Words worth in modern times

I won’t make promises that I can’t keep
I won’t make promises that I don't mean
I'll even mean the things I tell you in my sleep,yeah
I won’t make promises babe,that I can’t keepPromises, DEF LEPPARD

INDIA INC HAS AN UNPLEASANT AND UNWANTED GUEST this summer — broken oral agreements. In the history of business alliances, marriage pacts and international negotiations, oral contracts and promises have always had a place of pride and importance. A gentleman's word, once given, was always expected to be honoured. And, usually it was. People gave their lives but would rarely go back on their word. Indian mythology, especially the Mahabharat, is replete with examples of how broken promises — intentionally or otherwise — have resulted in grief and a life led largely in misery.

It is said that, in medieval England, if a man promised to marry a woman and then reneged on his promise, he was liable to pay a penalty. Wikipedia states: "A man's promise of engagement to marry a woman was considered, in many jurisdictions, a legally binding contract. If the man were to subsequently change his mind, he would be said to be in ‘breach’ of this promise and subject to litigation for damages." In fact, the world has seen courts honouring oral contracts on numerous occasions.

For instance, in early 1984, Gordon Getty agreed to sell his substantial holding in Getty Oil to Pennzoil. The hands were shaken and the deal was almost done, save the signing on the dotted line. In came Texaco and offered Gordon Getty a better deal. Like a good businessman, Mr Getty succumbed to the higher bid and sold his stake in Getty Oil to Texaco. Spurned and rejected, Pennzoil filed a lawsuit against Texaco and, surprisingly, won the case and was awarded damages of $10.3billion. Likewise, in 2006, actor Marlon Brando's death left the executors of his estate facing an irate housemaid, who claimed that she had been done out of a house the deceased Hollywood star had left behind for her. Her contention was that since the actor had ‘promised’ her the house verbally, it was as good as any contract. Predictably, after the initial bluster and flurry of court cases, the matter was settled privately.

The Indian legal system, like most other legal systems around the world, too finds oral agreements binding, provided they are backed by sufficient and leading evidence. Courts usually require the complainant to provide proof that an oral agreement did indeed exist and that it was breached. If there are witnesses to the oral compact, well and good. Otherwise, the courts rely on circumstantial evidence and other kinds of proof.

It will be interesting to see how the purported oral agreement between the two warring Bajaj factions gets resolved. It is believed that the two brothers — Rahul and Shishir — entered into an oral agreement over the methodology to be adopted while splitting the family business. What complicates matters is that there's not only one agreement; layers of them exist, to sub-serve the layers of companies used to control the family empire. Different newspapers have cited different agreements as the root of the alleged ‘breach of promise’! In fact, there is also no clarity on who has gone back on this shadowy oral agreement. In the flurry of media reports, both parties have alleged that the other has gone back on his word.

But clearly somebody, somewhere, has not honoured an agreement. Both sides are sure to contest this in the courts and a protracted legal battle looks imminent. If there's any moral in the story, it's this: always insist on a written contract. Another Indian industrialist once learned the same lesson. Having trusted, helped and financed an ally to take over the foreign holding of an Indian company, on the express condition that the stake would be later transferred back to him, the guy watched helplessly as his friend usurped the company, bled it dry and denied ever having entered into any agreement.

As the irascible movie mogul Sam Goldwyn once said: “An oral contract isn't worth the paper it's printed on.” In business, trust seems to last only till the next quarterly results.