Benourad v Compass Group Plc

In disputes where an intermediary performs services while negotiations continue, the court must determine objectively whether the parties intended immediate legal commitment or a formal executed document as a condition of binding effect. A draft stating that it takes effect on signature, coupled with requests to initial or sign it, strongly indicates that no contract exists until execution. The parties may later waive that requirement, but the change must be objectively established. If no contract results, a restitutionary quantum meruit may still arise where services were expressly requested or knowingly accepted and justice requires recompense. The benefit, risk undertaken, causation and circumstances of failure are relevant. The fee must reflect the services actually performed; a success commission for ongoing support and revenue is not automatically recoverable for a bare introduction.

The claimant, a business facilitator and introduction agent, claimed commission under an alleged agreement for introducing the defendant or its subsidiaries to Kuwait Catering Company. He relied on later arrangements between KCC and ESS. Alternatively, he claimed a reasonable restitutionary fee for his services.

The court tried liability issues only. It considered whether a commission agreement had been concluded, whether any agreement was subject to signature, the authority of the individual negotiating for the corporate group, whether the later arrangements constituted the contemplated joint venture, whether the introduction caused them, and whether restitutionary recompense was available.

Disposition. No KCC commission agreement was concluded by the meeting on 27 May 2001. The contractual issues were therefore resolved against the claimant or addressed only on alternative assumptions. A restitutionary quantum meruit was possible in principle, but the judgment did not determine the final sum or whether the claim would ultimately fail.

1. Contract formation depended on the objective meaning of the correspondence and conduct. Applying Cheverney Consulting Ltd v Whitehead Mann Ltd [2006] EWCA Civ 1303, Investec Bank (UK) Ltd v Zulman [2010] EWCA Civ. 536 and RTS Flexible Systems Ltd. v Molkerei Alios Müller GmbH [2010] 1 WLR 753, the judge held that a formal subject-to-contract stipulation was unnecessary. The draft’s provision that it would take effect on signature, and the requests to initial or sign it, strongly indicated that execution was required.
2. The negotiations remained incomplete. The parties were still addressing whether Compass or ACME was to be the contracting party and whether remuneration was to be calculated by revenue or acquisition value. The claimant’s introduction of KCC did not objectively establish that those matters had been settled or that the signature requirement had been waived.
3. Mr Marrel’s actual authority to bind Compass in relation to Kuwaiti business had been revoked after ACME began operating. Nevertheless, Compass had held him out as authorised until 25 April 2001, having regard to the corporate structure, previous dealings and his use of a Eurest email address. After that date it was clear that any agreement had to be with ACME.
4. The later MOUs between ESS and KCC were non-binding apart from specified provisions intended to facilitate negotiations. No further cooperation and management agreement was proved. The later sub-contract and purchase arrangements were materially different from a joint venture and involved ESS paying KCC rather than receiving revenue from it.
5. Restitutionary recompense remained available despite the absence of an immediate financial benefit and despite the claimant not being the effective cause of the later arrangements. The relevant considerations included the express request for an alternative partner, whether the services were normally gratuitous, the risk undertaken, the reality of the benefit, the circumstances in which negotiations failed, causation and unconscionability. The request and meeting could justify a fee for the introduction itself.
6. The fee had to reflect what the claimant actually did and what was reasonable. The contractual figure of 2 per cent of gross revenue included continuing support and was inappropriate for the introduction alone, particularly as ESS received no revenue from KCC. The evidence did not establish the claimant’s work or a reasonable market fee. The court therefore reserved submissions on whether the restitutionary claim failed or should be assessed by a Master.

not stated in the judgment.