Agreement to Agree in UK Law

The reason why an agreement to negotiate, like an agreement to agree, is unenforceable, is simply because it lacks the necessary certainty. Each party to the negotiations is entitled to pursue his (or her) own interest, so long as he avoids making misrepresentations. In my judgment, while negotiations are in existence either party is entitled to withdraw from those negotiations, at any time and for any reason.

As to that, it has frequently been observed that the creature to which the law gives no effect is an agreement to agree on terms which are not specified. Here there is a plain agreement that in the circumstances specified the hire shall be equitably decreased. True it is that the amount is left to the agreement of the parties. But they can only agree a decrease which is equitable in amount. That looks very like an agreement to agree on specified terms.

The object of the Court is to do justice between the parties, and the Court will do its best, if satisfied that there was an ascertainable and determinate intention to contract, to give effect to that intention, looking at substance and not mere form. It will not be deterred by mere difficulties of interpretation. Difficulty is not synonymous with ambiguity so long as any definite meaning can be extracted.

But I think the other reason, which is that the parties never in intention nor even in appearance reached an agreement, is a still sounder reason against enforcing the claim. In truth, in my opinion, their agreement was inchoate and never got beyond negotiations. They did indeed accept the position that there should be some form of hire purchase agreement, but they never went on to complete their agreement by settling between them what the terms of the hire purchase agreement were to be.

The true distinction is between those cases where the mode of ascertaining the price is an essential term of the contract, and those cases where the mode of ascertainment, though indicated in the contract, is subsidiary and non-essential�see Fry on Specific Performance (6th Edition) paragraphs 360, 364.

Fourth, where the court is satisfied that the parties intended that their bargain should be enforceable, it will strive to give effect to that intention by construing the words which they have used in a way which does not leave the matter to be agreed in the future incapable of being determined in the absence of future agreement.

It would be a strong thing to declare unenforceable a clause into which the parties have deliberately and expressly entered. I have already observed that it is of comparatively narrow scope. To decide that it has "no legal content" to use Lord Ackner's phrase would be for the law deliberately to defeat the reasonable expectations of honest men, to adapt slightly the title of Lord Steyn's Sultan Azlan Shah lecture delivered in Kuala Lumpur on 24th October 1996 (113 LQR 433 (1977)).