Pillsbury Winthrop Shaw Pittman

English contract law: your word may still be your bond

By Raymond Sweigart

US movie mogul Samuel Goldwyn is widely quoted as having said: ‘A verbal contract isn’t worth the paper it’s written on.’ He is also reputed to have stated: ‘I’m willing to admit that I may not always be right, but I am never wrong.’ With all due respect to Mr Goldwyn, he did not have this quite right, and recent case law confirms he actually had it quite wrong. English law on oral contracts has remained essentially unchanged, with a few exceptions, for hundreds of years. Oral contracts most certainly exist, and they are certainly enforceable.

Many who negotiate commercial contracts often assume that they are not bound unless and until the agreement is reduced to writing and signed by the parties. However, the courts in England are not at all reluctant to find that binding contracts have been made despite the lack of a final writing and signature. Indeed, as we have previously noted, even in the narrow area where written and signed contracts are required (for example pursuant to the Statute of Frauds requirement that contracts for the sale of land must be in writing), the courts can find the requisite writing and signature in an exchange of emails…

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