Negotiations between a supermarket and local developer were marked ‘subject to contract’, but heads of terms for the joint venture were never finally agreed, nor was a joint venture agreement signed. The supermarket then found another developer to work with, and the first developer then claimed for a breach of a ‘constructive trust’ between the parties.
The High Court found that the developer’s negotiations with the supermarket, including the possibility of transferring the site to the developer at some stage, had never amounted to an ‘understanding’ for these purposes – they were merely discussions.
Lessons for those considering a joint venture? Get everything clearly agreed in writing before the venture begins.
The case? Generator Developments LLP v Lidl UK GmbH  EWHC 814 (Ch)
Parties negotiating a potential joint venture should ensure their discussions are completed, and preferably committed to writing, before they take any action to carry out their joint venture - or risk the court finding there was no 'understanding' between them