MacInnes v Gross

An alleged oral commercial agreement is assessed objectively by reference to what was communicated and whether the parties agreed the essential terms with an intention to create legal relations. An informal setting does not prevent a contract, but may require close scrutiny of that intention. Complexity, uncertainty, unidentified parties, an undefined workscope and an uncertain commission trigger may each point against enforceability. A quantum meruit is concerned with the objective market value of services, not compensation for loss. An alleged remuneration formula may sometimes be evidence of that value, but ordinarily requires supporting objective evidence. A claim must also be properly pleaded and evidenced.

The claimant sought €13.5 million from the first defendant, alleging that an oral agreement was made at dinner on 23 March 2011. He said he would provide services concerning the RunningBall business and receive 15% of the difference between the eventual sale price and the lower of SFr 100 million or eight times 2011 EBIT. He advanced a quantum meruit claim in the alternative.

The first defendant denied any binding agreement and contended that the discussion concerned possible share options. The claim against a corporate defendant had been compromised before trial. The issues were whether a contract was formed with the first defendant personally and, if not, whether the claimant had a quantum meruit claim against him.

1. Contract formation. Applying the objective approach in RTS Ltd v Molkerei Alois Muller GmbH and Co KG [2010] UKSC 14, the court held that no binding contract was made. The claimant’s contemporaneous email referred only to agreement on headline terms, described a possible strike price for options, and left salary and other matters unresolved. The later email exchange showed that both parties contemplated making a proper contract.
2. The proposed remuneration arrangement was not recorded in the email and was materially uncertain. It was unclear whether the relevant sum was the value of the business, the shares sold, the cash consideration, the purchaser’s shares or later sale proceeds. The triggering event was also uncertain because a sale, change of control, asset sale or new equity issue might produce different consequences. A complex commission arrangement of this kind required clear written terms: see Cheverney Consulting Ltd v Whitehead Mann Ltd [2006] EWCA Civ 1303, Benourad v Compass Group PLC [2010] EWHC 1882 (QB), Luxor (Eastbourne) Ltd v Cooper [1941] AC 108 and Wells v Devani [2016] EWCA Civ 1106.
3. There was also no sufficient certainty as to the contracting parties or workscope. The claimant was acting as an Investec employee and could not contract personally in the circumstances. The evidence indicated that any corporate arrangement would have involved a RunningBall company, not the first defendant personally. The services were not defined beyond a vague senior strategic role.
4. Quantum meruit. The claim against the first defendant failed because the services, if beneficial, were provided to corporate entities and there was no cogent evidence of a personal obligation. In any event, the alleged €13.5 million formula did not establish objective market value. Under Benedetti v Sawiris [2013] UKSC 50, the court may consider an agreed remuneration figure, but ordinarily requires other objective evidence. The claimed figure was distorted by an unusually low EBIT and the later increase in value of shares accepted as consideration.
5. The alternative quantum meruit claim was not pleaded, particularised or supported by appropriate evidence. The claim was therefore dismissed and judgment entered for the first defendant.