News & Blog

The £15,000,000 Hangover – be careful what you say, it may become binding

When billionaire Mike Ashley was getting the round in at The Horse and Groom in January 2013 he probably did not expect his bar tab to come to £15,000,000.00. However, the boozy session has led to Ashley becoming entangled in costly legal proceedings with a former executive, Jeff Blue, of his company Sports Direct. 

Jeff Blue argues that during a drunken ‘lock in’ the founder of Sports Direct agreed that he would pay a £15,000,000.00 bonus to Blue were he to double the company’s then share price, from £4.00 to £8.00. Ashley has argued that due to how intoxicated he was and the circumstances surrounding the discussion, it was purely “banter” and that he did not intend to be legally bound by his word. Indeed, stories of Ashley vomiting into a pub fireplace and having regular binge drinking sessions have been commonplace in most newspapers for the past week. 

What is clear under English contract law, and its common law foundations, is that a verbal agreement, except where excluded (such as transfers of land), can be legally binding; as long as the core elements of an agreement exist, namely offer, acceptance, consideration and capacity. In this case most of those elements are present however questions remain in respect of Ashley’s capacity. A party to a contract must have the capacity to agree to the arrangement, and it could be argued, as Ashley’s legal team has done, that the required level of capacity does not exist where one party is heavily intoxicated. 

The counter argument made by Blue is that it was the norm for Ashley to carry out his business in less than traditional locations, such as casinos, restaurants and pubs. Blue and his representatives have painted the picture with tales of other business activities that Ashley has carried out under these circumstances; featuring one story where Ashley and an analyst engaged in a drinking competition that resulted in Ashley vomiting into a fireplace (to the applause and laughter of his senior management team). Another anecdote told by Blue is one where Ashley, in the process of a long drinking session, agreed for the transfer of a player to his football club, Newcastle United.

It will be interesting to see how the High Court decides on the facts of this case, in particular the capacity issue, but in any event it is a strong reminder that oral discussions can lead to a binding verbal agreement and should provide comfort to those who have acted in reliance of a verbal statement. In such circumstances it should be remembered that there may be contractual force to the verbal statements made and that this may afford one party options to enforce a valid agreement against the other regardless of the lack of a written contract. It should, of course, be noted that a written agreement is the best form of protection and evidence available and would have prevented these legal proceedings from unfolding in the first place.

For all your personal legal needs visit our sister firm Acumen People

Website More info & booking
Contact ACUMEN
Need more information? Get in touch.
What our clients say
"...we have used Acumen Business Law several times, not once have they failed to deliver the right result. Highly recommended."
Kevin Byrne | Checkatrade
"Its refreshing to have a new law firm on the scene which is challenging the more formal companies. I found Acumen very friendly, professional and thorough in my first dealings with them."
Nigel Pamplin | Prime Education
"...Acumen has proven to be an essential and trusted partner for the last 4 years. Through their advice, assistance and top quality work has consistently delivered excellent ROI..."
Robin Scott | Makemedia
"Tegen Ltd has used Penina’s services for a number of our businesses legal requirements. We thoroughly recommend the services and advice that she and her team provide."
Richard Smith | Tegen Ltd
"I have had need of Josh's and Acumen's services over the past couple of years, but fortunately I couldn't be in better hands. I couldn't give a stronger recommendation."
Jonathan Glendenning | Summer Rain Films Ltd
"I have used ACUMEN BUSINESS LAW on many occasions since switching to them. They’re a real breath of fresh air and they get the job done. I just wish I had come across them beforehand."
Joakim Roth | Light Foot LED
"We have used ACUMEN BUSINESS LAW and have been absolutely delighted with the level of understanding of our business that they have..."
Jon Clayson | Hunters Letting Limited

We use cookies on our website to improve your browsing experience.

By continuing to browse this website, we assume that you are happy for us to use cookies. To find out more please click here.