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Sensible Contractors Know that Oral Agreements Are a Recipe for Doubt

Oral contracts may seem clear at the time when hands are shaken, but all too often certainty is subsequently displaced by doubt as to what exactly was agreed. One High Court case concerning a £300 million council housing renovation project underlined the benefits of professionally drafted agreements.

The main contractor engaged in the project had sub-contracted part of the work to a specialist roofing and scaffolding company (the sub-contractor). The latter claimed that it had been orally agreed that it would carry out all relevant works in part of the council’s area on an exclusive basis for the duration of the main contract.

After the main contractor later dispensed with the sub-contractor’s services, the latter went into administration and, ultimately, liquidation. The liquidators assigned the benefit of their potential breach of contract claim against the main contractor to a company (the company) that pursued the matter to trial.

After hearing extensive evidence, the Court found that a meeting had taken place at which an oral contract had been concluded on the terms contended for by the sub-contractor. In dismissing the company’s claim, however, the Court ruled that that contract had been superseded and rendered inapplicable by a written framework agreement that had been concluded about eight months later. That agreement contained no promise of exclusivity and expressly permitted the main contractor to purchase the services of other sub-contractors.

Harvil Roofing Limited v Lakehouse Contracts Limited. Case Number: HT-2016-000230

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