No Contract, No Problem Claims


The binding of an oral contract does not match that of a paper one, but there is hope. Despite best intentions, there are occasions where companies can find themselves caught up in a commercial relationship without a formal written contract. This could be due to the need to get underway with a job as quickly as possible, leaving a contract till a later date, or due to an administrative error.

If this happens, one party may fail to perform their promised part in the agreement, leaving a disappointed and aggravated party to pick up the pieces, and more so, unable to cover any losses suffered from the lack of written communication.

There is however, a potential for business who have been unrightfully let down, be it intentional or not, to recover losses.

Regardless of Samuel Goldwyn’s famous maxim that a verbal contract “is not worth the paper it is written on,” there could be a chance that an oral agreement will stand up in court, as recent cases have been considering contract establishments that take place in person, rather than on paper.

The afflicted party could have the chance to establish their right to claim through the legal system if they can prove a breach of an oral contract has taken place. The aggrieved member must also show that the non-performing party did not follow suit in relation to duty of care systems. Levels of compensation and chances of success in claiming are dependant on the aggrieved parties ability to prove acts of tort from the other party.

If a wronged party can establish a contract’s basic terms and intentions, that did not go through as discussed, precise terms and breaches can be considered without the official paperwork in place.

A duty of care in the tort of negligence can be proven by undergoing two tests that will need to satisfy a court of wrongdoings. The first is the Threefold Test, in which the court will obtain knowledge of whether the loss was reasonably foreseeable, if there was a sufficient relationship of proximity between both parties and if the circumstance was/is fair/reasonable.

The next text is titled the Assumption of Responsibility, in which it is determined whether the non-performing party has undertaken any form of responsibility towards the other party to exercise any reasonable care.

If it comes to light that the non participating party did not provide a duty of care service, and this can be established as fact, the afflicted party will, in principle, be able to claim.

Professional negligence is being taken seriously, with a no contract, no fee, no problem, type of attitude coming forth. A recent example of a successful court win from no contract sufferings comes from a duty of care in tort case between Burgess & Anor vs Lejonvarn.

Mr & Mrs Burgess were made a promise by an Architect friend, who agreed to provide them with free architectural services with no need for a contract in place. The project failed which has lead to the Burgess’s claiming £265,000 for economic loss from the Architect.

The claim was successful due to the Architect owing the Burgess’s a duty to exercise reasonable skill and care in tort but failing to do so, a duty of care has been imposed on the Architect despite the problems being arguably foreseeable.

Various other examples of no contract, no problem claims are coming forth which means that there is hope for aggrieved parties.

Samuel Goldwyn was partly right in his speech and a written contract is the best way to ensure business can run smoothly, with legal, documented plans that will ensure courts know the facts much easier than with an oral contract.

The binding of an oral contract does not match that of a paper one, but if you have suffered negligence from a party who didn’t deliver the services you were assured, you can pursue a claim if you are able to prove your case.  


Latest Issue

BDC 317 : Jun 2024