Fenchurch Advisory Partners LLP v AA Limited

A binding contract is not formed merely because parties agree a fee structure while detailed contractual terms remain under negotiation. The court must assess the communications and context objectively. Where a formal signed engagement letter is contemplated, separate legal and commercial workstreams remain open, and material terms such as indemnity and termination are unresolved, prior performance does not establish an immediate intention to be bound. A contractual trigger requiring a project to be aborted by a public offer requires an active project and a causal interruption, not eventual impossibility. Services requested in anticipation of a contract may support restitution where the failure to conclude the contract fell outside the service provider’s assumed risk. The value of the benefit is the market value of the services, rather than compensation for loss.

Fenchurch Advisory Partners LLP provided extensive investment banking and corporate finance advice to AA Limited in connection with a proposed sale of its insurance division. The parties negotiated a detailed engagement letter and agreed a fee construct, but never signed the letter. The proposed sale did not proceed, and AA later became the subject of a public offer.

Fenchurch claimed contractual fees, relying particularly on a public offer trigger. In the alternative, it claimed an implied contract or restitution for the value of its services. The central issues were whether a binding contract had been formed, whether the public offer trigger was engaged, and whether AA had been unjustly enriched.

1. Contract formation. The court applied the objective approach in Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd’s Rep 601 and RTS v Molkerei [2010] UKSC 14. The parties had agreed the fee construct on 19 November 2019, but the legal terms remained open, including the indemnity and termination provisions. The negotiations were being conducted in separate commercial and legal workstreams. The parties objectively intended that the complete terms would be recorded in a signed engagement letter. No binding contract was therefore formed.
2. Public offer trigger. The words requiring Project Zodiac to be aborted as a result of a public offer required an active project to be brought to an end by the offer. A project that had already been paused and had become only a theoretical possibility was not aborted when a later public offer further reduced its prospects. The trigger was not engaged.
3. Authority and estoppel. The court observed that, had the engagement letter been signed by the relevant CFO, the AA would have been bound by ostensible authority. The absence of signature remained material. Estoppel could not supply the absence of an objective intention to contract: if the parties intended immediate legal relations, no estoppel was needed; if they did not, estoppel could not create the missing agreement.
4. Restitution. The facts did not support an implied contract for a reasonable fee because the parties were negotiating an agreed remuneration, not leaving remuneration to be assessed as reasonable. However, the services were requested in anticipation of a contract, and the risk that no engagement letter would ever be agreed fell outside Fenchurch’s assumed risk. AA received a valuable benefit by obtaining the information and optionality needed to decide whether to proceed with the sale. The enrichment was unjust.
5. Quantum and order. The benefit was valued by reference to what a reasonable person in AA’s position would have paid for the services, having regard to the contingent nature of the market. The transaction did not proceed, and the public offer trigger was not engaged. The appropriate value was £350,000 plus expenses of £16,276.06, excluding VAT. Judgment was entered for Fenchurch, with VAT, interest and costs reserved for further submissions.