Blue v Ashley [2017] EWHC 1928 (Comm)

Facts

• The claimant, an investment banker, asserted the defendant, owner of Sports Direct, promised to pay £15 million if the share price of Sports Direct reached £8.
• This alleged agreement was made during a social interaction in a pub.
• The share price later reached £8, but the defendant declined to pay the sum.
• The claimant argued a binding contract existed and sought enforcement through the courts.
• The court examined the factual context, including the informality of the setting, to determine if the parties intended to create legal relations.

Issues

1. Whether a legally binding contract was formed between the claimant and the defendant during the pub conversation.
2. Whether the circumstances indicated an intention by the parties to create legal relations.
3. Whether statements made in informal, social contexts, or possibly in jest or anger, could constitute enforceable contractual promises.

Decision

• The court found that no reasonable person present in the pub would have concluded that the defendant intended to create a legally binding contract to pay £15 million.
• The informality of the setting, the vague and imprecise language, and the casual nature of the conversation demonstrated a lack of contractual intent.
• The claim was dismissed on the basis that there was no intention to create legal relations.

Legal Principles

• The existence of a contract requires not only offer and acceptance, but an objective intention to create legal relations.
• Whether parties intend to be legally bound is determined objectively, considering the context and language used.
• Statements made in informal, social settings, especially those that are imprecise or made in jest or anger, are unlikely to meet the threshold for contractual intent.
• The absence of a formal written record and the use of vague terms further undermine a finding of legal intent.

Conclusion

Blue v Ashley [2017] EWHC 1928 (Comm) confirms that agreements made in informal, social settings—especially those lacking precise language or made in jest—will not generally give rise to legally enforceable contracts, as the objective test for intention to create legal relations was not satisfied.