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Ally Tow
Ally Tow,
SENIOR ASSOCIATE - CHARTERED LEGAL EXECUTIVE
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Unsigned agreement still legally binding
26 June 2015

In Reville Independent LLC v Anotech International (UK) Ltd (2015) the Commercial Court held that a party had accepted the terms of an agreement by its conduct, even though it had not signed the agreement which said that it required the signatures of both parties in order to take effect.

The Claim

The claim arose from Reville’s alleged agreement to license Anotech in the United States for intellectual property rights in relation to the US version of the television programme, Masterchef, plus integration of Anotech’s cookware products for 3 episodes of the TV series.

Reville contended that in March 2011 it entered into a binding agreement with Anotech pursuant to terms set out in a Deal Memorandum (“Deal Memo”) signed by the parties and that having fully performed its obligations it was entitled to payment of:

a)            an advance of $52,500 payable on signature

b)            $300,000 for the integration of Anotech’s products and

c)            further payments due under the Deal Memo totalling $657,500

Reville also claimed a further sum of $700,000 by way of damages in respect of other monies that would have been payable under the Deal Memo in 2014 and 2015 if Reville had not accepted Anotech’s repudiation of the agreement and terminated it on 24 July 2013.

Anotech contended that no contract had been reached between the parties, the Deal Memo having not been signed by a representative on behalf of Reville. Accordingly, Anotech sought to dispute Reville’s claim in its entirety.

Court Findings

The court found that in early 2011 the parties began negotiations for a legally binding short form agreement which became the Deal Memo. Once concluded this would set out the terms which would be replaced by detailed long term agreements which the parties would negotiate. Subsequent negotiations as regards the long term agreements broke down and so it was necessary for the court to decide whether there was a binding agreement on the terms set out in the Deal Memo.

The Deal Memo stated that it was not to be binding on Reville until signed by both parties. Whilst it was signed by Anotech the court found that Reville could not show that it was signed by them. However, the court went on to state that signature of a written contract was not a precondition to the existence of contractual relations as a contract could equally be accepted by conduct.

In this regard, the court found that “it was overwhelmingly clear that the work envisaged under the Deal Memo was carried out by the parties”. It further found that Anotech “worked and communicated with others on the basis that a deal was in place”.  Most significantly, said the court, Anotech “acknowledged the existence of a binding commitment by agreeing to get paid invoices on the basis of the Deal Memo”.

The court found that Reville had communicated its acceptance by conduct of the Deal Memo in early March 2011 and thereafter as Anotech recognised when acknowledging its obligation to pay.

Result

As a result, the court found that the Deal Memo did constitute a legally binding agreement between the parties. It followed that Anotech were in breach of contract and Reville’s claim succeeded, albeit that the court would not award damages for its alleged future losses. 

For more information about the issues in this article or to find out more about how the Dispute Resolution team can help you please contact Ally Tow on 0118 952 7206 or email [email protected].

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

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