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Imortance of recording Agreements in writing

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19 February 2009

Importance of having agreements recorded in writing

Yeoman's Row Management Ltd v. Cobbe.1 [2008] UKHL 55

The above case highlights the importance of recording an agreement in writing. If a full agreement cannot be reached then at least some provisional heads of terms or memorandum of understanding ought to be put in place so as to ensure there is some degree of certainty between the contracting parties. As a lawyer I cannot stress this enough.

In this case Lord Scott and Lord Walker made amongst other comments the following: (a) the House's concern to ensure certainty in commercial law by applying principles of law rather than subjective views of the merits; and (b) the risks for commercial parties in trusting to honour, or good will and leaving negotiations at the stage when no legally binding contract has been created.

I advise all clients to get the deal in writing or at least make sure that everyone appreciates the risks that are being run if this is not done.

What should you cover in a basic letter of intent?

This example is related to software development and is purely for illustrative purposes:

  • price to be paid, any extras. What will trigger a payment? Link to milestones or achievements
  • specification for the work, standards to be followed or maintained
  • scope of the work - any extras? Is there any form of support or maintenance? - is that included?
  • timelines and milestones for who is to do what and for when.
  • are any third party contractors involved? What is the relationship with them?
  • data protection - who is responsible for what, how will the data be kept, and will it remain within the EU or outside of this?
  • is there any form of acceptance testing?
  • hardware software requirements
  • period of warranty for the build
  • who will own the Intellectual Property Rights in what is created?

Once we have the answers to the above we will have a provisional agreement which will also serve to assist in drafting the main contract between the parties.

Izaz Ali (izaz.ali@lawdit.co.uk). Izaz Ali is a commercial lawyer who specialises in information technology law and intellectual property law with an emphasis on IT, escrow and buying and selling online businesses.


About the Author

Lawdit Solicitors offer services and advice for litigation, commercial contracts, Intellectual Property and IT legal agreements. We are experts in commercial law with a heavy emphasis on Intellectual Property, Internet and e-commerce law. Lawdit is a member of the International Trademark Association, the Solicitors' Association of Higher Court Advocates and we are the appointed Solicitors to the largest webdesign association in the world, the United Kingdom Website Designers Association.



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Article Published/Sorted/Amended on Scopulus 2009-03-08 15:33:09 in Legal Articles

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