Chatty Emails Do Not Make Contract

In a warning to the business community that it can sometimes be hazardous to mix business with pleasure, a judge has emphasised that ‘chatty’ emails, partly devoted to discussion of the provenance and vintage of fine wine, did not conclude a property development contract potentially worth millions.

At a time when the negotiating parties were on cordial terms, it had been agreed by a property development company that a consultancy company would be paid 20 per cent of the gross profits on any projects to which the latter introduced the former.

The consultancy company introduced the developer to an opportunity to develop a block of student housing that had proved highly successful and was projected to generate profits in excess of £8 million. However, following a falling-out between the parties which led to termination of their business relationship, a dispute arose as to whether or not the consultancy company was entitled to 20 per cent commission on those profits.

The High Court noted that the contractual dispute had arisen due to the ‘high level of informality’ in the negotiations between the parties, whose email correspondence was littered with ambiguous shorthand phrases and references to extraneous matters – including the relative merits of different vintages of claret.

Negotiations following the end of the parties’ business relationship had, at points, become ‘hopelessly muddled and confused’. Describing the dispute as ‘regrettable’, the Court noted that it faced a difficult task in attempting to extract evidence of the parties’ intentions from informal email traffic.

A critical email that had sought to set out the terms of agreement had been silent on the issue of the consultant’s commission and the Court concluded that, on a proper interpretation of the available evidence, the consultancy company had relinquished any entitlement to a share of profits from the development.

To ensure that your contractual arrangements are clear and enforceable, contact John Keeble.