Maple Leaf Macro Volatility Master Fund & Anor v Rouvroy & Anor

Contract formation is determined objectively from the parties’ words and conduct. An uncommunicated intention not to be bound has no relevance to whether a contract exists, although subjective intention may matter to a claim in deceit. A signature space or partial execution does not make signature a condition of formation unless the agreement or the parties’ consensus requires it. A third party may participate through conduct, including an email demonstrating assent, without signing. A condition requiring that party’s participation may fall away or be waived when the party makes a separate arrangement with the contracting parties. Bilateral performance is a significant objective indication that legal relations were intended.

The appellants, M Rouvroy and M Trylinski, negotiated with Maple Leaf and Astin for financing to reacquire control of Belvédère SA. The parties signed successive versions of a proposed Funding Agreement, but Lion Capital, whose participation was contemplated, did not sign. Maple Leaf nevertheless advanced approximately €30 million, which was used in the transaction.

Andrew Smith J found that a concluded Funding Agreement had been made, although it automatically determined in early August 2007, and ordered the appellants to pay substantial sums. His decision is reported at [2009] 1 Lloyd’s Rep 475. The appeal concerned whether the agreement had become binding, having regard to Lion Capital’s lack of signature and the appellants’ subjective intention not to be bound.

The appeal was unanimously dismissed. Longmore LJ gave the leading judgment, with which Wall LJ and Sedley LJ agreed. The formal order recorded that the application was refused.

1. The existence and timing of a binding contract depended on the objective intention conveyed by the parties’ words and conduct. The appellants’ subjective intention was irrelevant to contractual formation, although it was relevant to the separate deceit claim. The judge had properly considered the parties’ conduct as a whole.
2. There was no requirement in the Funding Agreement, or otherwise, that it could become binding only upon signature. A space for Lion Capital’s signature and the signatures of the other parties did not establish a prescribed mode of acceptance. Signatures were evidence of agreement, rather than conditions of contractual formation.
3. The agreement was initially subject to Lion Capital participating. Lion Capital’s email requesting contact with Maple Leaf’s lawyers demonstrated agreement to the later version of the arrangement, and was sufficient to make it a party without a signature. When Lion Capital instead agreed a separate transaction with the appellants, with Maple Leaf’s agreement, the requirement that it participate in the Funding Agreement either fell away automatically or was waived.
4. The appellants’ subsequent attempts to renegotiate did not prevent formation. Their signature, their pressure on Maple Leaf to make the necessary payments, and Maple Leaf’s payment of €29,999,946 were objectively consistent with an existing agreement. The court applied the practical principle stated by Steyn LJ in Trentham v Archital Lucifer [1993] 1 Lloyds Rep 25 at page 27, that bilateral performance may make it unrealistic to argue that there was no intention to enter legal relations.

1. Court of Appeal (Civil Division) — The appeal was dismissed unanimously: [2009] EWCA Civ 1334.
2. Commercial Court, Queen’s Bench Division — Andrew Smith J found that a concluded Funding Agreement had been made, subject to its later automatic determination, and ordered substantial payments. The decision is reported at [2009] 1 Lloyd’s Rep 475.