Contract law – the fascinating collision between precedent and modern technology, underpinned by interpretation of intent, or dry minutiae only of concern to lawyers? If your view is that it’s closer to the “boring/not for me” end of the spectrum, but you negotiate, then I’d invite you to consider a couple of recent decisions pertaining to contract law. In Jaevee Homes Ltd v Fincham the UK High Court found that a series of WhatsApp messages formed the basis of a legally binding contract, rejecting arguments that the informal nature of the messages meant that no contract was entered into. Similarly, the UK Court of Appeal confirmed that DAZN (who held the broadcasting rights to FIFA’s club World Cup, which took place over the Summer) had entered a contract with South Korean broadcaster Coupang, sublicensing them local rights. Again, assertions that emails and WhatsApp messages were informal and indicative of “discussions” rather than a formal contract were rejected.
Both decisions were widely seen by legal commentators as being entirely consistent with precedent (many of us will have heard or read about verbal contracts being upheld as legally binding, for example), so, not surprising. There is an obvious lesson for dealmakers to be cautious in their communication with counterparties, whether verbal or written, no matter the media used for any exchange. However, I’m interested in a point in time that should happen prior to those communications. In our view, that point is a specific element of the negotiation structure – the Agree step. Structurally, any successful negotiation culminates in an agreement, but the self-evident nature of that statement belies the critical thinking and process management that will ensure lasting success – i.e. the implementation of the agreement over its term.
Firstly, detail is something to address at the time (or “in the room”, when you are in contact with your counterparty). Don’t leave the conversation saying “I’ll email you the agreement later/next week” – be specific about the terms and ensure your understanding of them is shared and mutually agreed there and then. If you’re doing that virtually – share your screen and capture the heads of agreement digitally. If you’re face-to-face, use a whiteboard or flipchart to do the same – everyone can sign and photograph a heads of agreement. Recognising, of course, that case law precedent means it’s likely to be binding, that leads to the other consideration: are you (or they) comfortable with those terms? Are any potentially likely scenarios missing, and do they require management within the terms of the deal? And so on.
“Comfort” might sound a bit soft, but it’s entirely pragmatic – deals fall apart quickly where they’re one-sided and one party lacks commitment, starts to pull resources from implementation, and more. Recognising that the future may upend an agreement (in the case of DAZN their case was predicated on an opportunity to sub-license the South Korean rights for higher revenues) is also something that skilled negotiators can (and will) incorporate into a deal. If you believe a higher offer might come in, either don’t do the deal in the first place and cross your fingers, or ask whether you can build a clause into the contract whereby a better deal can be exploited. That might come at a cost (perhaps a percentage of the increment to the injured party), but if they are comfortable with that, it can be agreed. And you won’t need a trip to the high court.
