Benedetti v Sawiris & Ors [2013] UKSC 50 (17 July 2013)
Citation:Benedetti v Sawiris & Ors [2013] UKSC 50 (17 July 2013)
Rule of thumb:If no price is agreed under a contract, and it starts up anyway, is it a valid contract? Yes, if the contract starts it is implied that the going market-rate is the price that applies under the contract.
Background facts:
The basic facts of this case were that Benedetti had brokered a company takeover deal without agreeing a written contract for doing so, instead relying on an oral contract. After brokering this deal Benedetti was then not paid for organising this deal so Benedetti took the matter to Court.
Parties argued:
Benedetti argued that it if no price was agreed in a contract it was an implied term that the person was paid at the market rate. Sawiris argued that as there was no formal process of agreeing a contract price it was implied that Benedetti was helping them voluntarily and acting pro bono. It was further argued by Sawiri that people cannot just come along, be friendly, advise and help out, and then expect to be paid for this. If people are to get paid there has to be a formal declaration about this.
Judgment:
The Court upheld the arguments of Benedetti. If people start doing work without being stopped an oral contract is formed and it is an implied term they will be paid at the market rate. Sawiris was orderred to pay Benedetti for the consultancy services he provided. The Court held that Benedetti had to be paid at the market rate for these brokerage services and that the principle of unjustified enrichment had been breached.
Ratio-decidendi:
‘34. [...] in a case of this kind, (i) the starting point for identifying whether a benefit has been conferred on a defendant, and for valuing that benefit, is the market price of the services; (ii) the defendant is entitled to adduce evidence in order subjectively to devalue the benefit, thereby proving either that he in fact received no benefit at all, or that he valued the benefit at less than the market price; but (iii) save perhaps in exceptional circumstances, the principle of subjective revaluation should not be recognised, either for the purpose of identifying a benefit, or for valuing a benefit received’, Lord Clarke , 'the starting point ... is the market price for the services', Lord Clarke
Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.