Is there such a thing as a free lunch?

We’ve all been there. We’ve all had a guy say he’ll call us, or had a girl say “it’s not you, its me”. We’ve all had our hearts broken by people who have made false promises to us, or misled others by saying we’re willing to go out with them when we’d rather watch paint dry but can’t bare to say so to their faces.

I’m sure it wouldn’t surprise you to know that this happens in business too, but what may surprise you is that a bare promise is not enforceable. If I promise to do something for you, for nothing in return, I don’t have to do it, and if I don’t there’s probably nothing you can do about it, no matter what the consequences.

An aspiring entrepreneur was launching a new line of lingerie. She wanted to do a promotional event, but couldn’t afford to hire somewhere. A local restaurant, hearing of her plight, offered to lend her his premises on a sunday when he didn’t normally open. He didn’t want any payment, possibly hoping that he’d get some publicity out of it, but that was never said to be his reason. She went ahead and organised the event, laying on food, spending money on models and publicity and sending out invitations. He wasn’t involved in any of her plans, and so didn’t know (or pretended not to know) about her huge investment.

Two weeks before the event, the restaurant owner is asked to host a 50th birthday party at his restaurant from which he will make good money. He doesn’t hesitate to accept, explaining to our heroin that business is business and he can’t afford to turn down the opportunity, and her event will have to be postponed. Not only does this mean a huge loss to her financially, but it causes serious damage to her reputation and business as suppliers and customers are less likely to take her seriously, come to her next event or place orders with her if she has to cancel her launch at such short notice.

Sadly this doesn’t come with a happy ending. There was no binding contract, because the restaurant owner’s promise was just a bare one, with nothing to bind it. There were some good technical legal arguments I could run, but they weren’t straight forward and would be expensive.

How could she have protected herself. Well an e-mail setting out what each was doing for the other would have been better than nothing. Ideally, the parties would have entered in to a properly drafted binding agreement setting out what each was doing for the other and how things would work would have made him much less likely to have pulled the plug on her. An alternative is a deed – this is document signed by both parties and expressly stating itself to be a deed, but doesn’t need any quid pro quo and turns a bare promise in to a binding agreement.

Whatever the circumstances, always consult a solicitor before you agree to anything, particularly if you are investing time and money in a project that might be at risk if things go wrong. After all, at the end of the day, there really is no such thing as a free lunch!