BVM Management Limited v Roger Yeomans T/A The Great Hall at Mains and Another [2011] EWCA Civ 1254
BVM provided catering and events management services. Yeomans owned The Great Hall at Mains where he operated an events management business. He had a contract with a company to provide catering services which was terminable on three months' notice. The original company was experiencing internal problems, so one of the directors of that company, Mr Middleton, approached Yeomans with a view to setting up a new company to take over the events management. Drafts of a new agreement were circulated between the parties. They all contained a provision for termination on three months' notice, something that was in the previous contract. No one said anything about this provision at meetings between the parties. However, Mr Middleton asked for some security of tenure and it was agreed that the contract should be for 2 years. In the end, the services started, but the contract was never signed. The parties fell out and the question which arose was whether the contract could be terminated on three months' notice.
The Court of Appeal held the County Court Judge had been entitled, on the evidence, to reach a finding of fact that the parties had agreed that the three months termination provision had been part of the contract. The Judge found that Mr Middleton thought that there was a two year term without right to terminate; Yeomans thought that there was a right to terminate on three months' notice. These two cancelled each other out. The Judge was entitled to reach a finding that the three months' termination provision was part of the contract concluded orally and that it was consistent with Mr Middleton's desire for some security because he had the agreement to a two year term for the contract. There was no legal difficulty in having a contract for a period of two years with a provision that it could be terminated by either party on three months' notice. The two year period would be the maximum period of the contract, but both sides would have the right to end it (on giving proper notice) at an earlier stage.
There is no new law in this decision, but it does starkly indicate problems that can arise where a contract is not documented. Drafts had been exchanged – the mere fact the termination clause was present was sufficient to incorporate it into the oral agreement, even though one party believed there was no right to terminate early.
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