Joint ventures – protecting with contract terms

Joint ventures – protecting with contract terms

Joint ventures take many different forms but few have such an unusual background as a recent dispute involving what started as a simple agreement.  The commercial lawyers at Bahamas law firm ParrisWhittaker are experts in drawing up robust joint venture contracts.

The dream that came true…

In a recent case1, the defendant had a dream in which he was holding a large bundle of cash.  Standing in front of him was his employer who was the claimant in this case.  As the judge so succinctly put it: “The defendant is a strong believer in the power of dreams and interpreted this to mean that he and the claimant would win the lottery.”

As a result of the dream, the two parties (who lived in the UK) bought a Euromillions Lottery ticket – and won a £1 million prize. 

…but turned sour

However, as is unfortunately the case in many such situations involving substantial sums of money that are won, there was a dispute as to how the proceeds should be shared - and the case reached the High Court.  Even the judge described it as ‘a troubling case’.  The defendant’s employer (the respondent) claimed that as a result of the defendant having a dream and then prevailing upon him to play, the respondent decided to play.  He funded the tickets himself with no discussion or agreement as to sharing the ticket.

However, the defendant claimed the ticket was paid for in equal amounts; that it was agreed that he would retain the receipt and the play slips, and he would also retain the tickets.  The case went as far as obtaining substantial evidence including witness evidence, CCTV recordings, a series of text messages and, of course, the defendant’s evidence of his dream.

What did the court decide?

Lawyers for both sides were in agreement that the law is very straightforward: “For the defendant to succeed he would effectively have to prove that a contract existed with the claimant for the purchase of a lottery ticket jointly and that the terms of the contract would give rise either expressly or impliedly to an equal share of the beneficial interest, in the form of the prize money.”

In the circumstances, the defendant’s case was found to be inherently more plausible than the claimant’s. The court found that on the facts, the parties had entered into a contract for the joint purchase of a lottery ticket - on an equal basis. 

The judge found: “Either it was a term of the contract that any winnings should be shared equally or alternatively that such a term should be implied. I find that this term represents the obvious, but unexpressed intention of the parties.”  Therefore, all winnings had to be shared correspondingly between both parties.

What does this mean for businesses?

The ruling is a salutary reminder for commercial organisations of any size – even agreements between individuals - that all contractual terms should be clearly agreed and put in writing so that any later dispute can be resolved quickly and easily.  It is even more important to have strong contractual terms where there is a planned joint venture where both (or all) parties stand to gain – however simple the structure of the venture.

Interestingly, the court said its conclusion was necessary to give business efficacy to the contract.  This means the courts may well consider the contract terms ‘in the round’ and interpret the terms in such a a way as to give it business efficacy.

How can we help?

The commercial litigation lawyers at ParrisWhittaker are adept at drafting clear, unequivocal commercial contract, including joint ventures, to ensure there is no ambiguity should a dispute later arise.  If you are considering the terms of a joint venture or other contract, or are in the process of negotiating the terms, contact us now for experienced advice and representation.

1 Kucukkoylu v Ozcan [2014] EWHC 1972 (QB)