Key takeaways
Courts can fill pricing gaps in contracts
The Court of Appeal ruled that a market-based price could be implied for additional goods, ensuring the contract remained enforceable.
Commercial history can shape contract terms
The Court relied on the parties’ prior agreements and industry norms to justify implying a pricing term into the contract.
Jurisdiction challenges must be carefully assessed
The tribunal’s refusal to hear the case was overturned, reinforcing the need for thorough jurisdictional analysis.
KSY Juice Blends UK Limited -v- Citrosuco GmbH [2025] EWCA Civ 760
This was a sale of goods dispute, in which the parties had agreed the price of a fixed quantity of product, with the price for additional product to be fixed at a later date, in order to allow for market volatility. When the parties did not agree on the price for the additional product, one party used that as an excuse to argue that there was no binding agreement with regard to that additional product.
The Commercial Court decided that it was not appropriate to imply a term as to what the price for the additional product should be. There was, therefore, no binding agreement with regard to the additional product.
The Court of Appeal has now disagreed and found that, on the facts of this case, a term could be implied into the contract that the price for the additional product should be the reasonable or market price (which, the Court of Appeal said, were the same thing).
The background facts
The parties concluded a contract in 2018 for the sale of wesos (orange pulp wash). The price of the wesos supplied under the contract was calculated according to “Brix” and adjustable according to “Brix value” (the Brix unit is commonly used as a means of pricing orange juice).
The contract provided for the sale of a fixed quantity of 1,200MT per year for the years 2019 to 2021. There was a fixed price (but adjustable according to Brix value + - 5 Brix) for 400MT per year, with the balance 800MT “at open price to be fixed” by a specified date.
Prior to the 2018 contract, there had been two prior contracts between the parties. Those were on terms similar to the 2018 contract with a fixed quantity of wesos at a stated (but adjustable) price and with further quantities at a price “to be agreed” by a specified date. Both of the earlier contracts had been duly performed by the parties, after agreeing a price for the further tranches of product.
By late 2018, the buyer’s need for wesos had reduced and the 2018 contract had become a bad bargain for it. The buyer, therefore, failed to take delivery of the full contractual quantities of wesos. The seller terminated the contract due to the buyer’s repudiatory breach.
The buyer argued that, as the 2018 contract had left the price of the balance 800MT of wesos per year to be agreed and the parties had not reached agreement on the price, the contract was to that extent unenforceable as being a mere agreement to agree.
The Sale of Goods Act 1979
S.8(1) of the Sale of Goods Act (SGA) 1979 provides that:
"The price in a contract of sale may be fixed by the contract, or may be left to be fixed in a manner agreed by the contract, or may be determined by the course of dealing between the parties.”
If the contract is silent on the price, the buyer is obliged to pay a reasonable price (as per section 8(2) of the SGA 1979).
The Commercial Court decision
At first instance, the Commercial Court acknowledged that the parties had evinced an intention to deal in 1,200MT of wesos per year for three years. However, it concluded that they had not agreed a price for the balance 800MT of product and the Commercial Court declined to imply a term that the price (that the parties had agreed to agree) would be a reasonable price or the then market price. In the Commercial Court’s view, in the circumstances of this case, there were difficulties in defining the market price or in determining what the reasonable price for the additional quantities of wesos was.
The Commercial Court also rejected the argument that there was an implied term that the parties would use reasonable endeavours to agree a price. Such a term was too uncertain to be workable.
The Commercial Court concluded that there was no binding contract as regarded the additional 800MT per year of wesos.
The seller appealed.
The Court of Appeal decision
On appeal, the buyer argued, amongst other things, that where the parties had expressly stated in their contract that they would agree the price for the additional product, this precluded the court imposing a price on them that they had not agreed but which the court considered to be reasonable. In those circumstances, according to the buyer, s.8(2) SGA 1979 could not apply. Furthermore, if a reasonable price under s.8(2) could not apply, then there could also be no implied term as to reasonable price.
The Court of Appeal disagreed. Its reasoning was as follows:
The contract implicitly envisaged that the parties would seek to fix the price by agreement.
That did not, however, preclude the implication that, in the absence of reaching agreement, the price would be a reasonable or market price.
The parties intended to reach a binding agreement as to the full quantity of wesos contemplated by the contract. The subject matter of the contract was a trade with which the parties were perfectly familiar. The market was generally volatile, which is why the parties had left some flexibility as to pricing in a long-term contract. This flexibility had been successful in the past because, in their past contracts, the parties had reached agreement on price where that was left open.
The parties had provided a mechanism for deciding most elements of their long-term agreement. The contract did not contemplate any renegotiation on any other part of their agreement. This case was, therefore, firmly in the territory of those contracts which a court should strive to uphold.
Where the parties had agreed the overall price for all of the wesos to be supplied over three years and had agreed the amount to be supplied each year, the case for seeking to prevent the contract from failing (where the price of 2/3 of the amount to be supplied each year had been agreed) was compelling.
On the expert evidence, there was a generally accepted method of identifying the price of wesos by reference to frozen concentrated orange juice (FCOJ), it being generally accepted that the price for wesos of Brex quality specified in the contract was around 70% of the price of FCOJ.
The Court of Appeal concluded that a term should be implied to the effect that the price of wesos for the additional quantities was to be fixed, in the absence of the parties’ agreement, as a reasonable or market price. There was, therefore, no need to consider the alternative argument that the parties should use their reasonable endeavours to agree the price.
Comment
The Court of Appeal’s decision reflects the fact that, particularly in a commercial context involving parties who have had previous dealings with each other and are familiar with the trade in question, the English courts are willing to imply terms, where that is possible, to enable a contract to be performed.
For these purposes, an express stipulation for a reasonable or fair measure or price will be a sufficient criterion for the courts to act on. But even in the absence of express language, the courts are prepared to imply an obligation in terms of what is reasonable.
This dispute highlights the necessity for pre-contractual legal advice in circumstances where the parties wish to include flexible pricing mechanisms in their contracts.