‘I was recently offered a contract by an
agency. We agreed a start date; they sent me 2 copies of the contract
already signed by them; I gave notice
to terminate my former contract; then
the agency called and told me that the Client’s funding had been changed and
that the new contract would not proceed.’
It appears that you acted as soon as you
got the document from the new agency, by giving notice, etc But sadly, the one thing you omitted to do
was to take any steps to accept the contract – or to let the agency know that
the entire contract (including all the ‘small print’ that had not previously
been discussed) was acceptable.
First, we’ll consider whether or not
there was a binding oral contract. Now,
it is certainly true that oral contracts are certainly capable of being binding
– we make them virtually every day of our lives. But the simple fact that they may be capable of
being binding doesn’t necessarily mean that such a contract was actually formed
in this case.
We have to go to first principles, and
see whether or not the essential elements for a contract were present. These, regular readers will recall, are:
-
Consensus ad idem
– was there true agreement on all the essential terms of the contract?
-
Consideration –
did each party put something into the contract?
-
Mutual Intent to create legal relations –
had a point been arrived at where each party intended the contract to become
legally binding?
The big problem we have in attempting to
show the existence of an oral contract is this: where there is a piece of paper kicking around, calling itself a
‘contract’, with spaces for signature, then simple logic suggests that the point
of ‘mutual intent to create legal relations’ will not arise until and unless
both parties have signed – and therefore that there will be no legally binding
contract in existence until that point.
Whilst there might be certain situations
where an initial oral contract was intended to be superseded by a document,
there would need to be clear evidence that both parties regarded the initial
oral agreement as standing on its own two feet, and as being binding in the
absence of anything in writing. I strongly
suspect that this is not one of those occasions - here, in different
circumstances, you might on reading the document have decided that you felt
unable to accept the small print – in which case I am sure you would have
expected to be free to treat the written document as a declinable offer. Overall, in the situation in which you find
yourself here, it will be difficult for you to show that there was an oral
binding contract.
Secondly, was there a binding written
contract? Often it is helpful to break
down the question of whether or not there is consensus by analysing the
events, and looking for a sequence of Offer, Acceptance, and Communication
of Acceptance, - all relating to the same terms, and all three occurring
before there is any Revocation of the Offer.
Here, the contract signed by the Agency
clearly amounts to an Offer. Acceptance
would have required you to sign the document, following which Communication
of Acceptance would have required the signed document to either be given to
the Agency – or at least to pass out of your control on its way back to
them. The legal authorities make clear
that popping a document in the post box, correctly addressed and stamped, can
be a point at which such a contract is formed.
By analogy, I strongly suspect that the Courts in due course will treat
the despatch of a correctly addressed fax or email in the same way.
But unfortunately for you, before you
either accepted, or communicated your acceptance, the Agency rang you and told
you that it was all off. There’s no
rule which says Revocation of an offer has to be in any particular form
– it s sufficient if the communication advising you of the revocation (1)
actually reaches you, and (2) is sufficiently clear in its meaning. Here, it seems quite clear to me that the
effect of the Agency’s call was to advise you that the (at that point
unaccepted) offer was revoked – and therefore from that point, the offer ceased
to be capable of acceptance. It was no
longer on the table. Your situation
would of course have been otherwise, had you been able to say in reply ‘I
posted the signed contract to you 5 minutes ago’.
So, sadly, it seems that whichever way
one views it, there was no contract formed in this case. And without a contract, you have no remedy.
The lesson to be learned here is that if
you receive an offer of a contract, and if (having, of course, read and
understood all of its terms – and its IR35 implications) you decide that you
wish to accept, then you should actually do that – Accept – before you do
anything else which you would not otherwise have done (such as give notice to
end an earlier contract). And be aware
that you may still be vulnerable when you return to an agency a contract which
has not yet been signed by them.
28th April 2000
I'd really appreciate your feedback on this FAQ - so mail me and tell me what you think of it, if it's been useful to you, or let me know of any specific problem you have where I may be able to help.
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