UK: Oral Contracts: Deal Or No Deal?

Last Updated: 23 August 2012
Article by Tom Holroyd

Sadly for Noel Edmonds, it was no deal. Noel didn't record his contract with his developer friend in writing. The developments didn't go well and the house party ended in litigation.

Noel argued that various important terms had been said but never recorded. The Court's view? Noel's version of events didn't stack up. The Court preferred the written word. The developer friend won and Noel picked up the costs bill. His very own Gotcha.

Tom Holroyd takes a look at why this case serves as a poignant reminder to properly record deals in writing.


Poor old Noel Edmonds. He just seems to attract disputes. You'd have thought the "Blobbygate" affair with Lancaster City Council in 2003 would have put him off. But alas, no. Here's what happened this time.  

Noel had a close friend; Mr Ulrik Larson. Ulrik was a property developer and Noel is the chap from the telly. Noel and Ulrik decided to go into the property business together. They became involved in two properties; "Wood House" and "St Serf".

Wood House

Wood House was a grand country estate, but it was in a bad way. Ulrik thought it could be refurbished, with other properties being built in the grounds. Ulrik and Noel smelt a profit and bought the place in Noel's name in 2006. It cost £2.1m.

To fund the purchase, Noel borrowed £1.6m from the banker. As usual, the banker took a first charge over Wood House to secure the loan. Noel then put in £300,000 of his own money.

Ulrik also put in £300,000, but borrowed from his banker. Ulrik's banker then took a second charge over Wood House to secure its loan. For the benefit of the two bankers, a priority deed recorded that Noel's banker's charge ranked ahead of Ulrik's banker's charge. 

One small problem though: Ulrik and Noel didn't bother to record any of the terms of the arrangement between themselves. Some form of "joint venture" was discussed but never formalised. It seems clear that Ulrik was supposed to try to get the planning consents needed to turn the Wood House estate into something profitable. That was about all that was agreed; none if it in writing.  

They probably would have worked something out if the development of Woodhouse had gone to plan. It didn't go to plan. The development was a non-starter commercially. The planners didn't like the idea of 25 houses being built in the Grade I listed gardens of the estate. Noel ended up selling Wood House at a loss. After he'd redeemed his £1.6m loan and paid Ulrik his £300,000, Noel only got back £52,000 of his £300,000. He'd also incurred a lot of cost just maintaining the place.

Inevitably, Noel and Ulrik fell out over who should bear the losses. Noel sued Ulrik. The main thrust of Noel's case was that, before the bankers' priority deed was signed, Ulrik had agreed that Noel would get his £300,000 back before Ulrik got his £300,000 back. Noel therefore sued for his £300,000 and a contribution to the maintenance costs.

No deal, said the Judge. The Judge couldn't agree with Noel's version of events. He found it inconceivable that Noel would have freely executed the bankers' priority deed if there truly had been some prior agreement that Noel would get his £300,000 before Ulrik. Noel had to bear all the losses on the sale price. As is so often the case, the Judge preferred the written word over a vague oral statement.

Gotcha, said Ulrik. Indeed, he got his £300,000 but he did have to make a further contribution to the maintenance costs Noel had incurred.

St Serf

Noel needed a new family home. In 2006 he bought a nice pad in Exeter called St Serf. St Serf was a bit run down so Noel got Ulrik on the case (they were still friends at this time).

It was agreed that Ulrik would undertake a full scheme of renovation. Noel didn't need to engage a main contractor and professional team himself as Ulrik was to manage all that. In essence, it was akin to a design and build arrangement, with Ulrik as the D&B contractor and Noel the employer.

One small but familiar problem: the chaps didn't bother to record anything in writing regarding this arrangement, including whether Ulrik was to charge any mark-up on cost for his services.

Things went smoothly enough at first. Ulrik simply submitted an invoice each month for payment. Noel then paid it without demur. However, when things got heated over Wood House, Noel started to question the St Serf invoices, particularly in relation to whether Ulrik was charging a mark up. The payments to Ulrik stopped. Ulrik continued the work nonetheless. 

When Noel sued Ulrik over Wood House, Ulrik counterclaimed for the costs of completing St Serf, including a mark up to cover his services. Noel argued that Ulrik had agreed to perform the services at no cost because "it was in the spirit" of their joint venture. Ulrik said this was nonsense and nothing like that had been agreed.

Noel had bet on the wrong box again; the Judge didn't agree with him. Although nothing specific was agreed in terms of Ulrik's fees, the Judge simply couldn't see why Ulrik, as a businessman, would have agreed to provide the services for free. It made no commercial sense and in the absence of any written agreement recording the alleged freebie, the Judge favoured the commercial approach.


Noel had lost on both the Wood House and St Serf claims. As usual in the English civil court system, the loser pays the winner's costs.

The costs were high. All that oral testimony and lawyers' argument over the terms of what was and wasn't agreed cost a fortune. Rumour has it that Noel must pay £175,000 towards Ulrik's legal costs. Oh, and Noel's own legal costs are thought to be around the £500,000 mark. A victim of his own Gotcha.     

Lessons learned

When the going is good, disputes are less common. Problems tend to get washed away in deals funded by the profits on the job. That's what Noel and Ulrik must have had in mind. They thought the Wood House development was a dead cert. They could afford to sort out the money later. They were wrong and sorting out the money turned into an expensive mess.

When the going isn't so good and the profit not so healthy, disputes are far more likely as those involved tend to look for excuses not to pay. It is in those instances that a good, robust written contract will come to your rescue. Having a robust contract increases certainty; the parties know what they are getting and when. It leaves less wiggle-room for the party looking for excuses. 

A sure-fire way to increase the likelihood of a dispute is to fail to properly record what has been agreed. This way, no one has certainty and the non-payer has the wiggle-room he needs.

Noel has also neatly demonstrated the Courts' view on oral terms. Unless you have robust and credible witness evidence to support an alleged oral term, don't expect it to prevail over any commercially sound written agreement. Oh, and if you do need to argue an oral term, you best grab a grand, quite a few grand in fact. Running a case based on oral terms is notoriously expensive, as Noel found out. Better to just take the time to record the agreement properly.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.