BVM Management Ltd v Yeomans (t/a the Great Hall At Mains) & Anor

The terms of an oral or partly oral contract are ascertained as a question of fact from the parties’ words and conduct, assessed objectively. Evidence of what the parties said and did after concluding such a contract is admissible to establish what they had agreed.

An appellate court should be slow to reverse a trial judge’s evaluation, particularly where it depends upon oral evidence. Intervention is justified where the finding is obviously wrong, unreasonable on the evidence or produces a result unsustainable in law. A contract may provide for a maximum fixed term while permitting either party to terminate it earlier on notice.

The parties made an oral agreement under which an events-management business would provide services at a venue for two years. A draft agreement before them contained a term permitting either party to terminate on three months’ written notice, but that term was not discussed.

The Deputy Circuit Judge held that the notice term was incorporated into the oral agreement. Because the venue owners terminated without notice but had not established repudiatory breach, the management company was entitled to damages limited to the three-month notice period.

The company appealed from the order of Preston County Court. The central issue was whether the judge was entitled to find that the notice term formed part of the oral contract.

1. Appeal dismissed. Aikens LJ, with whom Lewison LJ and Lord Neuberger MR agreed, held that the trial judge was entitled to find that the three-month termination provision was incorporated into the oral contract.
2. The terms of an entirely or partly oral contract are ascertained from oral exchanges and conduct as a question of fact. Evidence of matters said and done after the contract was concluded is admissible to assist in determining what the parties actually agreed. The parties’ conflicting subjective beliefs did not resolve the issue and cancelled one another out.
3. An appellate court must be very slow to reverse a trial judge’s factual evaluation, particularly where it depends upon oral evidence. Intervention may be appropriate if the finding is obviously wrong, unreasonable on the evidence or produces a result unsustainable in law.
4. The relevant evidence included the presence of a three-month notice term in the parties’ previous contracts and in the draft studied before the meeting. Nobody objected to that term at the meeting. Later written drafts also contained it, and the management company did not object. Although a two-year term was expressly agreed and the manager sought security, he did not state that the agreement could contain no termination provision.
5. There was no legal inconsistency between a two-year contractual term and a right for either party to terminate on three months’ written notice. The two years represented the maximum duration, subject to either party’s right to end the agreement earlier by proper notice. The appeal was therefore dismissed unanimously.

1. Court of Appeal (Civil Division): The appeal was dismissed. The finding that the three-month notice provision formed part of the oral agreement was upheld: [2011] EWCA Civ 1254 .
2. Preston County Court: Deputy Circuit Judge Howarth held that the oral agreement had a two-year term but incorporated a right to terminate on three months’ notice. The respondents had terminated without notice and had not proved repudiatory breach by the appellant. Damages were therefore limited to the notice period.