Lloyd's Maritime and Commercial Law Quarterly
Oral agreements
Paul S Davies *
Although oral contracts are very commonly entered into on an everyday basis, most commercial litigation concerns written agreements. Yet a number of cases concerning oral contracts have recently reached the Supreme Court—most notably Wells v Devani, MWB Business Exchange Centres v Rock Advertising and Barton v Morris—and judges have taken very different approaches in all of them. Difficulties are not limited to oral agreements which have contractual effect: in Guest v Guest the Supreme Court split on the approach to be taken to remedies for proprietary estoppel. This article analyses those decisions and argues that the same fundamental principles of contract law should apply to both oral and written contracts.
I INTRODUCTION
Sam Goldwyn is reported to have said that “a verbal contract is not worth the paper it’s written on”.1 Yet, even in commercial contexts, valuable agreements involving very substantial sums have been established without any contemporaneous documentary evidence.2 Oral agreements may be negotiated and concluded entirely orally due to pressures of time, often by telephone,3 but some commercial parties may prefer to deal entirely face-to-face and optimistically trust that each party will keep their word and no problems will later arise.4 In Wells v Devani,5 Lord Briggs recognised that “the common law will recognise an enforceable liability to pay as arising from the briefest and most informal exchange between the parties”. And in MWB Business Exchange Centres Ltd v Rock Advertising Ltd,6 Lord Sumption acknowledged that “[t]he advantages of the common law’s flexibility about formal validity are that it enables agreements to be made quickly, informally
* Professor of Commercial Law, University College London; Barrister, Essex Court Chambers. This article is a revised version of a talk given to the Midlands Chancery and Commercial Bar Association in June 2023. I also presented a version of this paper at the Society of Legal Scholars’ Annual Conference in Bristol in September 2024. I am grateful to those who attended for their comments and questions, and to Ben Cartwright, Steve Hedley, Paul MacMahon and Christopher Monaghan. I am also very thankful for the generous support of the Leverhulme Trust through a Philip Leverhulme Prize.
1. As recognised by Rares J in TWW Yachts Sarl v The Yacht Loretta (No 1) [2021] FCA 240; [2022] Lloyd’s Rep Plus 21, [1].
2. Eg, Burgess v Kempson [2023] EWHC 2216 (Ch); O’Neill v Avic International Corp (UK) Ltd [2019] EWHC 165 (QB), [79] (Freedman J).
3. Cf Astra Asset Management UK Ltd v The Co-Operative Bank Plc [2019] EWHC 897 (Comm), [7].
4. See Blue v Ashley [2017] EWHC 1928 (Comm).
5. [2019] UKSC 4; [2019] BLR 221; [2020] AC 129, [63].
6. [2018] UKSC 24; [2018] BLR 479; [2019] AC 119, [12].
Oral agreements
65