A recent decision of the High Court (Hennigan v Roadstone Woods Ltd  IEHC 326) to award damages for breach of an oral contract demonstrates that the court will examine all of the surrounding circumstances and the corroborative evidence produced to the court to determine whether the parties intended to create a legally binding contract.
Details of the case
- The Plaintiff was an independent contractor who was engaged exclusively by the defendant in June 2007, when, he claimed, he was approached by the production manager of the defendant’s quarry and induced, by promises of increase in his hourly rate and assurances of future work, to enter into a leasing agreement for an expensive loading shovel.
- The Plaintiff gave evidence that it was necessary for him to have five years guaranteed work in order to comply with financial obligations under the leasing agreement and that he discussed these requirements with the production manager and again in a separate meeting with the quarry foreman and location manager.
- The Plaintiff claimed that at the end of that meeting he said to the location manager “It is a five year term- are you agreeing on that?” to which the location manager replied “Go away and purchase your machine. There is no problem”. He subsequently confirmed an agreed increased rate of €41 an hour with the production manager. The Plaintiff claimed that on the basis of these assurances he entered into a leasing arrangement for the purchase of the loading shovel to be repaid in 60 monthly instalments commencing on 25 July 2007. In December 2009, due to the economic downturn the Plaintiff was told there was no further work for him. The finance company repossessed the machine and sold it leaving a sum outstanding of €60,000. The Defendant denied encouraging the Plaintiff to purchase the machine and denied any agreement for a five year period of work at €41 per hour.
- The Court found that the Plaintiff had acted on the assurance given by the location manager and accepted the evidence of the Plaintiff over the evidence of the defence witnesses.
- The Court found it was clear that the Plaintiff was a careful man who wanted to ensure that, before committing himself to purchasing a new loader, he had some guarantee that he would continue to be used as a contractor for the period he had to repay the purchase price of the loading shovel. The increase in hourly rate to €41 per hour was consistent with his evidence.
- The Plaintiff was awarded damages of €60,000 in respect of the balance of the monies owed on the equipment together with the sum of €200,000 for the remaining two and a half years of the agreement.
What lesson can be learned from this case?
This case highlights the importance of recording the terms of every contract in writing, as oral evidence can always be contradicted by other oral evidence and can make it difficult to defend a claim.