The recent dismissal of an appeal by “high class escort”, Madison Ashton, in the New South Wales Court of Appeal should be a salient reminder to those of us in business of the need to ensure that any contract we enter into is properly constituted, and recorded, so as to enable it to be enforced.
At issue in the case of Madison Ashton, were promises that were allegedly made to her by billionaire cardboard king, Richard Pratt, before he died. Ms Ashton alleged in her claim that she had been promised financial support if she remained his mistress, even though nothing was ever put in writing or signed by the parties.
The New South Wales Court of Appeal found that any promises of financial support did not create a binding contract and would, in any event, have been void as being against public policy. It was found that the arrangement between the late billionaire and his mistress failed to spell out important terms that would be required in order for there to be a contract (assuming that one could exist without being void on public policy grounds), such as the duration of the arrangement and how the promised trust to provide financial support would be created.
Whilst the case may be a somewhat extreme example of the difficulties in proving an oral contract, it highlights the need for contracting parties to:-
- Ensure that there is agreement reached on all important terms;
- To ensure that there is “consideration” for the exchange of promises in the form of money or money’s worth;
- Preferably, to then ensure that there is some documentary record of the agreement which demonstrates that the parties have in fact reached agreement and intend that the arrangement be legally binding.
A simple promise, on its own, will not necessarily create a binding legal relationship, but if terms are set out in writing and signed by the parties, then there is a far greater prospect that a Court will enforce a contract if ever becomes necessary to do so.