3DM (3DMA) Pte Ltd (“3DMA”) sought payment of their retainer under an alleged consultancy agreement with 3DM 3DM Worldwide Ltd (“3DM Worldwide”). 3DMA claimed it entered into the consultancy agreement to provide corporate finance advice and project management assistance in developing 3DM Worldwide’s business. Draft consultancy agreements had passed between the parties in November 2004.

3DMA alleged that on 21 December 2004 a meeting between Mr Hancock on 3DM Worldwide’s behalf and Mr Hoyer Millar of 3DMA took place and concluded the agreement with Mr Hoyer Millar signed the contract on behalf of 3DMA and the space for signature for 3DM Worldwide remaining blank. 3DM Worldwide argued that the agreement was subject to further issues being negotiated between the parties including confirmation of a share split.

Did the arrangements agreed between Mr Hoyer Millar and Mr Hancock on 21 December amount to an immediately binding contract or only to a set of terms to take binding effect if and when approved by 3DM Worldwide?

Reference

There was not a legally binding contract. Mr Hancock had not been given authority to conclude a contract on 3DM Worldwide’s behalf and was only instructed to take the discussions forward.

It was clear from the correspondence that there were live issues (including the share structure) that had not been resolved in the period before Christmas. Further, the correspondence after 21 December was either equivocal or supported 3DM Worldwide’s claim that the consultancy agreement would not take effect until after the issues affecting 3DMA had been resolved. Although 3DM Worldwide were content with the wording as finally negotiated, this does not mean that it had entered into a contract on those terms.

*Full case details: 3DM (3DMA) PTE LTD V 3DM 3MD WORLDWIDE LTD [2006] EWHC 2427 (High Court, HHJ Mackie QC, 5/10/06)

Contact Fenwick Elliott on 020 7421 1986 or NGould@fenwickelliott.co.uk

Postscript

Parties to construction agreements frequently agree terms of a contract before becoming legally bound. There is a distinction between a party who indicates his agreement to the wording to be contained in the contract and his assent to be bound by the contract itself once drawn up and executed. Before commencing work under a contract, parties should ensure that it is legally binding so that each party must perform their obligations under the contract and be properly recompensed for doing so.