Banter, alcohol and a bit of wishful thinking does not a contract make

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Deals can be done in the pub or indeed on the golf course or elsewhere but on this occasion, the court was not convinced.

Author: Nona Bowkis
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This article is 4 years old.

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The High Court recently had to spend considerable time deciding on a claim between Mike Ashley of Sports Direct and a former investment banker called Mr Blue.

In short, the two were drinking in a London pub with 3 others who were being courted to become Sports Direct’s new Corporate Brokers. In between the banter re the fortunes of Mr Ashley’s Newcastle United, Mr Ashley apparently told Mr Blue he would pay him £15 million if he could get Sports Direct’s share price up from £4 to £8 per share. It seems Mr Blue went home and told his wife of the deal as around a year later, Mr Blue’s wife sent him a text saying “bingo is our nameo!!!” in relation to the shares hitting the magic £8. However, Mr & Mrs Blue’s payday was not to be and so off to court they went.

After hearing arguments from some no doubt very expensive legal folk,  the court ruled that there was no binding contract. It gave 8 reasons:

1.    The setting – described as “five guys and a barman in a pub”, this ‘meeting’ had no formal agenda or structure and was predominantly a social event. Deals can be done in the pub or indeed on the golf course or elsewhere but on this occasion, the court was not convinced. 

2.    The purpose of the occasion – there was a business reason behind the meeting but it was to lure the Corporate Brokers and not to agree a personal incentive bonus with Mr Blue.

3.    The nature and tone of the conversation – while the court accepted that ‘banter’ could have a more serious intent, it was not to be in this case.

4.    Lack of commercial sense – would a businessman such as Mr Ashley seriously offer someone who would be on £250,000 a year if he worked

5 days a week, a bonus of £15 million? No said the court, Mr Ashley was merely using pub banter to display his wealth to try and attract these Corporate Brokers to Sports Direct.

5.    Incongruity with Mr Blue’s role – the court were not convinced Mr Blue alone could ‘get’ Sports Direct’s share price up to £8 in fact they doubted “that any human being had such powers”.

6.    Vagueness of the offer – no time limits were set, no period was set for the shares to stay above £8 and so no real contractual terms were agreed.

7.    Perceptions of the witnesses – the three perspective Corporate Brokers said they saw the conversation as no more than banter, the court agreed.

8.    Mr Blue’s perception – for a contract to be binding all parties must intend for there to be a contract. Mr Blue failed to get anything in writing from Mr Ashely in the following days and in fact never made mention of it to Mr Ashley until a year later. Not the actions of someone who truly thought they has a binding contract.

The main lesson we learn here is that although oral contracts can be binding, it is always better to get something in writing and to make all the terms clear if only to avoid the wishful thinking of others because as the judge said;  “the human capacity for wishful thinking knows few bounds”- something we witness every day here dealing with consumers who expect a brand new vehicle for their used vehicle price.   

Nona Bowkis

Legal Advisor

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