In this blog article, Beth Abbott from our Conveyancing team demystifies the term ‘Caveat Emptor’, the principles of which are key when buying or selling a new home. What does Caveat Emptor mean? Put simply, Caveat Emptor is a Latin term...
Would You Agree a £200 Million Contract Orally? Of Course Not!
If important agreements are not enshrined in professionally drafted contracts, it can be an uphill task to prove that an accord was ever actually reached. That was certainly so in one case concerning the £200 million refinancing of a hotel group.
hotelOver drinks in the bar of a luxury hotel owned by the group, its managing director had met with two representatives of a company that specialised in finding sources of finance. The chairman was alleged to have orally agreed during that meeting that the group would pay a 1 per cent success fee in the event of the company successfully introducing an appropriate lender.
The company claimed to have effected such an introduction that resulted in a £200 million loan facility being advanced to the group, and claimed a success fee of £2 million. It launched proceedings after the group refused to pay.
In dismissing the company’s claim, the High Court noted the inherent unlikelihood of such an important and high value contract having been made orally. The account of the conversation in the bar given by the company’s representatives was unreliable and there were no emails or other documentary evidence to support the existence of a finalised agreement. In the absence of such a contract, the company had established no right to the success fee claimed.