The dangers of agreeing to agree

Insight

07.01.2025

“Agreements to agree” have often been held to be unenforceable. Primarily, this unenforceability stems from a lack of certainty of terms – one of the essential elements of a binding contract. And certainly if the agreement is to agree a fundamental term of the contract, such as price, then inevitably the unenforceability follows.

Such agreements to agree tend to arise where the contracting parties make an initial agreement covering certain terms, but also include a provision for a future agreement in relation to other obligations. It is this provision for a future agreement which courts have generally held as invalid.

This issue was the focus of the case of KSY Juice Blends UK Ltd v Citrosuco and highlights (again) the inherent risks of "agreeing to agree". The claimant, as seller of a quantity of orange pulp "wash", sought payment of the contract price and damages for the defendant buyer’s refusal to take delivery. However, although the contract referred to the delivery of a quantity of 1200mt per year over a three-year period, a contract price was only specified for the first 400mt.

It was held that there was an unenforceable "agreement to agree" in relation to the remaining quantity/price and that the buyer was entitled to refuse delivery of, and payment for, the first year’s remaining 800mt. For the same reason, the claimant seller (having terminated the contract) was not entitled to damages for a repudiatory breach by the buyer.

Whilst in the last throes of a negotiation the temptation to include drafting that "fudges" the issue can become overwhelming, this case is just the latest in a long line that reminds us all of the risks of this approach. Of course, depending on the context and which side of the contractual fence you are on, it may serve you well to adopt this tactic but, for those for whom that cannot be said (at the risk of a huge over-generalisation, suppliers mainly) it ought not to be quite so tempting.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.