Enterprise Plus Ltd. v Wagenmann

A party alleging an oral contract or warranty of authority bears the burden of proving it on the balance of probabilities. Contemporaneous documents must be assessed in their factual and commercial context. Where those documents support only an arrangement for priority payment from future project income, they do not establish an unconditional obligation to pay fees irrespective of the project’s success. A claimed authority to bind a third party must also be proved; it cannot be inferred merely from a person’s anticipated future employment or involvement in a venture.

Enterprise Plus Limited claimed fees for work undertaken in late 1997 on proposed privatisation projects in Pakistan. The claim was ultimately brought against Dr Bernard Wagenmann alone. It alleged that he had warranted authority to bind United Bank of Kuwait, or alternatively had undertaken personal liability, to pay Enterprise Plus’s fees regardless of whether a project was awarded.

The central issue was whether the parties had made an oral commitment of that kind, or whether the agreed arrangement merely gave Enterprise Plus first call on funds received if a mandate was obtained.

1. The claim was dismissed. Enterprise Plus failed to prove any contractual commitment by Dr Wagenmann, whether on behalf of IBJI, UBK or himself, to pay its fees unconditionally. There was consequently no breach of warranty of authority.
2. The burden lay on Enterprise Plus to establish the alleged oral agreement on the balance of probabilities. The contemporaneous notes did not support its case. The note of 6 October recorded that there could be no commitment to pay until the first mandate was obtained. That was consistent with Dr Wagenmann’s evidence and strongly supported the defence.
3. The note of 23 October was understood as recording, at most, an arrangement that Enterprise Plus would be paid first from money received after a mandate. References to charging TPG, rather than IBJI, UBK or Dr Wagenmann, and the surrounding commercial arrangements supported that interpretation.
4. The court rejected the suggestion that Dr Wagenmann had warranted authority to bind UBK on 23 October. He had not yet begun employment with UBK, his proposed employment remained conditional, and Enterprise Plus’s own account did not identify UBK as the relevant contracting party at that time.
5. The note of 15 December did not enlarge the earlier arrangement. The statement that Dr Wagenmann stood by his promise was consistent with priority payment from future revenue, not an unconditional obligation to fund work already completed. The commercial probabilities also made the alleged one-sided commitment improbable, since the participants shared the risk of an unsuccessful speculative venture.
6. The court preferred the first-hand evidence of Mr Raja and Mr Malik to impressions or second-hand accounts given by other witnesses. Imperfect recollection and later rationalisation explained the conflicting evidence.