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Moran v Pisarev - a judgement with lessons for us all

On 14 April 2016, the English Court of Appeal's judgement was published, dismissing an appeal by Moran Yacht & Ship (Moran) for unpaid commission concerning the sale of the luxury motor yacht 4YOU, for €19.8 million.

The case acts as an important reminder to ensure that Terms of Business are signed at the outset of an agreement. It also highlights the importance of making a contemporaneous note of key conversations. 

The facts

At some point between 11 May 2010 and 1 November 2010 (the precise date was disputed) Moran was instructed by Mr Pisarev to market for sale the luxury motor yacht 4YOU.

In late May 2010, Moran invited a potential buyer to view motor yacht 4YOU and, some 21 months later, the same person purchased the yacht.

Moran claimed (amongst other things) that it had been instructed by Mr Pisarev to market the yacht discreetly during a meeting on 11 May 2010. As Moran had initially introduced the buyer after that date, it claimed that the sale was due to its involvement and so it was entitled to commission.

Mr Pisarev argued that Moran had shown the yacht to the buyer of its own accord and, in May 2010, Moran had not been instructed to market the yacht as the seller was not inclined to sell her. 

As such, the seller argued (amongst other things) that Moran was not owed commission because Moran was not the seller's agent when the buyer viewed it originally.

Moran's terms and conditions were not signed, nor was an Agency Agreement. Moran's evidence was that the seller said the paperwork was unnecessary, because they were friends.

The judgement

At first instance, the High Court held that Moran was not entitled to commission for several reasons, including: 

  • There was no contractual agreement in place between Moran and the seller at the time of the sale; 
  • Moran introduced the buyer in May 2010 on its own initiative and;
  • Moran was not an effective cause of the transaction (that is, its involvement was too peripheral to justify commission).

On appeal, the High Court's judgement was upheld. 

Interestingly, the Court of Appeal held that "Moran has enjoyed significant, possibly excessive, latitude in asserting an entitlement to commission both on the facts and the law."

What lessons can be learned?

Moran's failure was due, in part, to its inability to substantiate many of its arguments. Several factors (stolen laptops, damaged servers, administrative failures etc) meant that it could not satisfy the court that it was instructed to market the yacht when it introduced the buyer in May 2010.  

There are two important, and very simple, lessons for us all. 

First, we should always ensure that Terms of Business are signed, right at the outset. Second, we should never under estimate the importance of making a contemporaneous note of key conversations

We all know how quickly the Superyacht industry moves and that hundreds, if not thousands, of telephone calls are made in the course of a transaction. When relations are warm, the temptation is often to rely on a verbal agreement, but who can say what the other party's recollections (or motivations) may be, several years later...?  

TLT are experts in Superyacht law. For more information on how our team can support you, please contact James Jaffa on +44 (0)333 006 1476 or james.jaffa@TLTsolicitors.com

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at April 2016. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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