ED & F Man Commodity Advisers Ltd & Anor v Fluxo-Cane Overseas Ltd & Ors

In assessing whether commercial parties reached a binding agreement, the court must consider their words and conduct objectively, viewed in their commercial and factual context. Parties may agree on essential terms while leaving implementation details for later. An agreement is not uncertain merely because further agreement is required, and striking down a bargain for uncertainty is a last resort.

In multi-party negotiations, no formal acceptance or individual assent from every participant is necessary where the discussion objectively proceeds on the basis that all are committed and no participant dissents. A binding agreement may therefore arise to restrain unilateral action pending a further meeting, alongside a conditional agreement governing subsequent performance.

The claimants, acting as clearing houses and brokers, sought summary judgment in a dispute arising from the liquidation of the defendants’ sugar futures positions. The defendants relied on an agreement allegedly made during a multi-party meeting on 17 January 2008, under which the brokers would act collectively, refrain from unilateral liquidation overnight, and pursue an orderly reduction if the defendants could commit to paying margin.

The hearing also included an application concerning a worldwide freezing order, but time permitted determination of only two issues: whether the 17 January agreement was arguable and whether it was void for uncertainty. The central questions were whether the transcript showed a concluded agreement and whether the alleged terms were sufficiently certain.

1. Summary judgment and outcome. The court granted declarations that the meeting ended with two binding arrangements. First, all participants agreed, with immediate effect, not to take unilateral action overnight to liquidate the first defendant’s positions before the meeting on 18 January 2008. Secondly, they made a conditional agreement that, if the first defendant could then commit to pay margin in accordance with its contracts, the brokers would put in hand an orderly reduction of its positions.
2. Objective agreement. The question was whether the parties’ words and conduct objectively demonstrated an intention to enter into mutually binding obligations. The court considered the whole commercial context, including the urgency of the market situation, the parties’ shared experience, the exchange’s requirements, and the practical prize of avoiding a disorderly liquidation. The language initially reflected negotiation, but the later discussions showed that the participants were proceeding on the basis of commitment and collective action.
3. Multi-party assent. No particular formality, such as going around the table or obtaining an express statement from every participant, was necessary. Where the participants were negotiating on the basis that all were involved, and no participant dissented when agreement was reached, the objective requirements for a meeting of minds could be satisfied. The absence of dissent was significant in the circumstances.
4. Certainty. The essential obligations were sufficiently identified. The parties had agreed the interim restraint on unilateral liquidation and the conditional framework for an orderly reduction, including the need for timely margin commitment. Further details of implementation did not prevent a binding agreement. The court applied the principle that uncertainty is a last resort and held that the alleged agreement was not void for uncertainty.
5. Procedural observations. The judge criticised the attempt to load a three-day vacation hearing with numerous issues and emphasised the need for realistic preparation and case management. Those observations were not necessary to the declarations.