On appeal, the Court of Appeal ruled in favour of the High Court, stating that « for an additional period, another agreement must first be concluded between the parties », as agreed at the SPA. As a result, both parties were free to agree or disagree on the duration of a possible extension without being obliged to negotiate in good faith or disregard their own business interests (provided that the underlying contract did not contain the opposite, which was not the case).3 The term was the « real paradigm » of an agreement inapplicable to the agreement. The Commercial Court examined the principles of the agreements to be agreed by the main authorities of the Court of Appeal of Mamidoil-Jetoil Greek Petroleum and B J Aviation. An essential principle derived from these decisions is that if, in a true interpretation of the contract, the parties have agreed on an essential issue (such as the price in a contract for the sale of goods or the provision of services) in the future, it is unlikely that the contract will be enforceable because of the uncertainty. Decisions also have the power to argue that if the court is satisfied that the parties wanted to make their agreement enforceable, it should seek to implement that intention by constructing or involving a clause. However, the implied clause cannot be incompatible with the court`s interpretation of the express contractual conditions. « Agreements » are a commercial reality in the life of companies, especially those involved in long-term contracts, such as research and development agreements in the life sciences or industry, complex technology contracts or energy and resource supply agreements. Often, companies enter into an agreement on the basis of an agreement (explicit or implied) that another agreement will be concluded at a later date, when the business justification and expected terms of that other agreement may have become clearer. Therefore, instead of negotiating their secondary agreement provided for at the time of the first conclusion of the contract, the parties simply agree that some or all of the terms of this agreement will be determined in the future. In this article, following our previous update, we examine the impact of the recent Court of Appeal case, Morris v Swanton Care & Community Ltd (Morris),2 in which the plaintiff sought to invoke a contractual option that allows him to provide additional services for « an additional period that can reasonably be agreed » as the basis for a claim for damages.
Finally, we highlight a number of points of formulation that can be drawn from the judicial treatment of the agreements to be concluded. (ii) Potentially enforceable obligations/rights arising from the parties` agreement on the contractual clauses (some elements still need to be clarified in the future on the basis of objective criteria or a specific mechanism that can be assessed by the courts in accordance with the agreement of the parties) The claimant has not disputed that delivery dates are a key issue. However, it argued that the parties could not intend that the option agreement would not be binding and that it contained an effective mechanism for setting delivery dates without the need for a future agreement. The applicant raised the latter point on the basis of two alternative implicit clauses. His main argument was that the delivery date was the earliest date the defendant had offered to the best of his ability in 2016 (first option) or 2017 (options two and three), and if not the earliest date he could offer with his best efforts. In the alternative, it argued that the date of delivery was an objectively reasonable date to the best of its ability in the light of the defendant`s obligation to be determined by the Court whether it had not agreed. The renegotiation clause stated: « . In the event of a material or financial change in the circumstances affecting the operation of [Tata SteelWorks] or the operation of the [Port] by ABP on or at any time after September 15, 2007, either party may notify the other party that the terms of this license shall be renegotiated. the parties will promptly endeavor to agree on modified terms reflecting such a change in circumstances and if no agreement is reached within 6 months. the case is referred to an arbitrator… Tata had the right, even after September 15, 2007, to terminate the license in writing with 12 months` notice if it closed its two local steel mills.
In 2015, Tata put one of its sites on hold, but its other factories remained in operation. In February 2016, Tata announced as part of the renegotiation clause and requested amended license terms, including a 50% reduction in fixed fees. Tata argued that there had been a « major physical or financial change in the circumstances » due to various market challenges facing the UK steel industry. These include the huge increase in cheap Chinese imports into Europe, which led to a sharp drop in domestic steel prices, the strong pound that had made British exports uncompetitive, and higher import tariffs imposed by the UNITED States. ABS argued that the renegotiation clause was void because of the uncertainty. In appropriate cases, the court recognizes the usual practice in certain professions or industrial sectors and is willing to include in an agreement conditions that take account of that practice, provided that the wording of the contract is not inconsistent with the effects. Finally, if it can be shown that the parties have dealt consistently and clearly with each other on a given basis, the court may be prepared to imply conditions that take this into account, provided that the very wording of the contract does not contradict it. The court then turned to the issue of implied conditions. It examined the main authorities in implicit terms, including Marks and Spencer, where the Supreme Court confirmed that an implied clause (for a reasonable reader at the time of entering into the contract) should be so obvious or necessary for the effectiveness of the business.
The court ruled that, despite « its efforts to reach its maximum, » it could not imply either term. It held that the first, the implied « date of offer » clause, would function as a « unilateral » contractual scheme, i.e. the plaintiff would be obliged to accept any delivery date that the defendant could offer to the best of its ability. .