Commercial terms can be a minefield if not carefully negotiated and drafted to reflect the parties’ clear intentions. An ‘agreement to agree’ a price for a product has led to the Court of Appeal providing guidance that businesses will find helpful.
Pricing is at the heart of the business relationship and should be made clear in formal agreements. However, the commercial realities for many business relationships, particularly those that are longer term, mean flexibility may well be necessary.
In KSY Juice Blends UK Limited v Citrosuco GMBH [2025] EWCA Civ 760, the court clarified that an ‘agreement to agree’ at a later date is not automatically unenforceable.
What's the background?
KSY Juice Blends UK (KSY) supplied premium juice products and contracted with the defendant in May 2018 to supply orange pulp wash over a period of 3 years. Within the pricing provisions, a clause stated: “800mt [metric tonnes] at open price to be fixed latest by December of the previous year”.
In the event, no agreement as to the open price was reached in December 2018. It was the same in 2019 and in 2020. Despite the lack of agreement, KSY issued invoices in January and May 2020 in respect of 800mt of pulp wash for 2019 at the price of €1,600/mt (which the defendant declined to accept).
The defendant did not pay the invoices and KSY brought a claim for damages. The trial judge rejected KSY’s claim in respect of the 800mt element of the contract, leading to this appeal.
At issue was whether the parties had agreed, on a true construction of the contract, that a reasonable price, or a market price, was to be paid in relation to the 800mt per year. Or was the open price provision an unenforceable ‘agreement to agree’?
KSY's case was that there was a reasonably ascertainable market price for the pulp (by reference to the frozen concentrated orange juice market price).
Contract upheld
The Court of Appeal found that it was implicit within the contract that “at least in the first instance – the parties would seek to fix the price by agreement”. Lord Justice Zacaroli added that the parties undoubtedly would have hoped the price would be fixed by agreement. The parties had agreed (or provided a mechanism for deciding) most elements of their longterm agreement; and the contract did not contemplate renegotiation of any other elements of it. The contract was therefore “firmly in the territory of those contracts which a court will strive to uphold”.
Therefore, there was an implied term to the effect that the price “was to be fixed, in the absence of agreement, as a reasonable or market price”.
Furthermore, although s8(2) Sale of Goods Act 1979 does preclude the implication of a term as to reasonable or market price - that only applies where the price is not determined by the contract; in other words, when the contract is silent as to price. The contract in this case was not silent in that respect, therefore s8(2) did not apply. KSY was entitled to be compensated in respect of the 800mt per year of pulp.
The defendant has lodged an appeal with the Supreme Court and we will be watching developments closely.
What does this mean?
The ruling confirms that an ‘agreement to agree’ is not automatically unenforceable - it depends on the facts and the proper construction of the terms relied on by the parties.
Long-term contracts can give rise to particular and understandable challenges for both parties. The appeal court’s decision sets out useful guidance when negotiating the best way to ‘agree to agree’ matters such as future pricing.
For advice and representation on business disputes, get in touch with the Commercial Litigation team at mfg Solicitors by calling 0845 55 55 321 or emailing reuben.grimshaw@mfgsolicitors.com. Alternatively, you can complete our online form and we will get back to you as soon as possible.
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