What? In BVM Management Ltd v Roger Yeomans t/a The Great Hall at Mains and another [2011], the parties disagreed on what was incorporated into an oral contract.
So What? This case demonstrates the perils of parties commencing performance without a written contract in place.
The parties entered into an arrangement whereby the claimant would provide event management services to the defendant. A written contract was never signed, although a draft contract was prepared which provided that the contract would be for a two year fixed term, with a right to terminate early on three months' notice. It was common ground that the parties had entered into an oral contract incorporating all the terms of the draft contract, save that the claimant alleged that it had not agreed to the right of early termination.
The Court of Appeal dismissed the claimant's appeal, finding that the oral contract did incorporate the early termination right, despite the fact that the claimant had told the defendant in negotiations that it needed the security of a two year contract. Factors that were key to the decision included: previous contracts which the parties were involved in contained the early termination clause; and the draft contract which was studied by both parties contained the early termination clause and this was not raised as an issue by either party. The Court did not consider there to be any difficulty in having a fixed term contract which can be terminated early on notice.
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