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Alleged oral agreement summarily rejected

In Parsadoust v Hanging Gardens Limited [2021] EWHC 1594 (Comm), Mr Justice Calver granted summary judgment on a claim to enforce a written call option over certain shares in Babylon Health, the digital healthcare provider.

He summarily rejected a defence alleging that, several years after the grant of the option, the parties orally agreed to vary the written agreement and that the alleged variations resulted in the Claimant losing his right to exercise the option.

At first glance, it might be assumed that a dispute about the conclusion of an oral agreement could only be resolved at a trial. But the distinguishing feature of the case was that the three telephone calls, during which the oral agreement was said to have been made, had been covertly recorded by the Defendant. The agreed transcripts of the calls were sufficient to enable the Court to determine on a summary basis whether the words spoken gave rise to a binding oral variation.

In deciding that no oral agreement was reached, the Judge rejected the Defendant’s submissions that the Claimant should be cross-examined at trial on his contemporaneous understanding of what was discussed during the telephone calls and what he intended various words to mean. The judgment is thus a clear example of the objective approach to determining whether parties have entered into a binding contract.

On 16 August 2021, Lord Justice Males refused permission to appeal, holding that it was clear that the question whether a contract had been concluded was objective and did not depend on the subjective intentions or beliefs of the participants. Since the relevant conversations were recorded, the Judge knew exactly what had been said, and the only question was whether, taking account of the relevant background, the Defendant had a real prospect of demonstrating that a contract had been concluded. He held that the Defendant had no such prospect.

Lord Grabiner QC, Conall Patton QC and Daniel Fletcher acted for the successful Claimant, instructed by Freshfields Bruckhaus Deringer LLP.

You can view the first instance Judgment here