With Beaujolais Nouveau celebrations in full swing this week, many Welsh businesses will be raising a glass with colleagues, clients, and referrers. It’s a great opportunity to strengthen relationships, but it’s also a moment when business talk can blur into something more serious.
A familiar scene unfolds every year, over lunch and a few glasses of wine, conversations turn to ideas, opportunities, and “rough agreements.” But when the celebrations fade and the follow-up emails begin, the question often arises: did that friendly chat amount to a legally binding deal?
When Does a Conversation Become a Contract?
In English & Welsh law (and most common law systems), a legally binding contract doesn’t have to be in writing. A verbal agreement can be just as enforceable as one set out in a formal document provided it meets the basic requirements of a contract:
1. Offer and acceptance – One party makes a clear offer, and the other clearly accepts it.
2. Consideration – Something of value is exchanged (money, goods, services, or even a promise).
3. Intention to create legal relations – The parties must intend their agreement to be legally binding.
4. Certainty – The terms must be sufficiently clear and definite.
If those ingredients are present, even a casual conversation over a glass of wine can give rise to a legally binding agreement.
The most contentious issue in a social or informal setting is often whether there was a genuine intention to create legal relations. In a purely social or domestic context, the law generally presumes there isn’t such an intention.
However, in a commercial context, even relaxed, wine-fuelled ones, the presumption is the opposite. The law assumes that businesspeople intend to create legal relations when discussing deals, even over lunch or drinks. That presumption can be overturned by clear evidence that both parties agreed otherwise, for example, by saying “let’s discuss details properly next week” or “nothing is final until we’ve signed.”
Even if a contract technically exists, proving it can be another matter entirely. Without a written record, the terms or even the existence of the agreement can be disputed.
In practice, the strength of any claim often depends on follow-up conduct:
· Were key terms discussed in detail?
· Did one party start performing obligations based on that conversation?
· Were there emails or messages confirming what was said?
These factors can all influence whether a binding agreement was intended.
Practical tips for businesses celebrating this week
To keep celebrations enjoyable and avoid unintended commitments, or to strengthen your position when one is intended, consider these steps:
1. Clarify your intent early. If you’re discussing a deal informally, make it clear whether the conversation is “subject to contract.”
2. Follow up in writing. A simple email summary can prevent misunderstandings or provide helpful evidence later.
3. Don’t rely on memory. Even the best intentions can be forgotten when wine is involved. Confirming key terms in writing protects everyone.
4. Be cautious about “handshake deals.” They may feel friendly, but they can be legally binding in ways you don’t expect.
A Toast to Clarity
There’s nothing wrong with blending business with a good bottle of Beaujolais, but don’t underestimate the legal weight of your words. The safest approach? Enjoy the conversation, but save the contract for when the glasses are empty and the pen is in hand.