A recent Court of Appeal decision illustrates the dangers for businesses of relying on conversations and unsigned draft agreements.
The parties in this case were involved in discussions regarding events management at a venue. During the negotiations, a draft agreement was produced, which included a two-year fixed term and a clause allowing termination on three months' notice.
After one meeting, various drafts of the agreement passed between the parties that contained a three-month notice provision, but nothing was signed. The parties argued about whether the contract could be terminated during the two year term and spent a considerable amount of time and money arguing the matter through the courts. The court held that the parties had concluded an oral contract for a two-year period but it could be terminated early on three months' notice.
The case underlines the importance of ensuring that key contractual provisions are always documented, especially those as fundamental as a right of termination.
To assist, we have prepared this checklist, which highlights the key issues a business should consider when negotiating contracts.
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If you require any assistance in relation to any contract that your business is proposing to enter into or your current terms and conditions of business, please contact John Wilson, Andrew Hill or Jamie Hawley on 01228 552600. Alternatively, email one of the team at cca@baineswilson.co.uk.
23 January 2011
