Agreement by conduct: Reveille Independent LLC v Anotech International (UK) Ltd [2016] EWCA Civ 443

Is an unsigned agreement binding where a written offer states it is not binding until signed and one party has not signed it?

The facts

Reveille was a US television company that sought to enter into a binding contract with Anotech, a cookware company. The intention was for Reveille to license its intellectual property rights in the brand “MasterChef” for the marketing of Anotech’s products, which were to be used in the television programme. Issues arose over a possible branding conflict concerning the use of the words “Master Chef” in relation to Gordon Ramsay and negotiations over the details of a long form of the contract broke down.

Reveille sought performance of the agreement, relying on its offer (the Deal Memo) that it argued Anotech had accepted because Anotech had signed and returned it to Reveille. However, the Deal Memo stated that it would not be binding on Reveille until signed by both parties and Reveille had failed to sign it.

The High Court found that Reveille had accepted Anotech’s counter-offer by conduct as it had performed all of its obligations set out in the Deal Memo and both parties had acknowledged the Deal Memo as being binding in correspondence.

The decision

• The Court of Appeal upheld the High Court and found that a binding agreement had been formed. It based its reasoning on the following key points:
  it is established law that a party can waive a prescribed mode of acceptance if it acquiesces in a different way, so long as that acceptance does not prejudice the other party
• Anotech had not been prejudiced by Reveille’s acceptance. Anotech argued that the absence of Reveille’s signature was prejudicial to it because it gave rise to uncertainty over whether a contract was formed. The Court disagreed and said that the only uncertainty arising from this was the precise date on which the contract was made. As Anotech was receiving all the benefits of Reveille’s performance of the Deal Memo, its position had not been prejudiced
• the subsequent conduct of the parties after the date on which the contract was made was relevant in confirming their beliefs that there was in fact a binding contract.

Why is this important?

This decision is another example of the Court’s approach to party autonomy and the overriding of formality provisions. It is an important reminder that a prescribed mode of acceptance of an offer can be waived, and that the Court’s guiding principle when deciding whether a contract has come into existence remains “the reasonable expectations of honest sensible businessmen”.

Any practical tips?

Continue including contract wording that prescribes a mode of acceptance as it is helpful evidence of the parties’ intentions. But remember that these requirements could be waived if the business performs the substantive obligations set out in the offer, even if the document is unsigned and other formalities have not been completed.