A recent case provides a salutary warning that oral contracts can be the source of endless dispute over what was, and was not, said in a matter of seconds. A businessman had to resort to costly High Court litigation to prove his entitlement to a substantial success fee on the completion of a shipping contract which he had helped to negotiate.
The four-day hearing hinged on a single telephone conversation during which the businessman claimed that his success fee on the charter of a newly-built drilling vessel had been unequivocally agreed on behalf of the vessel’s owner. He insisted that, when he named his terms, the person on the other end of the line had sealed the deal by uttering the two words, ‘all right’.
The failure to record the contract in writing meant that the Court had to fall back on a detailed analysis of extraneous documents and the resulting probabilities as to what was said during the conversation. Although neither participant’s recollection of the telephone call was perfect, the Court ultimately accepted that a binding contract had been concluded and that the businessman was due his success fee.