Scottish Court of Session Decisions

Section 9.1 of that agreement provided

That agreement was signed, on page 20, after a testing clause, by Mr C A Arghyrou, for the pursuer, and Mr Peter Darbyshire for the defender. Each of the previous pages also had the signature of these gentlemen appearing at the foot thereof. The final two pages of the agreement which contained list prices for products for the year 1993 and minimum shipment targets, respectively, were also signed at their foot by Mr Arghyrou and Mr Darbyshire.

This agreement, which I will refer to as the 1998 Agreement, contained a testing clause on its twenty fifth  page. The agreement was signed, on behalf of the defender, by its joint managing directors Mr Malcolm MacKinnon and Mr Duncan MacKinnon. On behalf of the pursuer it was signed by Mr Arghyrou and by Mr Andreas Malefakis. The 1998 Agreement also had two appendices, pages 26 and 27. Appendix 1 dealt with export price terms and Appendix 2 dealt with depletion targets. Both of these appendices were signed by Mr Malcolm MacKinnon and Mr Duncan MacKinnon and by Mr Arghyrou and Mr Malefakis.

The visit proposed in that letter was, in due course, fixed for June 2002. It was decided that, at that meeting, not only would there be the presentation by the defender to show its appreciation of the pursuer's success, in increasing the volume of sales, but also that there would be discussions about a new distributorship contract to replace the 1998 Agreement and to run on from its expiry. Mr Arghyrou, who gave evidence at the proof, for the pursuer, sent an email to the defender on 30 May 2002 setting out a programme for the meeting (44/1/13 of process). In the covering email he wrote "Not included is a side meeting to discuss issues of contract and Drambuie (Greek) trademark". Mr Arghyrou, in evidence, said that the reference to "issues of contract" was a reference by him to conversations he had had with the defender about a new five year distributorship agreement. He had raised this possibility in May 2002 because of a practice in the industry to discuss renewal of such arrangements at least one year before the expiry of any existing distributorship agreement. He said that, when he had raised the matter, Mr Duncan MacKinnon had said that he did not anticipate any problem about the pursuer getting a new five year agreement. At the meeting in June 2002 there was, in fact, no real discussion about a new contract but nothing was said to indicate that there would be any problem about the defender granting the pursuer the new five year agreement.

In evidence, Mr Arghyrou said that Mr Jeffray had said to him, in May, that he would send a draft of the new contract with a view to meeting and discussing it in September. Mr Jeffray responded to Mr Arghyrou's email on 2 August 2002 (44/1/16 of process). In it he said,

Shortly before this exchange of correspondence the defender had appointed a new regional manager, Mr Michael Kennedy who was to be responsible for, among other places, Southern Europe (including Greece). On 12 August 2002, Mr Kennedy emailed Mr Arghyrou (44/1/17 of process) to introduce himself. In that email he referred to the pursuer's success in building up the market for Drambuie in Greece and said,

A meeting was fixed for Mr Arghyrou to attend, at the defender's premises, on 27 September 2002. In advance of that meeting Mr Jeffray emailed Mr Arghyrou with the agenda for the meeting. He also emailed what he described as "a Contract for next year" (44/1/19 of process). The draft agenda had an item headed "Contract 2003". It set out target figures for sales of the defender's products for the years 2002-2008 which might be included in the new contract. At the end of the item there appeared the following: "What is Drambuie's ultimate growth potential in Greece?" The other matters on the agenda were as follows. There was to be discussion about a product, which was in the development process, namely "Drambite". There was also to be discussions about containers for the defender's products, various marketing issues and the possibility of extending the distribution arrangement with the pursuer to the Balkans and Albania. All of that, Mr Arghyrou, in evidence said, indicated that the parties were looking forward to a long term continuing relationship. It was clear, therefore, at the date of the proposed meeting, the parties were proceeding on the basis of a continuance of their long-standing business relationship, beyond 2003. At the meeting all the items on the agenda were discussed and there were, in particular, discussions of the proposed sales volumes to be incorporated into the new contract and other matters in relation to that contract. Mr Arghyrou, in evidence, said that the meeting ended on a very "festive" note. A very expensive bottle of champagne was opened to celebrate agreement having been reached on the major terms of the new contract, ie. sales volumes, payment terms, currency of payment and five year duration. Mr Arghyrou explained that a proposal for selling Drambuie Cream in sachets was worked on until early 2003 but did not progress further because of difficulties with regard to the material used for such sachets. Work also continued on the development of Drambite until early 2003. In particular the pursuer had worked on this product in its Greek laboratory to test quality. The defender's position regarding sales target figures and terms of payment were confirmed by Mr Jeffray to Mr Arghyrou in an email of 21 October 2002 (44/1/23 of process). In that email Mr Jeffray wrote, inter alia, "I will produce a revised draft". Mr Arghyrou replied, by email, in, inter alia, the following terms: "Many thanks to all of you for the contract. Kindly convey my thanks to Calum and Duncan and rest assured of our continuous efforts." Mr Arghyrou then produced a paper for a meeting of the pursuer's Board of Directors to be held on 22 November 2002. The paper is described as relating to "Drambuie Contract Review". In it, (44/1/27 of process) Mr Arghyrou wrote as follows:

The minute of the meeting of 22 November 2002 of the pursuer's Board of Directors is 44/1/26 of process. That meeting was attended by Mr Arghyrou. The minute records that Mr Arghyrou "informed the Board for (sic) the accomplishment of the renewal for five more years of the distribution agreement for Drambuie, ending on 30.6.2008". On 12 December 2002, Mr Arghyrou sent an email to Mr Jeffray which is headed "Re: Contract" and which was in the following terms (44/1/32 of process):

Mr Arghyrou, in evidence, explained that this was written because there remained to be carried out a tidying up of the detail of the agreement between the parties. Mr Jeffray replied to this communication with an email of 13 December 2002 (41/1/33 of process). In it he wrote, "I refer to our telephone conversation and attach the final revised draft for approval by you. The changes are primarily at 3.3 and in the target figures." The attached final revised draft of the contract was headed with the date 13 December 2002. Mr Arghyrou in examination-in-chief, said that the proposed changes to Clause 3.3 correlated to what had previously been agreed between himself and Mr Jeffray.

The attached draft of the agreement was headed with the date 30 January 2003. Mr Arghyrou replied on 5 February 2003 by email (44.1.49 of process). In it he wrote, inter alia to Mr Jeffray as follows:

The email went on to cover certain other matters of business between the parties. Mr Arghyrou did not receive any reply to that email and, in particular, Mr Jeffray never sent to him two copies of the agreement for signing. It is around those facts that the issue in the present case revolves.

In examination-in-chief, Mr Arghyrou said that his reason for sending this email, at that time, and in those terms, was that the tax authorities in Greece required notification of the terms of any contract when executed or implemented. He required a signed version of the agreement to lodge with the authorities.

The email was not replied to by Mr Jeffray. On 15 May 2003 Mr Kennedy emailed Mr Kollias, who was the pursuer's marketing manager at that time. That email (44/2/24 of process), covered a number of issues including the wish of the defender that the sales of its product Drambuie Cream should be aggressively pursued in Greece. The advertising and promotional budgets in relation to the defender's products were also referred to and, in relation thereto, Mr Kennedy wrote "We are willing to continue to make this level of commitment for the next 3 years, if we can manage to achieve reasonable growth year on year". Mr Kennedy later continued,

The RTD project referred to was to be launched in Greece in 2004. In circumstances which were not made entirely clear at the proof, a meeting was fixed for 29 May 2003 in London to be attended by Mr Arghyrou, Calum MacKinnon, Duncan MacKinnon and Stuart Jeffray. Mr Arghyrou explained in evidence that he produced a note of the matters raised at the meeting, some time after the meeting itself. The note is 44/2/32 of process. It states as follows:

In his evidence Mr Arghyrou said he was not sure when he first had heard that the defender was having discussions with Bacardi about the possibility of Bacardi taking over the distributorship of the defender's products in, among other places, Greece. (It is to be noted, however, that in the note of the pursuer's Board of Directors meeting on 22 November 2002 (44/1/27 of process) mention was made "that Drambuie was getting closer to Bacardi"). Notwithstanding what was said in the last sentence of the note made by Mr Arghyrou, of the meeting held in London on 29 May 2003, in evidence he said that this meeting was an awkward one because, during it, the defender's representatives were raising what he described as "incoherent points". One of them was concern expressed on behalf of the defender that the pursuer's new chairman was a "wine man" as opposed to one interested in the spirits side of the business. Mr Arghyrou was also asked as to what would happen to the distribution of Drambuie products if he were to leave the pursuer's company. The witness said that as he got up to leave the meeting Mr Calum MacKinnon suddenly presented him with a bottle of vodka liqueur. Mr Arghyrou resumed his seat and they all then proceeded to discuss the possibility of adding a new product to the defender's range based on vodka and to be called "Drambuie Crystal".

The proposed change, No. 2, referred to in that email, apparently arose from concern expressed by the defender's representatives at the 29 May meeting that the pursuer might lose their distributorship rights in relation to Brown-Forman brands and Cutty Sark whisky. It had apparently been believed by the defender that the inclusion of these in the pursuer's portfolio assisted in the promotion of the defender's products. Mr Arghyrou, significantly, in his examination-in-chief, said that by the time he received the email he "understood that Mr Jeffray wanted to turn away from what had been agreed in February". Mr Arghyrou's reply to Mr Jeffray was in an email on 2 June (44/2/36 of process). It was headed "Re: Contract". In it Mr Arghyrou wrote as follows:

• No problem with regards to the termination option should I leave WSK since as I have explained I have no intention of leaving. I am deeply touched and thanks.
• Fully understand and accept termination option on Cutty Sark but not on BF since they represent 12% of my business. They left me in 1991 when they were more than 30% and nothing happened.
• In today's difficult environment and in our joint attempt to develop our brands a 3 year time period is too short. Experience has shown that our usual 5 year renewals have not harmed us.

On the same day Mr Arghyrou sent a copy of Mr Jeffray's email of 2 June, and his response thereto to Mr Tony Easter, who was managing director, at that time, of Berry Brothers, the defender's parent company. He did so under cover of an email (44/2/37 of process) in which he wrote "Pls find their resposne (sic) after our meeting and my reply. We are almost there" (my emphasis). In examination-in-chief Mr Arghyrou said that, in his reply to Mr Jeffray, he did not make the point that the pursuer already had a binding agreement with the defender because, when dealing with agreements of this sort, designed to endure for five years, one always tried to be co-operative. He considered that his role, as managing director, was to seek to maintain the relationship and not to do anything that might upset or disturb it. At that time he said that the management in Drambuie was in a volatile state. Had he sought immediately to stand on the pursuer's strict rights "things would have started to get difficult". During the meeting in London, he had sensed that there was conflict between the defender's two Directors, the brothers Calum and Duncan MacKinnon.

The second of the letters (44/2/47) was in the following terms:

Mr Arghyrou said, in examination-in-chief, that his reaction on receiving these letters was that he could not believe what he was reading particularly because he had had no prior warning of their content. Mr Arghyrou sent copies of the letters to Mr Tony Easter, under cover of an email dated 12 June 2003 (44/2/48). In the email he said: "Pls. find attached to my surprise. I still think it is concerns about the future of CS or they might be selling. I will keep this quiet." Mr Arghyrou explained in evidence that "CS" was a reference to Cutty Sark. He also said that there had been rumours that the defender might be on the brink of selling its business. His position was that by saying that he would "keep this quiet" he was concerned that the matter should not leak out to persons like the pursuer's sales force and customers.

• SRTD. Consumer research was planned for end - June.
• Confirmatory discussions with Heineken on SRTD.
• Drambuie 'Vodka'.

Mr Arghyrou, in evidence, having been asked why he made no reference, at all, in that communication to the fact that the pursuer had a binding contract to commence with effect from 1 July 2003, said that he had debated that with himself at the time but had decided not to do so because of the tone of the letter from the defender which he said showed the defender was "dithering". He was trying to keep the relationship alive and to see what happened. He planned to continue discussions. What he had decided, however, was that, since the notice had said that the relationship would terminate in six months time, the pursuer would discontinue long term activities on behalf of the defender's products from 11 June until the end of 2003. On 17 June 2003, Mr Easter wrote to Calum MacKinnon (44.3.2). He did so in the following terms:

Mr Jeffray, in turn, replied to Mr Arghyrou's email of 17 June by an email dated 30 June 2003 (44/3/14). It was in the following terms:

Mr Arghyrou said that he acted upon this message by putting the Heineken project on hold and in continuing with the consumer research on SRTD. He could not remember what he did regarding Drambuie Vodka.

Ms Katsibri followed this email up with another email dated 11 September 2003 (44/4/29). In it she wrote:

Mr Arghyrou said that he had discussed the content of that email with Ms Katsibri before she sent it. On 12 September 2003 Michael Kennedy of the defender replied to Ms Katsibri's email of 4 September. That email from Mr Kennedy (44/3/30), apparently followed a telephone conversation between them. The email commenced:

Mr Kennedy then went on to address some of the specific issues that had been raised by Ms Katsibri. Mr Arghyrou in his evidence, said that after receipt of that email the pursuer had decided to act on the basis of "business as usual" up until 31 December 2003. On 30 October 2003 Mr Arghyrou emailed Mr Calum MacKinnon (44/3/38). The email was headed "Re: Status". Mr Arghyrou wrote as follows:

Mr Arghyrou confirmed to the Court that he wrote that email in the terms just set out because he had decided to present a conciliatory attitude to try to keep the relationship together. By that time he knew that the defender had been in discussion with Bacardi. Legal action, however, against the defender was not contemplated at that stage because "that was the last resort".

Mr Arghyrou, in examination-in-chief, said that he had not reported to the Board, at that time, that he considered that the defender was in breach of contract because he had not reached the view that a continued relationship with the defender was "a lost cause". The termination letter had, for example, not required the pursuer to return all remaining stock in its possession.

Mr Arghyrou said, in evidence, that though that had been a difficult meeting for him he had stayed very cool. He returned to Greece and sought legal advice. He said that he had never gone to court before. Through a contact in Scotland, he obtained the services of Scottish lawyers to give the pursuer advice about its position. Mr Arghyrou enumerated in evidence a number of things the pursuer did on the expectation of their relationship continuing with the defender for a further five years beyond 2003, including the employment, in January 2003, of eight additional personnel.

Mr Arghyrou said that Ms Katsibri had written that email having been told of the termination notice by the defender, and having been advised by Mr Arghyrou, nevertheless, to carry on working with the defender as best she could in the situation. Ms Katsibri's email to Mr Kennedy of 4 September 2003 (44/3/28) was written on the same basis, emphasising the difficulties that were being encountered because of the uncertainty caused by the defender.

• "Inform WSK that they are in a pitch process for the business.
• Evaluate merits of both bids."

It is noteworthy that that note does not recognise that there was already a binding agreement with the pursuer for the next five years in respect of Greece.

• What and when should we communicate to WSK?

Later on the following is noted:

• What is our entitlement/cost risk to work already done on RTD by WSK?"

On the instruction of Mr Calum MacKinnon, Mr Dominic Carter of the defender wrote to Mr Kennedy on 31 July 2003 (7/24). In that email it was stated inter alia as follows:

The email ends "Assuming that WSK key personnel are also on holiday at present I presume this aids your thinking and that you are not being prompted for clarification fromWSK at present". On 6 August 2003 Mr Kennedy emailed Mr Jeffray attaching a draft letter to Bacardi which asked Bacardi to consider a proposal to become the distributor for the Drambuie brands in Greece (7/25). In his covering letter to Mr Jeffray, Mr Kennedy wrote inter alia as follows: "In terms of WSK, I have continued to keep it business as normal and I have not indicated that a change is on the cards." Mr Kennedy accepted, in evidence, that up until that date the defender had given no indication to the pursuer that the defender would be likely to be appointing Bacardi as their Greek distributor. Mr Kennedy also emailed Mr Calum MacKinnon on August 6 (7/26). In that email he referred to the possibility of Bacardi taking over the distributorship. He wrote as follows:

On 4 September Mr Kennedy again emailed Mr Jeffray (7/28 of process) regarding the proposed deal with Bacardi. In that email he wrote:

The reference to the email from Ariane was a reference to 44/3/28 of process. Mr Kennedy, in evidence, explained that, at this stage, the defender wanted to defer communicating to the pursuer the possibility of the distributorship deal going to Bacardi, for as long as possible, to ensure as little disruption as possible in the market. He maintained that if anyone at the pursuer's company had ever contended that there was a concluded binding five year agreement with the pursuer, he would not have recommended the signing of a contract with Bacardi. No such assertion was made on behalf of the pursuer until the summons was served on the defender on 24 December 2003.

The question for the Court was whether or not by 5 February the parties had agreed to be bound. That was a matter to be determined objectively, and in regard to what the parties did and said. Reference was made to McBryde, Law of Contracts (2^nd Ed.) para 5-04. Reference was then made by senior counsel to the decision in the case of Rossiter v Daniel Miller (1878) 3 App. Cas. 1124. That was a decision of the House of Lords in a case where it was argued successfully that, on the facts, certain correspondence relating to the sale and purchase of a piece of land amounted to a final and binding contract without the need of the agreement being constituted in a formal deed. Senior counsel relied, in particular, in the first place, on a passage from the speech of the Lord Chancellor, Lord Cairns, at p. 1137 to p. 1339. After the Lord Chancellor had discussed a previous case, Chinnock v The Marchioness of Ely, he referred at p. 1138 to a dictum of Lord Westbury in that case where Lord Westbury had said:

Lord Cairns, the Lord Chancellor, then continued:

The Lord Chancellor then continued:

Seeking to adopt the approach of the Lord Chancellor in that case, senior counsel for the pursuer submitted that, if the Court in the present case, found that there had been a clear offer and acceptance regarding the distribution rights and there was no condition in either of them which provided that, the agreement had to be made the subject of an executed document then there was a binding and enforceable contract. Reference was also made to a passage from the speech of Lord O'Hagan at pages 1150 to 1151 where his Lordship said:

Reliance was also placed on the speech of Lord Blackburn at p. 1151 where his Lordship said:

Senior counsel for the pursuer submitted that one way for the Court to resolve the issue of whether or not, on an objective view of matters, the parties had evinced an intention to be bound, was to ask the question whether or not they were still in negotiation in any meaningful sense. To put matters another way, the question was whether or not at 5 February 2003 there was anything further to be detailed by the parties as to the term of their agreement. Mr Jeffray's evidence was that there was nothing left to negotiate at that date.

Reference was then made to a passage, in the speech of Viscount Haldane at p. 411 which, in due course, the defender relied upon heavily in the present case. His Lordship in that passage was to the following effect:

In the first place, senior counsel for the pursuer, sought to distinguish that passage from the position in the present case in that, he contended, that the document that existed as at 5 February itself contained the whole of the agreement between the parties. Moreover, as Viscount Haldane referred to the existence of a presumption, there was no authority in any previous case for the existence of such a presumption. In any event, any presumption did not apply to a case, like the present, where there was a completed agreement in an existing written document. As at 5 February the parties did not intend to "pause at that point". They intended rather to stop the negotiation process at that date. I was then referred by senior counsel to the case of Stobo v Morrison's Gowans 1949 SC 184. The judgment of Lord President Cooper in that case, it was submitted, supported the approach of the pursuer in the present case that the practical way of dealing with the question raised was to ask "Were the parties still in negotiations?". The particular passage which was relied upon comes from the Opinion of the Lord President at p. 192 where his Lordship said:

That dictum, senior counsel submitted, showed that even where there is an express stipulation that a completed contract would be embodied in a formal document that does not necessarily indicate that the parties were still in negotiations.

Reference was also made to the averments of the pursuer at page 5 of the summons which are to the following effect:

Senior counsel for the defender pointed out that in the period 5 February to 1 July 2003 the 1998 Agreement was still in force. The instrument of the parties' negotiation towards a possible agreement was a draft document circulating between them. This was not a case where there were previous oral communings or missives whereby agreement was reached which was to be set out in a formal document. Since at least 1990, the practice of the parties had been for similar draft formal agreements being passed between them and made subject to adjustment by them. Reference was made to 41/1/2 of process. That agreement had a completed testing clause. Section 13.2 thereof provided that it stated that the entire agreement of the parties "and there exist no other written or oral agreement as of the date hereof, not superseded and cancelled in accordance with section 13.1 hereof as to the subject-matter hereof". "The date hereof" was the date of the execution of the agreement, i.e. 18 October 1993. The 1998 Agreement between the parties (44/1/5) again had a completed testing clause which the parties had executed on 8 and 12 May 1998. Again there was a provision, section 13.2 which stated that:

That provision, it was said, linked the execution of the document to a fairly fundamental matter, i.e. the supercession of all prior rights existing between the parties. The same structure was envisaged in 44/1/46. Senior counsel for the defender stressed the wording in bold in the preamble of the document to the following effect: "NOW THEREFORE, THE PARTIES HAVE AGREED AS FOLLOWS". Section 14.1 and 14.2 followed the pattern of the previous two agreements just referred to by providing as follows:

The question had to be posed, having regard to the wording of section 14.2, "What was the date hereof?" The answer to that question was the date on which the Agreement was executed. The Agreement's coming into force was suspended until that date. It was not legitimate to infer that the parties had, in the circumstances, meant to stop short of what they had set out to do, i.e. sign the Agreement. Reference was made to the speech of Lord Blackburn in the case of Rossiter at p. 1152 and to Viscount Haldane's speech of Gordon's Executors in the passage cited above. Relying particularly on what Viscount Haldane said in Gordon's Executors, and paraphrasing his words, senior counsel for the defender contended that, in the present case, the parties had produced a draft agreement with a testing clause. It was not legitimate to say they had decided to stop short of doing what they planned to do, i.e. execute the agreement and complete the testing clause.

At page 132 Cooke P. referred to "the principle" as being "of some importance for it provides a prima facie rule of some certainty in the field of commercial or vendor and purchaser law". Referring, in particular to that last dictum, senior counsel for the defender submitted that the signing of the agreement ruled out disputes where one party thought there was a binding agreement and the other did not. It brought a desirable certainty to such situations. I was referred to a passage from McBryde, Law of Contract (2nd Edition) para.5.4.4 dealt with in my previous Opinion at page 28, where it is stated:

Senior counsel for the defender drew my attention to section 9.1 of 44/1/46 which provided:

Before 1 July 2003 the defender had served its notice. That was consistent with there being no agreement binding the parties for the following five years.

I have no reason to depart from that statement of the law having regard to the evidence led at the proof, and the subsequent submissions made to me. In the present case Mr Jeffray for the defender, in evidence accepted that, as at 5 February 2003 there was nothing further to negotiate between the parties as to the terms of a new five year distributorship agreement commencing on 1 July 2003. The document 44/1/46 contained a complete agreement between the parties. There were no outstanding points to be discussed and agreed. To that extent, I am entirely satisfied that the pursuer has met the requirements set out in the first part of the statement of the law I endeavoured to formulate in the passage just cited. But the remaining question is whether, nevertheless, there was no agreement, binding in law, because the document was never executed by the parties, they having intended that neither would be bound by the terms of the document until it was signed by both of them. It is important, in my view, to recognise that while there may be complete agreement between parties, in the sense of negotiations being over, there may not yet necessarily be a binding agreement. That distinction is, I think, what Lord Mackay of Clashfern was alluding to at page 102 of the Comex Houlder Diving Limited case when he said "final mutual assent as spoken of by Lord Blackburn in Rossiter v Miller ....means mutual assent to be bound in law". In many situations, in the law of contract, a person's words are deemed to be his bond but the law of contract provides that, in certain situations, it is a person's signature or equivalent that is his bond. The question, in a case like the present, is whether or not it was the parties' intentions, as objectively discerned from the relevant facts and circumstances that, notwithstanding that they had agreed the terms of the deal, they had postponed its coming into legal effect until they acknowledged its terms formally by executing the document in which the terms were set out. In the present case, the evidence before the Court, as to how the parties had conducted themselves prior to February 2003, as regards their contractual arrangements, was consistent and compelling. The Court had before it three previous written agreements between the parties dating from 1990 (although, of course, the evidence was that the parties had a commercial relationship with each other since the late 1970s). The first of these written agreements before the Court, 41/1/1 of process was in the form of a letter of appointment from the defender to the pursuer. The defender, in a letter of 3 July 1990 sent two copies of the letter of appointment and asked that both be signed on the reverse side and adopted as holograph. The letter of appointment was signed on behalf of the defender by both Mr Calum MacKinnon and Mr Duncan MacKinnon, the defender's directors. It was signed, as requested, on the reverse on behalf of the defender and adopted as holograph by the signatory. The next written agreement between the parties before the Court was 44/1/2 of process. It was signed by Mr Arghyrou on behalf of the pursuer and Mr Peter Darbyshire on behalf of the defender. Indeed it appears that both of these gentlemen signed each of the pages of the document. [Given the date of the document, 18 October 1993, the signing of each page may have been done having regard to what was understood to be the law of Scotland in relation to formal execution of attested deeds at that time.] It is noteworthy, also, that pages 21 and 22 of that document, which follow the body of the agreement itself, and contain the list price for products for 1993 and minimum shipment targets, were also signed by Mr Arghyrou and Mr Darbyshire. The parties' agreement of 1 May 1998, 41/1/5 was also formally executed. It was signed on page 25 by Mr Malcolm MacKinnon and Mr Duncan MacKinnon for the defender and by Mr Arghyrou and Mr Malefakis on behalf of the pursuer. Once again it is noteworthy that all four gentlemen signed the following pages which are described as appendices and deal with price lists and depletion targets. It is, therefore, clear to me that since 1990, at least, these parties chose to regulate their contractual arrangements with a significant degree of formality and did so on a consistent basis. Mr Arghyrou of the pursuer would have been fully aware of that, having been party to the execution of the 1993 and 1998 Agreements. While Mr Jeffray gave evidence that the document, 44/1/46 was taken from what was really the defender's house style for distribution agreements, and while its structure bears some considerable resemblance to the 1998 Agreement, there were, nevertheless, quite a number of important provisions which had to be negotiated between the parties and which differed from the 1998 Agreement's provisions. Those matters were inter alia the subject of the negotiations that took place between the summer of 2002 and the end of January 2003. I am entirely satisfied that up until January 2003 the parties did intend to enter into a fresh distribution agreement to replace the 1998 Agreement and were negotiating, in good faith, to that end. The correspondence to which I was referred covering that period all confirms that as being the position. By early December 2002, indeed, most, if not all, matters of substance had been agreed between the parties. Mr Arghyrou's announcement of the "renewal" of the distributorship to his Board of Directors on 22 November, 44/1/52, while perhaps a little premature, was entirely understandable in that there was no indication to the contrary from the defender that renewal would not take place and, as I have said, most, if not all, matters of substance had been agreed between the parties. The negotiation stage, however, did continue until late January 2003. That is reflected in the fact that Mr Arghyrou was asking Mr Jeffray on 21 January 2003, 44/1/44 "is everything okay with the comments on the draft contract". But the process of negotiation, I am satisfied, came to a conclusion by the exchange of emails of 30 January 2003 and 5 February 2003, 44/1, 46 and 44/49 of process. As matters then stood, Mr Arghyrou was entitled to believe that a final agreement had been reached as to the terms of a new distributorship contract. There had been consensus in idem. Did he, however, consider, and more importantly was he entitled, in law, to consider that the parties now, that is at 5 February 2003, had a binding legal agreement even though the document had not been signed and he himself was recognising that it was the parties' intentions that it should be signed? - I consider these questions fall to be answered in the negative. There was certainly nothing in the way that the parties had dealt with each other, in the past, to lead him to believe that they would consider themselves bound before formal execution of the relevant agreement. Nor was there anything in the evidence of what was done and said in the negotiation of the terms of the 2003 document that this would be so on that occasion. When one has these factors in mind, an explanation emerges for the somewhat remarkable feature of the evidence that, at no time, did anyone from the pursuer, after 5 February 2003, up until the raising of the present proceedings, assert, in any shape or form, that a binding legal agreement had come into force on 5 February 2003, notwithstanding that the 2003 document was never executed by either of the parties. The evidence, of course, of Mr Arghyrou was that the explanation for the lack of reference by him or anyone else from the pursuer to the existence of a binding agreement arose from a desire not to upset the relationship of the parties and, in particular, to diminish or remove the possibility of the defender affirming its commitment to the pursuer. These considerations, it was said, were coupled to a deep and longstanding reluctance on the part of the pursuer and its parent company to indulge in litigation. I have considered those explanations carefully but have come to the view that they do not provide a plausible explanation for the complete lack of reference by Mr Arghyrou or anyone from the pursuer from 5 February onwards and, in particular, from 11 June onwards to the existence of an established binding agreement. As senior counsel for the defender observed the pursuer could have alluded to its belief that there was in place a binding agreement without threatening legal proceedings. It could have done so, in my view, in a measured way which any commercial party might have done in the situation, in discussion with another commercial party, with whom it had had a longstanding and amicable commercial relationship. Mr Arghyrou struck me, in giving his evidence, as a shrewd, astute and very intelligent businessman. I found it difficult to believe that, in the situation that had developed from 5 February until December 2003 between the parties he chose never once to refer to the existence of a binding agreement simply for the reasons he put forward at the proof. I am not necessarily suggesting that he was setting out to mislead the Court in that respect. It may be that his hopes and expectations regarding a continuing relationship with the defender having been dashed, and having taken legal advice on the matter, he, ex post facto, sought to provide an explanation for his conduct which he, himself, began to convince himself about. I find it of some considerable relevance in relation to this part of the case that, not only was Mr Arghyrou not intimating directly to the defender that there was a binding agreement in place, but that he was also allowing Ms Katsibri to believe that she may become redundant and that he, and she, were seeking instructions as to how matters should proceed between the parties on the assumption that there would be no distributorship agreement between them after December 2003. It is also telling, I think, that Mr Arghyrou was saying to Mr Easter on 2 June 2003 in his email of that date and under reference to Mr Jeffray's email of the same date, and his response thereto, "we are almost there". It is difficult to see why he should have expressed himself in that way if he considered that the pursuer had a binding contract with effect from 5 February 2003. This is not a case where the Court is concerned with the construction of the terms of an agreement which the parties accept is binding, but where their dispute is as to its effect. It is a case where the question is whether parties had concluded a binding agreement. The matter, I accept, ultimately has to be tested, primarily as to what the parties' intentions were as at 5 February 2003. The question, however, being whether there was a binding agreement at all at that date, it is legitimate, in my opinion, where the parties have not expressly provided as to what the purpose and effect of formal execution is to be, to look at what occurred from that date and how the parties conducted themselves thereafter. That exercise is for the purpose of seeing whether there was consistent actings of the party which do not contradict, if not support, the position being advanced by one or other of them as to what those intentions were. In that respect, for the reasons given, I have reached the conclusion that the evidence of the parties' conduct since 5 February 2003 was consistent with the position being that the parties' intentions as at 5 February were that there was to be no binding agreement between them until the document was formally executed.