Under the Bills of Exchange Act 1882, bills of exchange,
cheques and promissory notes must be in writing. Sim-
ilarly, the transfer of shares in a limited company must
be in writing. Regulations introduced under the Consu-
mer Credit Act 1974 lay down requirements about the
form and content of regulated consumer credit and hire
agreements. The Employment Rights Act 1996 requires
that employees be given a written statement of the terms
and conditions of employment within two months of
starting work. Failure to provide a written statement
does not affect the validity of a contract of employment,
although it does entitle an employee to refer the matter
to an employment tribunal. The tribunal can decide on
the particulars which should have been included in the
written statement. An example of a possible form of
written statement may be seen in Chapter 16.
3 Contracts which must be evidenced in writing. There
is only one type of contract which must be evidenced
in writing: s 4 of the Statute of Frauds 1677 requires a
contract of guarantee to be evidenced in writing. If you
borrow money or buy goods on credit, you may be
asked to find someone who will guarantee the debt. This
means that if you do not or cannot repay the money, the
guarantor will pay your debt for you. The requirement
of written evidence does not affect the formation of such
contracts. The absence of writing does not make the
agreement void, so, if any money or property has changed
hands, it can be kept. However, if one of the parties
wishes to enforce the contract in the courts, the neces-
sary note or memorandum must be produced.Part 3Business transactions
228
property, it was agreed orally that PHH would not con-
sider any further offers, provided that Mr Pitt exchanged
contracts within two weeks. PHH sold the cottage to
Miss Buckle at a higher price before the two-week
period had expired. Mr Pitt sued PHH for breach of the
‘lock-out’ agreement. PHH argued that the agreement
was unenforceable on three grounds: (i) the agreement
formed part of the continuing negotiations for the sale
of the property and as such was ‘subject to contract’;
(ii) the agreement was a contract for the sale of an inter-
est in land and was, therefore, only enforceable if the form-
alities required by the Law of Property (Miscellaneous
Provisions) Act 1989 were observed; and (iii) Mr Pitt had
given no consideration for the agreement. The Court of
Appeal held that PHH was in breach of contract and was
liable to pay damages. The court said that the lock-out
agreement was capable of existing independently of any
agreement to sell the cottage and was, therefore, not
‘subject to contract’. The 1989 Act did not apply either,
for the same reason. The court found that Mr Pitt had
provided consideration in the form of removing a threat
to make difficulties for Miss Buckle and in promising to
exchange contracts within two weeks.Actionstrength Ltdv International Glass
Engineering & Saint-Gobain Glass
UK Ltd(2003)
Saint-Gobain Glass (SGG) had retained International
Glass Engineering (IGE) as the main contractor to build a
new factory. IGE engaged Actionstrength (AS) to supply
labour. The contract between IGE and AS entitled AS to
terminate the contract with 30 days’ notice if invoices
were not paid. IGE fell behind on payments and AS
threatened to withdraw from the contract. SGG allegedly
then made an oral promise to AS that if IGE did not
settle the invoices, SGG would pay them. AS continued
working but, when IGE did not pay, AS sought to enforce
SGG’s promise to pay. SGG defended the claim by argu-
ing that its oral guarantee could not be enforced because
it had not been evidenced in writing. The House of Lords
held that SGG’s oral guarantee was unenforceable
because it had not been evidenced in writing as required
by s 4 of the Statute of Frauds 1677.Formalities and electronic communications
At the start of the third millennium, we find ourselves
in the midst of a new industrial revolution. It is widely
predicted that the rapid development of electronic com-
munication technology will revolutionise the way
in which business is conducted in the future. Although
e-commerce currently accounts for a very small pro-
portion of transactions in the UK, the government
recognises the enormous potential for electronic trad-
ing and has set itself the ambitious target of making the
UK the best place in the world to trade electronically.
The Electronic Communications Act 2000 is designed to
facilitate the development of electronic commerce by
providing for:
■a voluntary registration system for organisations pro-
viding cryptography support services, such as elec-
tronic signature and confidentiality services;
■legal recognition of electronic signatures;
■the removal of obstacles in other legislation to the use
of electronic communication and electronic storage
in place of paper. (It should be noted that the Law