How Valid is an Agreement written on a Napkin?

Simon Cowell is facing a High Court action over the failure to pay the agreed fee outlined in a deal that was originally written on a napkin during the course of a dinner at Simon Cowell’s home.  Legally, an agreement can be written on any material and it will be officially acceptable, provided the terms of the deal are clear.  The Bills of Exchange Act 1882 codifies the law relating to cheques and promissory notes etc.

In the 1960s a man attempted to present a cheque written on his dog to a London Bank, writing all the mandatory banking details across the torso of his dog and presented the animal at a bank counter to pay off a debt.  However the bank refused to accept the “cheque” on the basis of storage as the dog could not be stored at a clearing house.

However, using mediums other than those that are the accepted normal, despite it being technically acceptable is not generally recommended.

The basic elements of a valid contract are:

• The offer one party wishes to extend to the other party
• What is being offered in exchange for compliance, this can be money, services, an agreement to do or not to do something.  
• The legal and other consequences of not complying with the agreement.
• Complete clarity on all the terms of the contract
• The assurance that the parties have the legal capacity to enter into the agreement.
• The agreement must not involve any actions that are unlawful.

Under England and Wales contract law an agreement can be verbal or written or a combination of the two.  Generally, an agreement or contract is professionally drafted, typed and the document is signed.

The legal battle between Simon Cowell and Ian Rosenblatt is not that the agreement was initially written on a napkin but that the fee was not paid.  Simon Cowell has not revealed his reasons for not adhering to the napkin agreement.

Mirko Prisko, commented “All businesses should be crystal clear on the terms, expectations and the conditions of the agreements that are signed.  The Court will want to know whether the terms were breached or varied and if the obligations were clearly set out, in the event of a dispute.  A judge will not consider what an individual who was party to the contract thought or assumed, only what is actually communicated in the agreement”.  

Should there be a claim that there are errors or the suggestion that there was misrepresentation or ambiguity then all aspects of the agreement, including verbal discussions, may be considered.

Businesses should not act on informal discussions whilst believing that the terms of the undertaking will be formally outlined in a proper agreement at a later stage.  Whilst verbal agreements are permitted, the parties may mis-remember the discussion and in the absence of other parties who may be able to confirm what was actually said, it may be very difficult to enforce, should a dispute arise before a written agreement has been drafted, any future legal claim made may not be considered to have a firm basis.

The commercial lawyers at Giambrone and Partners urge companies to ensure that all terms and conditions relating to any undertaking should be clearly outlined in an agreement which all parties distinctly understand.  A document outlining all aspects should be drafted by lawyers and signed by all parties.  Giambrone and Partners can assist businesses in drafting unambiguous agreements that have complete clarity.
Mirko’s expertise and experience.

For further information please contact client.services@giambronelaw.com  or call 020 7183 9482