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Facts[]

D, operators of a fleet of motor coaches, agreed to purchase a piece of land from P who operated a service station on adjacent premises. The sale was made subject to a supplemental agreement that D would purchase all of the petrol required for their business from P “at a price to be agreed by the parties in writing and from time to time.” The supplemental agreement contained an arbitration clause to this effect. D agreed and for three years, obtained all of their petrol from P. However, D then attempted through their solicitor to repudiate the supplemental agreement on the grounds that no fixed price had been stated for the petrol and this rendered the contract invalid. In return, P sought a declaration that the agreement was binding and an injunction to prevent D from purchasing their petrol elsewhere. At the trial level, the court decided in favour of P and at the court of appeal, this decision was sustained.

Issue[]

  1. Does the fact that no price is quoted mean that the contract was void for uncertainty?

Decision[]

Appeal dismissed.

Reasons[]

Scrutton states that there was a binding contract. He struggles to fit together the precedents of May & Butcher Ltd. v R and Hillas & Co., Ltd. v Arcos, Ltd. (1932). Holding that each of these cases was decided on the facts, he notes that the two parties acted for three years as if there was a contract, so Classique Coaches cannot simply decide not to adhere to it all of a sudden. Further, if there was an issue with the price it should have been settled by arbitration as was laid out in the contract – Classique breached the contract by going to other vendors.

Ratio[]

  • An agreement to make an agreement does not constitute a contract.
  • The wrongful repudiation of a contract by one party relieves the other party from the performance of any conditions of the contract.
  • Past performance will indicate that a contract is binding (reliance interest).
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