A GBP 1m lesson in checking that your telephone offer has been accepted

Loraine MacDonald

In Moorgate Capital v Sun European, the High Court found that no contract arose from a telephone conversation between two directors because there was insufficient evidence of a consensus being reached or an intention to create legal relations. As a result, Moorgate lost out on a GBP 1m payment.

A director from Moorgate (Mr Mockett) had a telephone conversation with a director from Sun European (Mr Daccus) offering Moorgate’s advisory services. Mockett claimed that a contract was concluded in this telephone conversation under which Sun European would pay GBP 1m for Moorgate’s help on an acquistion. Daccus did not recall any agreement being reached.

Where an oral contract is alleged, the court must be able to identify a consensus reached between the parties based on terms that had been mutually and openly agreed. The evidence provided by Moorgate here was insufficient because:

  • it was unlikely that a contract of this type, and for an unusually high fee, would be agreed in a telephone conversation and not recorded in writing;
  • the absence of an engagement letter was at odds with market practice;
  • subsequent emails from Mockett to Daccus did not refer to a concluded agreement, and instead used the word “proposal”;
  • Daccus engaged alternative advisers and did not mention any agreement to his colleagues; and
  • Moorgate did not actually provide any services or send an invoice for the GBP 1m.

Moorgate’s alternative claims that (1) Daccus accepted the offer through conduct when inviting Mockett to attend a meeting, and (2) even if there was no contract, Moorgate was entitled to restitution for their services, were also rejected. The former, because Mockett did not assert that his attendance at the meeting was in the role of professional adviser. The latter, because it could not be established that Sun European had received any benefit from Moorgate.