KSY Juice Blends UK Limited v Citrosuco GmbH

A contract may be enforceable for part of a transaction even though another part is an unenforceable agreement to agree. Where the parties have agreed a quantity but left the price for part of it to future agreement, the court may preserve the concluded bargain, but it cannot imply a price mechanism which contradicts the contract or lacks sufficient certainty.

An invoicing price is not necessarily the contractual price. A reasonable or market price, or an obligation to use reasonable endeavours to agree a price, cannot be implied where the contract expressly leaves the price to agreement and the proposed term is unworkable or uncertain.

The claimant sought payment for, alternatively damages arising from, the defendant’s alleged failure to accept orange pulp wash, known as wesos, under a three-year contract.

The contract provided for 1,200 metric tonnes per year. The first 400 tonnes were priced at €1,350 per tonne, invoiced at €1,600 per tonne with free trucks adjusting the effective price. The remaining 800 tonnes were described as subject to an open price to be fixed by December of the preceding year. No price was agreed for that balance.

The central issues were whether the contract was enforceable for the additional 800 tonnes, whether a contractual price could be identified or implied, and whether the claimant could recover the price or damages and terminate the contract.

The claim failed in relation to the additional 800 metric tonnes per year. The court also made findings on the remaining issues, although they were academic in light of that conclusion.

1. Agreement to agree. The parties intended to contract for 1,200 tonnes per year, but the price for the additional 800 tonnes was expressly left open for future agreement. The contract was therefore unenforceable as to that balance where no price was agreed.
2. Construction of the price provisions. The €1,600 per tonne invoicing figure was not a fallback contractual price. It was an invoicing figure used with the free-trucks mechanism. The contractual price for the additional quantity remained a price to be agreed by the parties. The mechanism could not be converted into a fixed price without contradicting the express terms and commercial purpose of the contract.
3. Implied terms. No term for a reasonable price, market price, or reasonable endeavours to agree a price could be implied. The contract already specified that the price was to be agreed. In addition, the proposed terms lacked sufficient precision because price depended on factors including packing, transport, duty, exchange rates, supply and demand, shelf life and commercial relationships.
4. Price and damages claims. Even if an enforceable contract had existed, the claimant could not recover the price merely by issuing invoices. Delivery instructions and the passing of property were required for an action under section 49 of the Sale of Goods Act 1979. Had there been a breach, damages would have been assessed on the basis that there was no available market, subject to avoidable delivery costs and without a deduction for failure to mitigate.
5. Termination. Because there was no binding contract for the additional 800 tonnes, the claimant was not entitled to terminate for repudiatory breach and could not recover termination damages. The claim was dismissed in substance, with consequential costs matters left to be addressed.