Key Points

  • Exchanges between the bank and the customer did constitute a binding agreement
  • Appellate court not entitled to revisit findings of fact of the first instance court

The Facts

In 2007, Mr Carlyle approached RBS for funding to both acquire and develop land at Gleneagles. Mr Carlyle made clear in conversations that funding was required for both the acquisition and the development of the project given a buy-back clause in the sale documentation meaning the seller could repurchase the land if it were not developed promptly.

The bank confirmed in a phone call that funding was approved and provided the acquisition finance but refused to advance funds for development and subsequently demanded repayment of the loan. Mr Carlyle brought a counterclaim for breach of contract in failing to provide development funding.

The Decision

The Scottish court of first instance held that the Bank had given a collateral warranty to Mr Carlyle binding itself to provide funding for the development of the project. The Scottish appeal court disagreed concluding there was no binding agreement in relation to the development funding on the basis that discussions were simply statements of future intentions and specific terms had not been agreed.

The Supreme Court reinstated the first instance decision holding that the appeal court did not have jurisdiction to overturn its findings of fact that the bank intended to make a legally binding promise. Given those findings, the court was required to look for ways to give effect to that promise.


While fact specific, this judgment makes clear that banks can be held to have orally entered into binding agreements with their customers despite no formal loan documentation being signed.

Carlyle v Royal Bank of Scotland plc [2015] UKSC 13