Forming the Agreement

Actionstrength Ltd v International Glass Engineering [2003] UKHL 17; [2003] 2 AC 541

Facts: The claimant had a contract to supply labour with the fi rst defendant. Concerns about late payment led, according to the claimant, to an agreement with the second defendant as a result of which the claimant continued with the work, in return for the second defendant promising, if necessary, to pay the claimant directly out of money owed by the second defendant to the fi rst defendant. This agreement was oral. The claimant subsequently tried to sue the second defendant on its promise. The second defendant denied that any promise had been made, but argued that in any case the agreement was a guarantee falling within s. 4 of the Statute of Frauds 1677, and was therefore not enforceable, because it was not in writing. The claimant alleged that by persuading the claimant to carry on with the work, the second defendant was estopped from relying on the Statute. The trial judge held, on an preliminary issue, that the claimant might be able to succeed. The Court of Appeal held that the agreement was a guarantee, and that the second defendant could not be estopped from relying on the Statute of Frauds.