In Leddington and another v Sandercock and another [2026] EWHC 938 (Ch), the Chancery Division dismissed a claim for over £333,000 relating to an alleged oral agreement between the parties.
The case highlights a key issue in contract law, that although oral agreements (sometimes referred to as “gentlemen’s agreements”) can be legally binding, they must still meet specific legal requirements to be enforceable.
Earlier guidance on so-called “gentlemen’s agreements” has highlighted that oral agreements can, in principle, be legally binding if they meet the requirements of contract law. However, this case demonstrates that the issue is not simply whether an agreement can be proved, but whether it satisfies those legal requirements in the first place.
Background to the Case
The dispute arose out of a longstanding business relationship within the social care sector. Sandercock operated several care businesses through different limited companies over time. Initially, Arches Domiciliary Care Limited (“Domiciliary”) delivered services, before the business dissolved and transitioned in 2017 to Arches Support Services Limited (“Arches”), which was later sold in July 2023.
Leddington was involved through a separate company, Camu Ymlean Support Services Limited (“Camu”), which provided administrative support services to the Arches business. The parties had worked closely together for many years, with overlapping commercial interests, including care sites connected to Leddington’s partner.
The Collaboration Agreement
Between June 2011 and July 2023, the parties operated under a long-standing informal arrangement, often described as a ‘Collaboration Agreement’.
Under this arrangement:
- Sandercock acted as the Responsible Individual for both Arches and the Camu-related care sites
- Camu provided administrative support services
- Fee income from the Camu sites was received by Arches and then distributed to Camu
- Sandercock received a fee from Camu for her role
Despite its significance, this arrangement was never formally documented.
The Alleged 2022 Oral Agreement
In early 2022, as Arches was being prepared for sale, the parties discussed varying their existing arrangement. The claimants alleged that a further oral agreement was reached, under which:
- Arches would retain 30% of Camu’s fee income
- Camu staff would transfer to Arches
- Leddington would receive one-twelfth of the eventual sale proceeds
At the time, the sale value was estimated at £6 million. However, Arches was ultimately sold in July 2023 for £4 million, and the expected payment (around £333,333) was not made.
Although there were subsequent discussions about a reduced settlement figure, no payment was ultimately agreed or made.
Why the Claim Failed
The court accepted that conversations had taken place regarding a payment linked to the sale. However, this alone was not enough.
The key issue was whether the alleged oral agreement satisfied the legal requirements of a binding contract. The judge found that it did not, due to a lack of sufficient consideration. In simple terms, there was not enough of a clear, legally recognisable exchange of value to support the agreement. As a result, the claimants were unable to enforce the agreement, despite their expectation of payment.
Key Takeaways for Businesses
This case is a useful reminder that:
- Oral agreements (or “gentlemen’s agreements”) can be binding, but only if all contractual elements are present
- Even where parties agree on something in principle, a contract may still fail if it lacks consideration or certainty
- Informal arrangements carry significant risk, particularly in high-value transactions
Protecting Your Position
To avoid disputes like this:
- Always record commercial agreements in writing
- Ensure any variation to an existing agreement is formally documented
- Clearly set out who is entitled to what, and why
- Take legal advice before relying on informal or “gentlemen’s” agreements, especially where significant sums are involved
If you would like advice on drafting or reviewing commercial agreements, please contact Craig Feeney at Craig.Feeney@swinburnemaddison.co.uk, or Jenny Wade, Head of Swinburne Maddison’s Commercial Team at Jenny.Wade@swinburnemaddison.co.uk or call us on 0191 384 2441.
