'I was interviewed for a 3-month contract; the agency called and offered me the position, and I said 'yes'. The rate had been discussed but the start date and hours had not. The agency said they'd send me the contract. When it still had not arrived 2 days later I called the agency and said I was accepting another contract through another agency. The first agency claims I am in breach of contract, and has sent me an invoice for what they say is their lost profit.'
To succeed in a claim against you for damages for breach of contract, the agency would have to show that there was a contract between you; that you were in breach of the terms of that contract; and that they had suffered loss as a result.
The real question is the first - whether there was a contract; if there was, then I think it is clear you would have been in breach of it, in which case the agency would be entitled to recover damages from you, such as to place them in the position in which they would have been, had you not been in breach.
In general terms, our legal system works on the principle that 'he who asserts must prove', and it would be for the agency to prove that, on balance of probabilities, there was a contract.
To do this, they would have to show that all the three essential elements of a contract were present:
First, that there was consensus ad idem, a clear mutual understanding and agreement as to all the material terms of the contract.
Second, that there was consideration - in other words, that each party was putting something into the deal.
And thirdly, that there was a mutual intent to create a legally binding arrangement.
The issues here arise on the first and third points. Can the agency show that there was indeed consensus ad idem? That there was a clear agreement on all the material terms of the contract? I have my doubts. Neither the start date, nor the hours had even been discussed! All that had been 'agreed' was the identity of the parties to the proposed contract, the rate, and the identity of the Client. Is that enough? Whilst in some circumstances it might be, I think here the answer is clearly 'no'.
It is clear that both parties had envisaged that such agreement as they may have anticipated reaching would be recorded in a document, to be signed by both parties. You have told me that this document in fact arrived on your doormat another 2 days after you had told the agency you would be accepting a contract through another agency instead - that you were withdrawing.
Doubtless this document contained terms which you had not previously seen - not simply covering the questions of the start date and the hours, but also a host of other matters, none of which had previously been discussed between you and the agency. You had not done business with them before, and were not familiar with their standard terms. You would have wanted to consider these terms. You may well have wanted to negotiate on the terms, before finally reaching agreement. The agency had no reason to expect you to accept these terms unseen.
Whilst a contract does not have to be in writing to be legally binding, the fact that a contract document is produced by one party, incorporating spaces for signature, certainly creates a strong inference that at least the party producing the document regards the document as being of some relevance. I see two angles to this.
First, if there was already a contract in existence, then it is difficult to see what that relevance might have been, beyond recording terms already agreed - but here, it must be common ground that you had no prior knowledge of most of the contents of the document, before it landed on your mat. Thus the fact of such a document having been produced suggests that the party producing it at least did not regard a contract as being in existence before that time, and shows that there are some material terms, contained in the document, which had yet to be discussed. So it suggests that there was not yet any consensus ad idem.
And secondly, the fact that the document contained space for signature suggests that some useful purpose was to be served by signing it. What can that purpose have been, if not to create legal relations? So the other side of that coin is that there is a strong case for saying that until the document was signed by both, there was no mutual intent to create legal relations.
Either way, at least one of the essential ingredients of a contract was missing, and it's quite clear to me that there was never any legally binding contract between you. It's all quite logical, really!
27th November 1998
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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