You might not expect a member of Russia鈥檚 super-rich to speak the same language as a British builder. But when it came to deciding if the oral agreement they had was a binding contract, it was the English court that had the final word
鈥楳r Evans aspired to become a property developer on the strength of having successfully developed two flats in the Portobello Road, west London, which he had completed to a high standard,鈥 said the judge. Hmmm. Can you hear a downfall coming? Oh, there is nothing wrong with starting out on your own. Sir Alan Sugar started out with a few bob selling car aerials out of the back of a van. He aspired to become well off; now he鈥檚 worth 拢800m.
Mr Evans, on the other hand, is at square one. His client was a Russian with the lovely name of Olga Mirimskaya. 鈥淭his lady,鈥 said the judge, 鈥渋s a highly intelligent and successful businesswoman with a commanding presence.鈥
Can you tell what鈥檚 coming? 鈥淪he expects complete obedience and prompt results from her staff members and is used to retaining a lot of information in her head 鈥 But she does not remain in any one place very long at any one time.
鈥淪he is used to negotiating deals but, coming from her culture, does not expect to enter into binding legal agreements without formal contract documents being in place.鈥 And given she had bought a property in Hammersmith and wanted to do it up as a present for her son鈥檚 18th birthday, Mr Evans had his hands full as Olga Mirimskaya鈥檚 builder.
Now, if I was asked what the chances were of these two having a successful construction contract relationship for a job worth upwards of 拢1m, I would have to guess pretty damn low.
Mr Evans is the sort of chap who deals with things, how shall we say, informally. Putting matters into writing wasn鈥檛 high on his agenda. He never kept a diary or even notes of meetings. His memory is a bit skinny. Documents are few and far between. His customer was also often far between, 鈥渁n extremely wealthy businesswoman who spends a great deal of time travelling on business and between her various homes and her yacht in the Mediterranean鈥.
Anyway, the two got together to have a dispute. It was all about whether a contract had arisen, what its terms were, who was in breach, what damages the innocent party was entitled to and so on.
That鈥檚 all very interesting, but more interesting is that phrase about our Russian client 鈥渃oming from her culture鈥. It鈥檚 ever so important because it鈥檚 so ordinary nowadays in the UK to find that your customer or builder or grocer comes from a different culture and is so easy to misunderstand.
Your customer nowadays is just as likely to have been coaxed by his mum to behave in a way that is quite different to what your mum told you
Olga Mirimskaya is absolutely convinced that her word is not her bond. She is amazed at the suggestion that she had entered into a binding contract orally. She could not accept that, without formal documents, she was bound in English law.
Here is what she said to the judge: 鈥淚n my culture, the verbal agreement and the verbal promise does not mean anything. It is nothing.鈥 And I believe her. When this highly successful woman says a verbal promise does not mean anything, she means it honestly.
It鈥檚 the way she was brought up.
Mr Evans, her British builder, or budding property developer, doesn鈥檛 see the force of paperwork. He doesn鈥檛 see the need to say 鈥渟ign here, guv鈥 or to record in writing when his customer promised to pay several hundred thousand pounds by set dates.
He didn鈥檛 understand that it was necessary because of his customer鈥檚 culture. And then when the cash was only partly paid and it affected his ability to plan ahead, and he got behind with the programme, his client being a person of commanding presence, being a person expecting complete obedience and prompt results, promptly ejected Mr Evans from her Hammersmith property. The High Court came to help.
The English court is highly respectful of oral agreements. They are every bit as binding as commandments carved in stone from the great steppes of Russia. So the court saw the story Mr Evans鈥 way.
But weigh all this carefully: a customer on your doorstep is nowadays just as likely to have been coaxed by his mum to behave in a way that is quite different to what your mum told you.
Olga Mirimskaya honestly believed in her rules of conduct, the principles she learned at her mother鈥檚 knee. She repeats them to herself while travelling between her various houses and her yacht. 鈥淒ictum meum pactum,鈥 I say. My word is my bond.
Postscript
Tony Bingham is a barrister and arbitrator
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