Difficulties with oral contracts – Court of Session provides guidance

The decision in BPL Contracts (Scotland) Limited v Beattie FRC Limited [2026] CSOH 22 from the Outer House of the Court of Session on 6 March 2026 concerns a dispute arising from two construction sub-contracts connected with the Aberdeen Harbour Expansion project. Both sub-contracts were entered into orally – and the parties later disputed what they had actually agreed to.

Background

Aberdeen Harbour Board undertook major expansion works to Aberdeen Harbour and appointed Beattie FRC Limited (‘Beattie’) as the main contractor for various packages of work on the project.

To meet the requirements of the main contract, Beattie in turn entered into two sub-contracts with BPL Contracts (Scotland) Limited (‘BPL’) for (i) construction of the Crown Wall; and (ii) Pavement Slab works. Each contract was agreed orally, and the terms were not recorded in writing at a later date.

This dispute centred on what the payment terms of the two sub-contracts were (in particular, what “profit” meant), and how much (if anything) remained due under each of them. There was also a dispute about which of the two sub-contracts a payment of £200,000 made by Beattie to BPL should be allocated to.

The dispute concerned the following issues:

1. Crown Wall sub-contract

The parties did not dispute that the Crown Wall sub-contract was entered into at a meeting on 8 March 2021. They did, however, dispute the meaning of a 50/50 “profit share”, which had been agreed at that meeting.

BPL argued that it was entitled to the 50% of Beattie’s net profit for the Crown Wall works under the main contract as a whole. Beattie argued that the split applied to profit on the labour element of the works only and that on this basis they had overpaid BPL.

Here, the court preferred the position taken by BPL (and dismissed Beattie’s counterclaim), deciding that the 50/50 split was for the net profit made by Beattie on the Crown Wall works, not just for the labour element.

2. Pavement Slab sub-contract

A separate contract related to the Pavement Slab works. The court found that this sub-contract was concluded by performance (i.e., when the works commenced on 23 May 2022), and it was not necessary to decide precisely what was agreed at a subsequent meeting on 25 May 2022, which was when the defender had argued that the sub-contract was concluded.

Due to programme pressures and a lack of labour on the part of Beattie, Beattie agreed that the profits would be split 90/10 in favour of BPL. As with the Crown Wall sub-contract, the parties disputed what “profit” meant. Beattie argued that the 90/10 split was limited to labour rates under the Bill of Quantities (i.e. the project pricing schedule). BPL argued that the split was for a share of the net profits under the works as a whole. The court again preferred BPL’s position, holding that BPL was entitled to 90% of the net profit made by Beattie on the whole Pavement Slab works.

3. £200,000 payment

There was also a dispute about a £200,000 payment made by Beattie to BPL and which sub-contract it related to. Beattie claimed it was a final payment for the Crown Wall sub-contract allegedly agreed at a meeting in November 2022. BPL argued that the payment was made in respect of the Pavement Slab sub-contract. The court preferred BPL’s position and allocated the payment to the Pavement Slab sub-contract.

Issues considered by the court

1. Establishing the terms of oral contracts

A central issue was how courts determine the terms of an oral contract where the parties’ accounts conflict. The court emphasised that this is primarily a question of fact. In practice, that means the court must review the available evidence to decide what was agreed, including witness evidence, contemporaneous documentation, and the surrounding commercial circumstances.

In this case, the court examined, among other things:

The credibility and reliability of witnesses
Which of the parties’ positions was more consistent with the available contemporaneous documentation
The wider commercial context
The subsequent conduct of the parties, where relevant

This case demonstrates the evidential challenges inherent in oral commercial agreements. Without written terms, disputes can depend heavily on recollection and the weight a judge will give to competing accounts, which increases litigation uncertainty.

2. The role of post-contract conduct

Beattie argued that evidence of what the parties did after the contracts were made (post-contract conduct) should not be taken into account, on the basis that the court should focus on what was agreed between the parties at the time of formation. However, the court drew an important distinction between (i) interpreting the meaning of agreed contractual wording (typically in a written contract); and (ii) deciding, as a matter of fact, what the parties actually agreed in the first place where the contract was made orally and the terms were disputed.

The judge held that while post-contract conduct is generally not admissible when interpreting contractual terms of an existing in written contract, it may be relevant where the court has to decide what the terms of an oral contract were, or whether an oral contract existed. Evidence of post-contract conduct can support (or undermine) witness evidence on what was agreed.

3. Commercial context and bargaining power.

The judgment also demonstrated the court taking account of commercial context and bargaining power when determining the likely terms of the oral agreement.

In relation to the Pavement Slab sub-contract, the court accepted that an entitlement for BPL to 90% of the net profit from the whole contract was plausible, even though it was a highly favourable arrangement for BPL. Beattie was under considerable pressure to complete the works quickly but lacked sufficient manpower. It depended on BPL’s workforce to progress the project. The court considered that, due to commercial pressures, Beattie was in a weak bargaining position when terms were being agreed, and so it was plausible that Beattie would have agreed to a less advantageous deal.

4. Documentary evidence

The court relied heavily on contemporaneous documentation, including internal communications and project records. The reliance on such documents illustrates the evidential value of objective commercial records. Even when contracts are concluded orally, documents created during the project can provide strong evidence of what the parties understood their agreement to be.

5. Expert and factual evidence

The case also highlights important principles governing expert evidence in civil litigation.

Beattie relied on an expert quantity surveyor whose calculations were based on information that had not been disclosed or properly proved in evidence. The court held that expert opinion is only useful where it is founded upon factual material properly before the court and discounted the expert’s opinion accordingly.

Practical takeaways

Importance of written agreements.

This dispute arose largely because the parties failed to record their agreements in writing. High-value commercial arrangements were reduced to conflicting recollections of informal discussions.

The judgment is a reminder of the risk of relying on oral agreements in complex construction projects.

Changes of position and credibility

Beattie changed its position several times during the case. The court also found that certain of Beattie’s witnesses were neither reliable nor credible. The court considered that these matters undermined Beattie’s position. It is a reminder of the difficulties inherent in disputes over what was agreed in oral contracts, as the establishment of facts necessary to found an argued position will depend on the nature of the evidence and the witnesses giving that evidence.

Record-keeping and project documentation.

The dispute also demonstrates the importance of maintaining accurate project records. Where documents did exist, these tended to support BPL’s position. The lack of supporting evidence was a significant weakness in Beattie’s arguments on deductions from profit under both sub-contracts, including (a) overheads; and (b) deductions agreed with the Aberdeen Harbour Board in the final account.

On overheads, the court rejected Beattie’s attempt to introduce complex accounting-style deductions. As the sub-contracts were simple oral agreements reached “on a shake of the hand” there was no evidence that overhead recovery was agreed or complex accounting contemplated.

On the Aberdeen Harbour Board deductions, the court held that the profit calculation had to reflect the sums received from the Harbour Board (so the agreed deductions did reduce profit, and therefore reduced BPL’s share).

Conclusion

Ultimately, the Court found in favour of BPL. For the Crown Wall sub-contract, BPL was entitled to 50% of the net profit made by Beattie on the Crown Wall works under the main contract.

For the Pavement Slab sub-contract BPL was entitled to 90% of the net profit made by Beattie on the Pavement Slab works. The court also held that the £200,000 payment fell to be allocated to the Pavement Slab sub-contract.

More broadly, the case highlights the legal and practical difficulties that arise when complex commercial relationships are not documented clearly. The absence of written contractual terms can transform routine commercial disagreements into extensive and costly litigation.

It is vital to ensure that contracts are well documented in order to maintain clear records and evidence of commercial agreements. If you would like help with this, or have any questions, please contact a member of our Construction, engineering and infrastructure disputes team.

This article was co-authored by Trainee Euan Rennie.

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