Endcape Ltd v Musgrave Generators Ltd

[2022] EWHC 2972 (Ch)

Endcape made a claim for damages alleging breaches of contract and trespass. One of the issues was whether or not there were two complete or legally binding contracts. The Judge referred to the following three principles:  

(1) If parties reach an agreement on essential matters of principle but leave important points unsettled so that their agreement is incomplete, it is not binding.

(2) Where parties have agreed simply to negotiate, that is not a binding contract because it is too uncertain.

(3) Where an agreement fails to satisfy the requirements of certainty, that defect cannot be cured by implying a term that the parties must continue to negotiate in good faith.

When assessing the witness evidence, the Judge noted that an honest witness can nonetheless be a mistaken witness. Here, one of the claimant’s witnesses was described as an honest witness albeit one whose memory failed them on occasions. The Judge considered that the witness was plainly doing their best to recall all of the various matters in dispute; however, he accept that his memory was not accurate or consistent on all aspects of the claim. In addition, their recollection was supported by significant amounts of contemporaneous documentation. A second of the claimant’s witnesses was “plainly angry and irritated when giving” evidence about what had happened. They were, however, consistent in their recollection about events and acknowledged when they simply could not recall specific details. 

On the other hand, the evidence of the key defence witness was not accepted, and the Judge said that it was: “not credible that [the witness was] as forgetful as he contends. Alternatively, if he is that forgetful, it is not credible that a businessman … would not ensure that events concerning contracts and other important matters were recorded in writing at the time.”

That all said, in relation to the first contract, the Judge held that there was not an agreement as alleged. The evidence of the Claimant was not adequate to establish, on the balance of probabilities, that there was a concluded agreement. The key witness did not contend for an agreement as was pleaded, either in their written evidence or oral evidence. The position expressed was inconsistent with the pleaded case. The result was an absence of any degree of consistency as to what the asserted the terms were. 

However, with the second contract, the Judge did find that there was a valid agreement. It was a simple oral agreement but nonetheless one which was concluded and enforceable. All of the contemporaneous correspondence went to support the claims of the Claimant. There was “literally nothing” in that documentation to support the Defendant’s position. As a final point, the Judge noted that, in pre-action correspondence, the existence of the agreement now denied by the Defendant was conceded by the Defendant’s then solicitors. 

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