Not worth the risk: a reminder of the danger of acting without a written contract

United Kingdom

The High Court examined the law on oral contracts and unjustified enrichment based on the principle of quantum meruit in the case of Moorgate Capital (Corporate Finance) Limited v H.I.G. European Capital Partners LLP [2019] EWHC 1421 (Comm). The Court took the position that a risk-taking party will not have an automatic right to payment for services undertaken in the absence of a binding contract.  As this is an English decision, it is not technically binding in Scotland but it is highly persuasive.


Moorgate Capital (“Moorgate”), a corporate finance advisor, alleged that they had agreed a retainer contract (the “Fees Agreement”) with H.I.G. European Capital Partners LLP (“H.I.G”), a private equity firm. The Fees Agreement is alleged to have been negotiated at a drinks reception hosted by H.I.G. Moorgate’s primary argument was that, at the reception, the representatives negotiated the Fees Agreement, under which, in consideration of the advisory services provided by Moorgate, H.I.G promised to pay Moorgate £1,000,000 in the event of the successful acquisition of Bezier Acquisitions Limited (“Bezier”) by H.I.G. Failing this, Moorgate sought a quantum meruit award of £1,000,000 on the grounds of unjustified enrichment for the services that it provided in connection with the Bezier acquisition.


Was there a contract? 

HHJ Keyser QC did not accept the existence of a contract based on a number of factors, including that:

  • It was unlikely that a high value retainer agreement was negotiated at a drinks reception. It was not only against social norms, but also against commercial practice for negotiations to take place in this forum.
  • Given the unusual circumstance surrounding the alleged contract, if the H.I.G representative had made such an agreement, he would have remembered doing so.
  • At the time of the event, H.I.G would not have held sufficient financial information on Bezier to make a reasonable estimation of what the equity value would be.
  • There was a lack of a written record of the contract and failure by both parties to engage their respective internal governance approval procedures.
  • Following H.I.G’s acquisition of Bezier, Moorgate failed to issue an invoice to H.I.G. Additionally, when H.I.G offered to pay £80,000, Moorgate did not refer back to the Fees Agreement. It was not until 6 years later that Moorgate sought payment based on the Fees Agreement.

Was there a valid claim on a quantum meruit basis? 

HHJ Keyser QC set out the three areas of dispute in respect of a quantum meruit claim: 

  1. the existence of enrichment;
  2. the existence of an unjust factor; and
  3. the valuation of any enrichment. 

The second limb, the existence of an “unjust factor”, was fundamental to Moorgate’s success. In determining whether an “unjust factor” existed, weight was placed on the fact that there was no reason to suppose that the parties acted in the mistaken belief that there was a contract between them. The Judge added that it was not the role of the courts to create contracts between parties and suppose that payment was intended in the absence of a contract. 

The Judge also noted that it was significant that Moorgate had kept its options open with other potential clients throughout the period for which payment is claimed. Moorgate’s behaviour did not indicate that it had been working on the assumption that the Fees Agreement would materialise. For example, Moorgate alleged that the parties had an exclusivity agreement, Moorgate undermined this themselves, given that they were in contact with other potential purchasers of Bezier. Moorgate were ultimately described as a “disappointed risk-taker” who took a calculated risk in the hope of eventual payment.


This case not only reinforces the importance of ensuring that proper contractual arrangements are in place regarding the provision of services and fees payable, but it also highlights the courts’ reluctance to interfere where a calculated risk taken by a party has materialised. 

When parties are in dispute over the existence of an oral contract, the court will look to a number of factors in determining the likelihood of either party agreeing to be bound by any agreement and their true intentions. However, while the specific factual matrix will always be determinative, it is clear that the risks of acting on the basis of an oral agreement cannot be overstated. It is prudent to document any proposed agreement in a written contract to avoid potentially costly and protracted disputes.