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Legal Insights on Verbal Contracts

Mr. Wright alleged that he reached an oral agreement with the Rowland family on their yacht to purchase up to 5% of the shares in Banque Havilland S.A. for €50 million, the same price the Rowlands had paid. However, the court rejected the claim, finding no evidence the parties intended to create a legally binding contract and lack of certainty around key terms. In another case, Blue v. Ashley, the court also rejected a claim to enforce an alleged multimillion pound oral agreement made while drinking in a pub. The judge found no reasonable person would have thought the offer was serious or intended to create a contract, as all present saw it as a joke at the time

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105 views1 page

Legal Insights on Verbal Contracts

Mr. Wright alleged that he reached an oral agreement with the Rowland family on their yacht to purchase up to 5% of the shares in Banque Havilland S.A. for €50 million, the same price the Rowlands had paid. However, the court rejected the claim, finding no evidence the parties intended to create a legally binding contract and lack of certainty around key terms. In another case, Blue v. Ashley, the court also rejected a claim to enforce an alleged multimillion pound oral agreement made while drinking in a pub. The judge found no reasonable person would have thought the offer was serious or intended to create a contract, as all present saw it as a joke at the time

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Verbal contract cases

The case: Wright v Rowland – the facts

Mr Wright provided consultancy services to various Rowland family businesses. He alleged that in 2008,
he was responsible for the introduction of the Rowlands to the former Chairman of Kaupthing
Luxembourg (the distressed Luxembourg arm of the collapsed Icelandic banking group, Kaupthing Bank),
and that he then worked as a senior member of their deal team to negotiate, structure and close an
acquisition of the bank. The transaction involved the demerger of Kaupthing Luxembourg into a private
bank called Banque Havilland S.A. (BH).

It was contended by Mr Wright that at a party on July 20, 2009 on board the Rowlands’ yacht in the
south of France, an oral agreement was reached between himself and the Rowlands that (amongst
other things) granted him an option to purchase up to five per cent of the shares in BH for the same
proportionate price that the Rowlands had paid to acquire the entire issued share capital of BH, i.e. €50
million. The Rowlands subsequently denied that they had made any such agreement with him.

The Court rejected the claim that money was due on the basis of an oral contract because there was no
evidence of the parties’ intention to create legal relations, as well as a lack of certainty in relation to
certain other fundamental terms which militated against the existence of a binding contract.

The case: Blue v Ashley – the facts


The parties disputed the existence of an oral agreement by a businessman to pay a sum of
millions of pounds in certain circumstances to a business acquaintance with whom he was then
drinking in a public house.
Held: The claim failed: ‘no reasonable person present in the Horse and Groom on 24 January
2013 would have thought that the offer to pay Mr Blue pounds 15 million was serious and was
intended to create a contract, and no one who was actually present in the Horse and Groom that
evening – including Mr Blue – did in fact think so at the time. They all thought it was a joke. The
fact that Mr Blue has since convinced himself that the offer was a serious one, and that a legally
binding agreement was made, shows only that the human capacity for wishful thinking knows
few bounds.’

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