My supplier claims we made a deal over the phone but I disagree. Who’s right? Fraser McKeating writes for The Times
09 August 2021
One of my suppliers says we reached a deal but I don’t think we did. It was all done over the phone so I don’t have paper records. What can I do?
A: While most contracts are recorded in writing, at least in part, it is possible to form a binding contract by way of a verbal conversation. That could be over the phone, via a videocall or, now that restrictions have been eased, face-to-face.
Most of the time it will be clear when negotiations have matured into a binding deal. However, on occasion, that might not be the case.
Whether a contract has been formed will depend on what was said between you and the individual representing your supplier in that phone call. Think back and note down everything that you can remember about what was said on both sides.
Even though you say that you don’t have any paper records, it’s worthwhile checking thoroughly for any follow-up emails, texts or other messages which may refer to that conversation. Those documents could be highly relevant. A contract could have been made partly over the phone and partly in writing. If so, any communications between you and the supplier could well show what was (or wasn’t) agreed. At the very least, they may back up your side of the story of what was said on the phone.
There are certain set ingredients that have to be present to create an enforceable contract. If the supplier offered you goods at a fixed price, which price you accepted and it was clear who would do what and by when, then there may well be a binding contract in place.
Once you’ve carried out the above steps, you’ll be in a position to respond to your supplier. If you consider that there was no contract, then say so. If you think that a contract was formed but on different terms than the supplier is stating, then you’ll need to spell that out and explain why. Your response will be informed by how important the commercial relationship with that supplier is to you and your business.
In order to avoid uncertainty in the future, it is best to ensure that all agreements are recorded in writing wherever possible, whether that be in a formal written agreement, a purchase order, or even an exchange of emails. The nature of the deal will dictate what’s appropriate. Having the terms set out in writing will greatly reduce the scope for any disagreement about whether there is a contract or what its terms are.This article was first produced for The Times Enterprise Network. Please note this article is behind a paywall.