Consultants entitled to £212k fee because of implied contract term

A firm of consultants were entitled to a large fee for introducing a client to an insurance company even thought there was no specific contract. The law allowed for a fair payment to be implied in the business agreement.

Sam Lyon Head of Corporate & Commercial reports on this recent case.

That was the decision of the High Court in a case involving Premia Marketing Ltd v Regis Mutual Management Ltd.

The court heard evidence that Premia had made a recommendation to Regis that it implement a mutual insurance scheme. From April 2016, it liaised with Regis about managing any such scheme for a potential client it had found.

It held discussions and meetings with both parties separately, finally introducing them to each other in August 2016.

A year later, the client signed a four-year mutual management contract with Regis.

Premia maintained that Regis had been asked at the outset whether it would pay an introductory fee if things progressed and it had said it would.

Regis pleaded that there had been no agreement to pay a fee nor any legal basis upon which one could be demanded. It contended that it had no practice of paying referral fees.

However, its witness evidence indicated that it had always intended to pay a reasonable sum and that it had offered a fee but withdrew it when Premia did not accept it.

The court found in favour of Premia.

It held that the evidence showed that Regis had indicated that it was willing to pay for Premia’s services, and the fact that it must have been obvious from the outset that Premia was not facilitating the arrangement from the goodness of its heart.

However, no express agreement was reached as to payment or method of calculation.

The Supply of Goods and Services Act 1982 s.15 filled the gap by implying a term that Regis would pay a reasonable charge for Premia’s services.

Premia’s time was not an accurate metric to assess the value of what it had enabled Regis to achieve.

The fundamental factor was what the arrangement created by Premia’s vision had generated for Regis by way of an increase to its bottom line. What was payable should reflect the value to Regis of having the new client’s business.

On the evidence, Premia’s entitlement was £212,000 plus a continuing fee of 10% of Regis’ net profit each year.

If you would like more information about the issues raised in this article or any aspect of contract law please contact Sam on 01228 516634 or click here to send him an email.