Legal Updates

Commercial Law – Oral Agreement – Potential Agency Agreement – Oral Terms

The case of Aboualsaud v Aboukhater and Another [2007], concerned an agency arrangement where a Claimant contended entitlement to commission pursuant to a binding oral agreement. The claimant was the executive vice-president of the Kuwait Investment Office in London and a financial adviser to both a petroleum corporation in Kuwait and to the Minister of Energy. The first defendant was a commercial director of the office of the government of one of the United Arab Emirates in London. The second defendant, the first defendant’s father, was the beneficial owner of a number of large hotels.

In the 1990's, the claimant and the first defendant had a meeting in London. They subsequently became close friends. They would see each other every week and would speak on the telephone most days. Then, in late 2002, the claimant alleged that the first defendant had spoken to him about the sale of one of his father's hotels. The specific hotel concerned was the 'Monte Carlo Grand Hotel' (“MGCH”).

The claimant further contended that a binding oral agreement had been made with the first defendant. He claimed that the agreement arose out of various meetings and telephone calls and that the terms were that if he introduced a party to the defendants, and that party went on to purchase the MCGH for a price that was acceptable to them, he would be entitled to a commission of EUR 21.5million.

In December 2004, the MCGH was sold to Kingdom, a member of the joint venture FHR European Ventures LLP. The claimant argued that the sale had been facilitated by the introduction of HRH Prince Al Waleed bin Talal bin Abdulaziz al Saud, who was the principal owner of Kingdom.

The defendants denied that there was any binding agreement for the payment of commission in the terms that the claimant had alleged. The defendants felt that the case was simply one where a friend had sought the help of another friend, and that if that help were to be successful then payment in recognition of that help could be expected.

The case proceeded to trial.

The issue which arose to be decided by the courts was whether there was an agency agreement between the claimant and the first defendant, the latter acting for himself and his father.

The court held that on the evidence, the first defendant's account was more convincing than that of the claimant. This was mainly in respect of the essential points in dispute, namely, how the discussions between the friends arose, how the discussions progressed and what the outcome of those discussions was.

The court felt that on that basis, there could not be any agency agreement upon which a binding legal contract could be established. Therefore, judgment would be made in favour of the defendants.

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© RT COOPERS, 2007. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.

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