There have been a number of famous historical quotes about the strength and honour of a verbal agreement including:
- An honest man’s word is as good as his bond
- A man’s word should be as good as his bond
You also still hear people saying that “it was agreed on a handshake and nothing more was required”. All very honourable but does this hold good as we approach 2016?
For a start, half of our readers might say that the above quotes are a bit sexist and outdated now and that the quotes should be that a person’s word is as good as their bond. Putting equality issues to one side, what about the principle?
The legal point is sound. A verbal agreement can form the basis of a contract which can be relied on and can form the basis for a breach of contract claim if the promisor defaults. However, verbal agreements tend to cause all sorts of problems.
Over the years I have had many cases where witnesses on both sides have sworn on oath to tell the truth and yet the recollections of what was said or agreed on a given date (sometimes not that long ago) have been very different. In some cases, there might have been a misunderstanding or loss of memory. In other cases, the reality has been that one of the witnesses has simply not been telling the truth. So, the first (and obvious) practical problem is that people can choose to not remember or distort what was agreed. You then have a situation of one person’s word against another.
The next problem is that verbal agreements are sloppy and open to misinterpretation. As a lawyer who takes cases to trial, I want to see the evidence. I am happy when I have a piece of paper which supports my client’s case. Verbal agreements provide no certainty and can seriously backfire for one or more of the parties. A good example of this is the recent case involving Sepp Blatter and Michelle Platini. The story goes something like this:
- Platini agrees to carry out consultancy work for FIFA in or around 1999. There appears to have been a limited written agreement made at the time.
- Platini allegedly carries out work in the period up to 2002.
- Blatter agrees to pay a huge sum of money to Platini (2 million Swiss francs). However, there is no written agreement in relation to key terms such as:
- How much Platini will be paid?
- What precisely he will do to earn this money?
- When he will be paid?
- In 2011, Platini is paid a cool £1.35 Million on the basis of the alleged verbal agreement.
- Blatter becomes public enemy number 1 and his private world is looked at rather closely by US and Swiss authorities.
- The FIFA Ethics Committee takes action and decides in December 2015 that the payment to Platini had no legal basis in the written agreement signed between both officials in 1999. Platini and Blatter’s assertions of an oral agreement are determined to be not convincing and are rejected by the Ethics Committee.
The upshot of this is that Blatter and Platini are suspended from football for 8 years and the payment is called a disloyal payment. Blatter’s reputation was already pretty much shot but Platini had hopes of taking over from Blatter at the helm of FIFA. Now, Platini’s reputation is tarnished and his ambition has been thwarted.
Should we have sympathy for Platini? My instinct says no. Whatever happens, he has acted foolishly. If he was due to be paid £1.35 million for consultancy services then why was this not written down? Well run commercial organisations do not agree to pay people on the basis of a verbal agreement and well organised individuals do not agree to carry out work unless the payment terms are clearly stated. It’s a bit of a mess and a sad end for Platini (if this is the end). Platini was a football player who played with rare flair and who was a person who had widespread support and respect (including from the English FA).
The moral of the story is a simple one. Get it written down and get some decent advice if you’re not sure. If Platini had done this then he would be on his way to fulfil his ambition at FIFA.