I am based in the UK and having a dispute with a former partner organisation. We had a written agreement between us that they drafted and called a 'Heads of Agreement'. In it they refer to operating as a 'gentlemen's agreement' rather than anything more formal and their footer for the email that it was written on says "Contracts may not be concluded by email and any contract or agreement attached is subject to contract and shall not and is not intended to create a legally binding relationship". When the relationship broke down (due to their conduct) we stopped paying them a fee for work done. They are saying we had a legal obligation but my defence is that it is clear that this was never intended to be legally binding. Any thoughts? It looks like we are heading to county court over it.
Province/Country relating to question : United Kingdom
We have exchanged emails and letters. They are claiming that because we paid them against the letter it is a contract, but it clearly was not intended to be binding. We are preparing a formal response but think they have already taken out action in the County Court.
HiThank you for your question. I will try to help with this.What do you mean by a partner organisation? What was your relationship?
Hi. We are a limited company and so are they. They introduced us to a client of theirs and the basis of the agreement was that we would pay them 15% for all work done with the client. We paid them a total of £10k before the relationship went sour (they did things we expected to do and also stole some of our intellectual property). This brought the relationship to an end. We then stopped telling them when we were working with the client so at present they cannot assess losses. However, they are pretty petty and I suspect we are going to court.
Why do you think its clear that nobody intended this to be legally binding?What is it that they say you shouldn't have done exactly?
Because the initial agreement was headed as a 'Heads of Agreement' and in the email they wrote ".....we are happy to operate under a Gentlemen's agreement," and the footer of their email stated, ""Contracts may not be concluded by email and any contract or agreement attached is subject to contract and shall not and is not intended to create a legally binding relationship," I have worked on the basis that the agreement was only a gentlemen's agreement and was not intended to be legally binding.
They say we should have continued to tell them when we were working with the client during 2011 (we have stopped working with them) and declaring the days done so they can bill us for 15% of the total work done.
Sorry, I don't understand what you mean by 'days done'?
We are a management consultancy and are paid 'by the day'. This means the more days we do the more we get paid. A bit like a solicitor/barrister :).
Yes, so what do you mean by days done?Who has done the days?
We (meaning me and my team from our company) were doing the consulting days with the client they (the other party) had introduced us to. The agreement was that we would pay them 15% of the fee charged for every consulting day done with the client they had introduced us to.
OK.Do you accept agreeing to that even verbally?
We agreed to the heads of agreement and to operating it as a gentlemen's agreement not just verbally but by paying them. What we didn't agree to was the agreement being legally binding, as per what they had written in their email to us to form the agreement.
That is a legally binding agreement I'm afraid.If you agreed to this even verbally then that is a contract and you are bound by it.I'm afraid there is no defence of an agreement not being legally binding. In any event, two limited companies reaching an agreement is clearly one that has legal consequences.I'm very sorry but there's no defence on the facts you raise.I'm sorry this isn't the answer you wanted but it is the position that you face and I have a duty to inform you truthfully.Hope this helps. Please press ACCEPT and then I will answer your follow up questions for free. Your question will not close but I will thereafter provide related information at no extra cost.
Bar Exams, over 5 years in practice.
Hi. Thanks for the answer. I have researched gentlemen's agreements and it seems to be that these are not meant to be binding. Also, I don't understand how their email can explictly say that the heads of agreement is not binding and yet it is?
Im very sorry but thats completely wrong.There's no such thing as a gentlemen's agreement in law anyway. Either there's an agreement or there isn't. There clearly was an agreement here even on your own account. An agreement is legally binding.The actual document here is all over the place and will probably be void for uncertainty. But come what may, you accept there was a verbal agreement so its game over. I'm very sorry.
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