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Oral contracts - worth the paper they’re written on?

29 November 2011

The recent changes to the construction act removed the requirement that a construction contract had to be in writing. Whilst this was a sensible change, the recent case of BVM Management Ltd v Roger Yeomans t/a The Great Hall at Mains highlights the risks surrounding oral contracts.

The Court of Appeal upheld a (non-construction) county court decision that an oral contract for a fixed two-year term contained an express term that it could be terminated on three months’ notice, so limiting BVM’s claim for damages for wrongful termination.

There is no new law here. However, it is an important reminder of the risks of relying on oral contracts / unsigned draft agreements. Being a lawyer, you won’t be surprised to hear me say that it’s best to get your agreed terms into a signed contract – especially fundamentals such as the right to terminate. But a thought for the sceptics: both parties in this case had to spend time and money litigating all the way to the Court of Appeal, far outweighing any legal fees they’d have paid had this been resolved at the start …

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