Slipshod Execution of Contracts Can Come Back to Haunt You!

Slipshod execution of contractual documents can come back to haunt you, and that is one good reason why you should always have the benefit of qualified legal advice. In one case, the waters were so muddied that the High Court was unable to say, without hearing full evidence, whether a $6 million settlement agreement was worth the paper it was written on.

On the face of it, the document achieved a final settlement of a contract dispute between six shipping companies and a Nigerian oil importer. However, the only copy of it that had been found bore the signature of the importer alone. The companies sought summary judgment in respect of $5.8 million that was said still to be owing under the agreement, but the importer argued that it had not been properly executed.

The companies claimed that the document had been drawn up in two counter-parts, one of which had been signed on their behalf and the other by the importer, but that they had not taken a copy of their part of the agreement, which had been prepared by the importer's lawyers. That explanation was disputed by the importer, who claimed that the purported settlement was a sham that had been designed to deceive the companies' bank and that its formal execution had never been intended.

In rejecting the companies' application, the High Court found that neither side had the better of the argument as to whether the document had been validly executed. The evidence on both sides was unsatisfactory and, in those circumstances, a full trial of the action was required to resolve the issue. The importer's plea that the English courts lacked jurisdiction to hear the case was rejected.