Agreement to agree CASES
In English law, an agreement to agree refers to situations where parties express an intention to formalise contractual terms at a later date but do not create an immediately enforceable contract.
Definition and Principles
Generally, agreements to agree lack sufficient certainty to be legally binding, as courts require clear, definite terms for enforceability. Mere expressions of intent or promises to negotiate further are typically insufficient.
Exceptions and Considerations
- Courts may enforce agreements if essential terms are sufficiently certain or mechanisms for determining terms are clearly specified.
- Agreements containing binding commitments to negotiate in good faith may sometimes be enforceable.
Practical Implications
Parties should avoid relying solely on agreements to agree, instead clearly specifying contractual terms or methods to establish those terms, reducing uncertainty and potential disputes.
Importance
Understanding the limitations of agreements to agree promotes clarity, enforceability, and confidence in contractual relationships.
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An agreement for the sale of goods stated the price was 'to be agreed upon from time to time'. The House of Lords held this was not a binding contract, as an essential term was left for future agreement, making it fatally incomplete. Facts The appellants, May & Butcher Ltd, sought to purchase the entire stock of ‘old tentage’ from the British Government’s Disposals Board following the First World War. An agreement was outlined in a letter dated 29 June 1921, which stated that the price for the tentage, dates of payment, and delivery schedule would be ‘agreed upon from
An agreement for the sale of timber included an option for a future purchase 'of fair specification'. The seller claimed this option was unenforceable for uncertainty. The House of Lords held that the court should enforce commercial agreements where possible, and any uncertainties could be resolved by reference to the parties' previous dealings. Facts W.N. Hillas & Co. Ltd. (the buyers) entered into a contract with Arcos Ltd. (the sellers) to purchase 22,000 standards of Russian softwood timber for delivery during 1930. The contract specified the timber as being ‘of fair specification’. Clause 9 of this agreement also granted Hillas
