The High Court has found that no legally binding agreement was entered into in the course of oral discussions relating to the supply of certain specialist services by the claimant to the defendant broker in the financial services industry: JAS Financial Products LLP v ICAP Plc [2016] EWHC 591 (Comm).

Although the decision is necessarily very fact-specific, it gives an interesting example of how the court looks at the question of whether a binding agreement has been reached. It underlines the importance of making clear when negotiating a contract, whether in writing or orally, whether there is an intention to create a binding agreement or whether the negotiations are subject to contract.

Chris Bushell and Maura McIntosh outline the decision in more detail below. For more information on how the courts determine whether a binding agreement has been reached, see our guide When do you have a binding contract? It may be more (or less) often than you think, which forms part of our series of contract disputes practical guides.


The claimant alleged that it had entered into a binding agreement to provide "middle office support" to the defendant's Structured Products desk (essentially bolstering risk management, legal, operational and compliance functions) for a period of 24 months. The defendant denied that a binding agreement had been reached.

It was common ground that in late 2007 / early 2008 the claimant and the defendant were in discussions about a possible engagement to provide middle office support. On 3 March 2008 the claimant set out a proposal in an email to the defendant. There was a meeting on 13 May 2008 between two representatives of the claimant and two representatives of the defendant, at which they went through the 3 March email point by point. No changes were made apart from the date on which the engagement was to commence. Handshakes followed.

The claimant sent the defendant an email on 16 May 2008 stating:

"I have set out below the terms … agreed in the meeting … on Tuesday [1]3[th]. … I am happy to sign whatever additional documents ICAP requires to record this agreement."

The email went on to record various services the claimant would provide in return for a monthly fee of £50,000 plus VAT and £2 million of credit for facilitation fees annually (ie credit in respect of fees the claimant would otherwise owe the defendant to facilitate the claimant's trades).

The question for the court was whether a binding agreement had been reached at or immediately after the 13 May meeting.


The High Court (Mr Justice Knowles CBE) found that no binding agreement had been reached. The legal principles were not in doubt; whether or not a binding agreement had been reached depended on an examination of the parties' words and conduct to determine whether, looked at objectively, they intended to create legal relations and agreed all the essential terms.

Three of those present at the meeting on 13 May recalled Mr Bray for the claimant saying at that meeting that the parties were "done" or words along those lines. However, the judge accepted the evidence given by Mr Smith of the defendant that he had challenged the statement and said things had next to go to the lawyers. The judge said he was quite sure Mr Smith's challenge made it clear to all, and would have made it clear to an objective observer, that although all points had been agreed in the sense that no issues remained outstanding, the stage of a legally binding agreement had not been reached. In other words, non-binding heads of terms had been agreed, but the parties had not yet entered into a binding legal agreement.

In the judge's view, the parties had not at any stage contemplated that a legally binding agreement would be entered into orally. Although reference had been made at trial to trades in the defendant's area of business being concluded orally, this was not such a trade. It was a proposed 24 month hiring of services to enhance oversight and control risk.

At no point had the parties entered into an agreement in writing. Even if the emails of 3 March and 16 May were capable of acceptance by, for example, an email in response, they were not so accepted. The parties might not have contemplated elaborate documentation, but a confirmatory reply was the minimum contemplated.

The judge was not persuaded by Mr Bray's evidence that the additional documentation contemplated was simply to record the agreement already reached. When Mr Bray was asked in cross-examination why he had later spoken of trying to "market" to the defendant's general counsel if there was already a binding legal agreement, he "did not have a convincing answer".