Fasil Hussain, Commercial Solicitor at Neves Solicitors in Milton Keynes, uses the recent high profile court case involving Sports Direct owner Mike Ashley to demonstrate the importance of securing written business agreements.
The recent high profile case between Mr Jeffrey Blue (investment banker) and Mike Ashley (owner of Sports Direct) has served to reinforce the importance of documenting commercial agreements in writing.
In a nutshell, Jeffrey Blue claimed that he had reached an agreement with Mike Ashley that Mr Ashley would pay Mr Blue £15 million if Mr Blue doubled the share price of Sports Direct from £4.00 to £8.00.
This figure was achieved and Mr Blue argued that he had only received £1 million of the £15 million agreed.
The problem was that the alleged ‘meeting’ in which the agreement was reached took place in a pub, the Horse and Groom in London, where the relevant parties had consumed a considerable amount of alcohol.
Even more problematic was that the deal was not followed up in subsequent correspondence or indeed in a legally binding contract.
Mr Blue alleged that Mr Ashley often conducted business transactions in a similar informal fashion, which is why he had reason to believe Mr Ashley was making a legitimate business deal.
The High Court ruled that it was clear to everyone who attended the ‘meeting’ that the offer was not serious and that in Mr Ashely’s words during the trial, it was “obviously just banter.”
Handing down the judgement, Mr Justice Leggatt said that no reasonable person could have considered Ashley’s offer to be serious and that Mr Blue’s attempts to enforce it show that “the human capacity for wishful thinking knows few bounds.”
Mr Justice Leggatt also reiterated a ruling made in a previous case in which it was mentioned “that the best approach in a commercial case is for the judge to place little if any reliance on witnesses’ recollections of what was said in meetings and conversations, and to base factual findings on inferences drawn from the documentary evidence.”
This case serves as a stark reminder for individuals and businesses to ensure that all commercial agreements with third parties are recorded in writing at the time they are made.
You can call Fasil at Neves on 01908 304560.