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Oral Assurances Are No Replacement for Properly Drafted Documents

PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.

Oral assurances are all well and good but, if they are not recorded in a professionally drafted document, how can it be proved that they were ever given? A farmer’s son faced exactly that difficulty in a High Court dispute with his father.

The case concerned a 400-acre family farm that was worth at least £8 million and much more than that if its development potential were exploited. The elder son of the family had, for many years, worked long hours on the land for low pay. Following a bitter falling-out with his elderly father, however, the latter gave his controlling stake in the family company – he owned all but one of the 24,000 shares – to his younger son. The younger son was also given almost two thirds of the farmland.

After the elder son launched proceedings, the Court found that his father had made repeated oral representations, over a 20-year period, that he would succeed him and that the lion’s share of the farm would one day be his. In devoting his working life to the farm, he had acted to his detriment in reliance on those representations, which were seriously made and had been understood to be so.

After changing his mind, the father had convinced himself that no representations had been made and that his elder son was a bad farmer. However, the Court found that the latter had in reality been the backbone of the business and, had it not been for his efforts, the enterprise would have ceased to exist.

In the circumstances, the Court accepted that the father’s transfer of his shares and land to the younger son was unconscionable. It found that the elder son was entitled to 52 per cent of the shares in the company and 46 per cent of the land.

If you have ‘understandings’ in your family that will cause significant issues if not adhered to, contact us for advice on how to put promises on a proper legal footing. Family disputes seldom end amicably.

 

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