1. What is Consistent Behavior?
Consistent conduct involves one party acting in a manner that another perceives as legally binding.
There is a close correlation between assertive behavior and inaction. It must also be said that there are great similarities between situations where an agreement “eventually grows”, cf our article on this, and situations where an agreement is considered to have been concluded as a result of conclusive conduct.
We will try to highlight the topic through case law.
2. Judgment of the Supreme Court of 16 May 2017 (Yara judgment)
The dispute in this case concerned the question of whether an agreement on commission in intermediary relations had been concluded and, in that regard, what requirements are imposed for such an agreement to be concluded.
In the judgment, the Supreme Court refers to a number of other judgments of the Supreme Court, and one can say by far that the Supreme Court summarizes the state of law in this judgment. Accordingly, we quote more from this judgment than normal, and so we do not go into more detail on the judgments to which it refers.
From the judgment, the following is found:
(36) The starting point in Norwegian law is freedom of form when concluding agreements. If it is not If there is a written or oral agreement, other circumstances such as inaction and inaction must be taken into account. An overall assessment shall be carried out, including the nature and scope of the agreement, agreement on key terms, remuneration and the parties' prior circumstances will be of importance. The assessment may fall out differently, depending on the type of contract, business area, expectations of the parties, etc.
(38) In practice from the Supreme Court, some guiding criteria have been drawn up for the assessment of when an agreement must be deemed to have been made, including in Rt-2001-1288 (Gate Gourmet). The case concerned the question of whether an acceptance of a tender had been made by conclusive conduct. About this, the Supreme Court stated on page 1298: “For the question of whether contract is to be deemed terminated, it is crucial whether the bidder has behaved in such a way as to give the tenderer reasonable cause to believe that he has been given the assignment.”
(39) These criteria have been followed up in subsequent case-law, for example in Rt-2008-969 (Smolt judgment), which concerned the change of debtor in smolt production, and Rt-2011-410 (Optimogården), which concerned the rental of business premises.
(40) Common to these decisions is that the pledger failed to make the promisee aware that it was considered that an agreement had not been concluded. The importance of this inaction was treated as part of a comprehensive assessment. (...)
(41) It can be inferred (...) that in the question of whether the agreement has been concluded, it is not decisive how the promisee actually perceived the promisor's conduct, but whether the promisee had reasonable cause to understand the promisor in such a way that he had bound himself. It is the legitimate expectations that are protected. The assessment of what the promisee could reasonably expect should be made on the basis of an overall assessment, where inaction on the part of the pledger is a matter of importance. The case-law shows that a concrete assessment of the circumstances of the case should be made.
(42) In the overall assessment, consideration must be given to what the promisee could reasonably put into what the promisor “wrote, said, did or failed to do when all circumstances are taken into account. “, cf. Woxholth, Law of Contract, 10th edition page 35. But it is also close to looking at the circumstances of the promisee, as there will be a correlation between the parties' performance in the case. If the promisee's expectations have given visible results showing the pledger that he believes an agreement has been reached, the pledger will have a strong urge to react, cf. also the Optimogården judgment.
(45) “Of particular interest in assessing whether a party has legitimate expectations that an agreement has been concluded is the extent to which agreement has been reached on key terms of the agreement. If there is agreement on important points of agreement, this must be given great importance in the overall assessment, see, inter alia, Rt-1987-1205 (Folgefonna hotell), which concerned the question of the transfer of a property. The Supreme Court, in this decision, placed considerable emphasis on the fact that the purchase price and all material circumstances had been clarified, so that the seller — after an overall assessment — was considered to be bound. If there is no agreement on substantive matters, it will take several more time before a Party can claim that an agreement has been concluded.”
3. Disagreement over the format of remuneration
If you do not put an agreement in writing, you can quickly run the risk of confusion about key issues.
In a judgment of the Agder Court of Appeal of 9 February 2024 (LA-2023-032471), the dispute concerned which remuneration format had been agreed. The dispute was resolved by a long way through an analysis of the parties' conduct, or rather conclusive conduct.
The dispute stood between a contractor and a subcontractor.
The parties had not entered into a formal contract.
Through the evidence, it was clarified that the right of responsibility for both design and execution had been applied for the subcontractor.
Evidence was also brought that the subcontractor had detailed design of his works.
Accordingly, the court concluded that a total subcontract had been entered into even though NS 8417 had not been agreed.
On the other hand, the Court of Appeal considered the standardised construction contracts to be “express general principles of contract law”, and concluded that NS 8417 would be a relevant source of law.
Eventually, cooperation between the general contractor and the total subcontractor split.
The latter finished his works and sent his last invoice referred to as “a account” invoice No 5.
Thus, the total subcontractor had sent four a account invoices during the project.
In the fifth, and final, account invoice, the total subcontractor settled all works as if everything had been carried out on account.
The general contractor did not accept bill work, stating in turn that a fixed price had been agreed.
After a detailed review of all the evidence, the Court of Appeal concluded that the parties had agreed on a fixed price, and awarded the general contractor the award.
The Court of Appeal, in its assessment of evidence, emphasised, inter alia, that the general subcontractor had sent four a account invoices without attached timesheets or any other form of documentation required for invoice work.
There were also several modification order claims where the general subcontractor had demanded additional remuneration, which is not necessary if everything is to be carried out at cost.
In addition, the total subcontractor had originally prepared budgets with round sum records, and sent an email to the general contractor with “offers” as the heading.
It can therefore be safely established that the Agder Court of Appeal decided the case on the basis of an assessment of how the parties had behaved towards each other. An overall assessment was made based on the parties' conclusive behaviour.
We have written in more detail about the ruling under “Recent jurisprudence”; read more here.
