Gravy Solutions Ltd v Xyzmo Software

Legal Case Summary

Gravy Solutions Ltd v Xyzmo Software GmbH [2013] EWHC 2770

Contracts – Freezing Injunctions – Privity of Contract -Oral Contracts – Measure of Damages

Facts

Gravy sought to impose a freezing injunction against a company related to Xyzmo (called Z), after commission Gravy alleged to have earned was not paid and neither was the principal sum. An alleged implied contract had been formed between Xyzmo and Gravy, but  Xyzmo was a company without assets and had been formed overseas. No specific commission amount had been expressed, only a formula for which it could be calculated.

Issues

Whether there has been an acknowledgement of Z’s obligations in relation to the relationship between Gravy and Xyzmo and whether a freezing injunction should be granted.

Decision / Outcome

Gravy’s application was refused. The Court determined and interpreted the meaning of a contract to require the fundamental elements of offer, acceptance and intention to create legal relations between the parties signed to the contract. It was not usual for such a contract to be implied and any oral agreement required a demonstrable mutual acceptance of terms. Oral agreements could be legally enforceable but the terms of such an agreement needed to be agreed and understood by both parties. The invoice was evidence of a willingness of Z to pay Gravy, but it did state it was “voluntary and without prejudice” which limited its enforceability. Any injunction would not be against Xyzmo but against Z, which would interfere with the business relationship between Z and Xyzmo in respect of money paid to Xyzmo. Also, there was no evidence to suggest that Gravy would benefit from a proprietary claim, lest not entitled to one. As such, the injunction was not granted.