Legal Updates

A gentlemen and general agreements orally made are not binding if not included in a later written contract

June 19, 2024

Shareholders of a company entered into an agreement under which one sold his holdings to the other due to the financially unstable state of the company, with the contract stating that it embodies all the agreements between the parties. Despite this, the seller contended that before the conclusion of the contract, another oral agreement was made, according to which after the company comes out of the crisis, he will be entitled to repurchase his shares.

The Court held that there was no agreement between the parties on the granting of a right to repurchase the shares. Generally, when parties have entered into a binding contract in writing, it is presumed that this contract exhausts all the agreements reached. Beyond that, a contract is perfected only if the parties have expressed their determination to enter into the contract and if the agreements were certain in the sense that the essential and fundamental details were put in writing. Here, the written contract did not mention the oral agreement and even explicitly stated that it includes all agreements between the parties. Further, even to the extent that oral consent was received, it is a gentlemanly and general agreement. Therefore, the oral agreement was not perfected into a binding contract.