The Consultant Bound by a Side Promise
A software firm asked a freelance consultant to help win a public contract. The firm promised in writing: 'If we win, we will pay you a £25,000 success fee and give you a non-executive role.' The consultant worked for six weeks unpaid, relying on the promise, and turned down two other engagements worth £12,000. The firm won the contract but refused to pay, saying the promise was a gratuitous statement made before any contract existed and that the non-executive role was never formalised. The consultant sues for the £25,000 and for the lost engagements. The firm also argues there was no intention to create legal relations because the parties were 'working together informally'.
1. Was there consideration for the firm's promise, and does the consultant's reliance help?
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Consideration must be something of value given in exchange for the promise. The consultant's six weeks of unpaid work at the firm's request is capable of being consideration, even if the work was not quantified, because it was requested and conferred a benefit on the firm. The written promise to pay on success is therefore supported by consideration. The consultant's reliance is relevant in two ways: it evidences that the promise was seriously intended, and it supports an argument in promissory estoppel or a collateral contract if consideration were found lacking. However, estoppel is generally a shield, not a sword, so it is weaker as a basis for claiming the £25,000. The lost engagements are not consideration; they are reliance loss, recoverable only if the main claim succeeds.
2. Address the intention to create legal relations and the status of the non-executive role.
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The 'informal working together' argument is weak. The parties are commercial entities, the promise was in writing, it specified a precise sum, and it was made to induce the consultant to work. The presumption in commercial dealings is that legal relations are intended, and the firm would need strong evidence to rebut it. The non-executive role is different: it is vague, with no terms, duration, or remuneration specified, and it may be too uncertain to enforce as a contractual promise. The consultant should claim the £25,000 as a debt or damages for breach, and treat the role as an unenforceable aspiration. The £12,000 lost engagements are recoverable as reliance loss if the consultant can show they were turned down because of the promise, but they may be reduced if the firm shows the consultant could have mitigated.