Practical Contract Law
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Transcript of Practical Contract Law
© Law2020 LLP 2013Practical Contract Law
Consequences of a contract dispute?
Management Time
Management Time
A lot of time!
Stress
Loss of a customer
Loss of a customer
For ever!
Reputational harm
Reputational harm
Loss of more customers?
And Lawyers are expensive
And Lawyers are expensive
Very expensive!
• You have a meeting with Alpha Services, a potential supplier
• You think it is a preliminary meeting
• You have a meeting with Alpha Services, a potential supplier
• You think it is a preliminary meeting
• You discuss the services to be supplied and the price
• You shake hands and leave
• You have a meeting with Alpha Services, a potential supplier
• You think it is a preliminary meeting
• You discuss the services to be supplied and the price
• You shake hands and leave
• Alpha Services then e-mails you saying:
“ I t i s g r e a t t o h a v e e n t e r e d a c o n t r a c t w i t h y o u ”
With which statement do you agree?
There cannot possibly be a contract as it was only a preliminary meeting
There cannot be a contract as we have not agreed all the terms
The may well be a contract
There may well be a contract
There may well be a contract
You might be legally-bound
Offer
Intention
Acceptance
Consideration
What is a contract?
Back to the meeting
At the meetingYou may have both made statementsA court might find that you have agreed certain terms
Back to the meeting
At the meetingYou may have both made statementsA court might find that you have agreed certain terms
A court might identify an offer and an acceptance
Back to the meeting
At the meetingYou may have both made statementsA court might find that you have agreed certain terms
A court might identify an offer and an acceptance
‘Consideration’ is a legal term for an exchange of promisesThe exchange of promises might amount to
consideration
Back to the meeting
At the meetingYou may have both made statementsA court might find that you have agreed certain terms
A court might identify an offer and an acceptance
‘Consideration’ is a legal term for an exchange of promisesThe exchange of promises might amount to
consideration
But did you intend to be legally-bound?
Intention?
In a commercial settingThere is a presumption that you intended to be legally-
boundYou will have to rebut the intention
Intention?
In a commercial settingThere is a presumption that you intended to be legally-
boundYou will have to rebut the intention
But surely you did not agree all the terms?A court may find that you have agreed sufficient terms
for a contract to come into existenceThe court may fill in the gaps
Intention?
In a commercial settingThere is a presumption that you intended to be legally-
boundYou will have to rebut the intention
Buy you did not agree all the terms?A court may find that you have agreed sufficient terms
for a contract to come into existenceThe court may fill in the gaps
So there may be a contract
There may be contract
What should you have done?
MAKE IT CLEAR THAT YOU DO NOT INTEND TO ENTER
LEGAL RELATIONS
These discussions are subject to contract
We do not intend to enter a contract until we have signed a final written agreement
These discussions are subject to contract
We do not intend to enter a contract until we have signed a final written agreement
Minutes of Meeting‘Subject to Contract’
These discussions are subject to contract
We do not intend to enter a contract until we have signed a final written agreement
Follow-up e-mail
and all other
correspondence
‘Subject to Contract’
These discussions are subject to contract
We do not intend to enter a contract until we have signed a final written agreement
DRAFT CONTRACTS
‘Subject to Contract’
These discussions are subject to contract
We do not intend to enter a contract until we have signed a final written agreement
ALLPRE-CONTRACT DOCUMENTS
‘Subject to Contract’
Another example• Alf tells a potential buyer that
“someone else is interested” in a machine that he is trying to sell– This is not true– The buyer purchases the
machine– Alf has made a fraudulent
misrepresentation
– This could prove very costly
• Alf tells a potential buyer that “someone else is interested” in a machine that he is trying to sell– This is not true– The buyer purchases the
machine– Alf has made a fraudulent
misrepresentation
– This could prove very costly
Another example
• In one recent case• Contract value was £48m• Liability cap was £30m• Fraudulent
misrepresentation!• Claim for over £700m• Settled for £319m
Simple steps can prevent problems arising
Train sales people in the
basics
Put simple
processes in place
Simple steps can prevent problems arising
Train sales people in the
basics
Put simple
processes in place
About us
We have been training lawyers and businesses
for 20 years
TRAINING
About us
We have been training lawyers and businesses
for 20 years
We train lawyers and businesses in English law
TRAINING
About us
We have been training lawyers and businesses
for 20 years
We are now designing effective e-learning on
practical contract law to complement our face-to-
face training
We train lawyers and businesses in English law
TRAINING
For more information
www.legalandcommercial.com