An oral contract over the phone is binding, the High Court has ruled in a multi-million pound case which threatened to undermine the way the world of high finance operates. The verbal agreement did not have to be in writing, the court found. An investment fund, Forum Global Equity, agreed a deal over the phone with US …
"An oral contract over the phone is binding, the High Court has ruled in a multi-million pound case which threatened to undermine the way the world of high finance operates."
So previously oral contracts were not binding? This doesn't sound plausible- the phone lines of trading desks of investment banks have been recorded for decades. Why bother doing this if the conversations were not legally binding for trades?
oral contracts have always been effective - the decision is the narrower one that this particular telephone conversation was a contract, not (for instance) a conversation about the weather
Jeff (my namesake, as it happens!)..think about it!....
... this case could have undermined, i.e. taken away, the previously held rule of law that a verbal contract is just as valid as a written contract. As it happens, the judge in this court case upheld current practice, and no undermining occurred.
Put more simply, just in case:
Previously, verbal contracts were binding (hence why investment banks, etc recorded everything);
There was an attempt to have that rule of law changed (so that verbal contracts, at least in certain circumstances) were not binding;
That attmept failed:
Hence, verbal contracts are still binding;
Thus, there was no change in the law;
Therefore, there was, in fact, no undermining...just the threat of it while the reported court case was pending.
I suggest you read things fully and digest properly before jumping in with a comment that shows you did neither of the above - otherwise you just undermine yourself ;)
... read it again... Forum *lost*.
If Forum had won, then the telephone deals to which you refer could be later claimed by one party *not* to be binding, based on this precedent (had Forum won).
So, like the article says: this was "... a multi-million pound case which threatened to undermine the way the world of high finance operates...", i.e. for as long as there was a possibility of Forum winning.
"The verbal agreement did not have to be in writing, the court found."
Isn't the whole point of a verbal agreement that it's not in writing??
Anyway, this case seems to indicate that, despite Sam Goldwyn's assertion, a verbal contract IS worth the paper it's written on.
Re: Undermine what?
To say that something is the case at this moment in time is NOT necessarily to say that it was not the case at some earlier point in time.
If a court rules that I am male, it does not mean that I was not male prior to that ruling. It's called affirmation or upholding.
In this instance, it's been common practice to consider verbal agreements binding, but legal precedent had not been set. Now, legal precedent HAS been set, affirming that verbal contracts are binding agreements.
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