What are words worth?

You might not expect a member of Russia’s super-rich to speak the same language as a British builder. But when it came to deciding if the oral agreement they had was a binding contract, it was the English court that had the final word

“Your customer nowadays is just as likely to have been coaxed by his mum to behave in a way that is quite different to what your mum told you”

“Mr Evans aspired to become a property developer on the strength of having successfully developed two flats in the Portobello Road, west London, which he had completed to a high standard,” said the judge. Hmmm. Can you hear a downfall coming? Oh, there is nothing wrong with starting out on your own. Sir Alan Sugar started out with a few bob selling car aerials out of the back of a van. He aspired to become well off; now he’s worth £800m.

Mr Evans, on the other hand, is at square one. His client was a Russian with the lovely name of Olga Mirimskaya. “This lady,” said the judge, “is a highly intelligent and successful businesswoman with a commanding presence.”

Can you tell what’s coming? “She expects complete obedience and prompt results from her staff members and is used to retaining a lot of information in her head … But she does not remain in any one place very long at any one time.

“She is used to negotiating deals but, coming from her culture, does not expect to enter into binding legal agreements without formal contract documents being in place.” And given she had bought a property in Hammersmith and wanted to do it up as a present for her son’s 18th birthday, Mr Evans had his hands full as Olga Mirimskaya’s builder.

Now, if I was asked what the chances were of these two having a successful construction contract relationship for a job worth upwards of £1m, I would have to guess pretty damn low.

Mr Evans is the sort of chap who deals with things, how shall we say, informally. Putting matters into writing wasn’t high on his agenda. He never kept a diary or even notes of meetings. His memory is a bit skinny. Documents are few and far between. His customer was also often far between, “an extremely wealthy businesswoman who spends a great deal of time travelling on business and between her various homes and her yacht in the Mediterranean”.

Anyway, the two got together to have a dispute. It was all about whether a contract had arisen, what its terms were, who was in breach, what damages the innocent party was entitled to and so on.

That’s all very interesting, but more interesting is that phrase about our Russian client “coming from her culture”. It’s ever so important because it’s so ordinary nowadays in the UK to find that your customer or builder or grocer comes from a different culture and is so easy to misunderstand.

Olga Mirimskaya is absolutely convinced that her word is not her bond. She is amazed at the suggestion that she had entered into a binding contract orally. She could not accept that, without formal documents, she was bound in English law.

Here is what she said to the judge: “In my culture, the verbal agreement and the verbal promise does not mean anything. It is nothing.” And I believe her. When this highly successful woman says a verbal promise does not mean anything, she means it honestly. It’s the way she was brought up.

Mr Evans, her British builder, or budding property developer, doesn’t see the force of paperwork. He doesn’t see the need to say “sign here, guv” or to record in writing when his customer promised to pay several hundred thousand pounds by set dates.

He didn’t understand that it was necessary because of his customer’s culture. And then when the cash was only partly paid and it affected his ability to plan ahead, and he got behind with the programme, his client being a person of commanding presence, being a person expecting complete obedience and prompt results, promptly ejected Mr Evans from her Hammersmith property. The High Court came to help.

The English court is highly respectful of oral agreements. They are every bit as binding as commandments carved in stone from the great steppes of Russia. So the court saw the story Mr Evans’ way.

But weigh all this carefully: a customer on your doorstep is nowadays just as likely to have been coaxed by his mum to behave in a way that is quite different to what your mum told you.

Olga Mirimskaya honestly believed in her rules of conduct, the principles she learned at her mother’s knee. She repeats them to herself while travelling between her various houses and her yacht. “Dictum meum pactum,” I say. My word is my bond.

Readers are invited to forward recent judgments for reporting in this column (with full acknowledgement) to: Tony Bingham, 3 Paper Buildings, Temple, London EC4Y 7EU. DX: 37164 Biggleswade

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