It happens, unfortunately. Contracts are concluded and important terms are either not agreed at all or are not sufficiently clear to avoid a dispute later.
The Court of Appeal recently decided that where a contact would appear to be unenforceable because the parties didn’t agree an essential term of that contact, then that missing term cannot simply be implied into the contract.
The case in question was Wells v Devani  EWCA Civ 1106 and was about a dispute resulting from an estate agent failing to mention before a sale was concluded what the trigger event would be for the payment of his commission.
In 2017 Mr Wells developed a block of residential flats in Hackney. The development comprised of 14 flats and Mr Wells experienced some difficulty in selling them. Mr Wells met an estate agent, Mr Devani, who was confident that a property management company he knew would be interested in buying the flats.
Mr Devani told Mr Wells during a telephone conversation that his commission for the sales would be 2% of the sale price plus VAT, but he failed to mention during that conversation what event would trigger the payment of that commission.
A buyer for all of the flats was found by Mr Devani and he sent Mr Wells an email attaching his terms of business including the following information about the payment of commission:
“1. A commission of 2% plus VAT (Multiple Agency) of the eventual sale price of the property.
2. The commission will be due on exchange of contracts with a purchaser”.
After the sale of the flats was completed, Mr Devani asked for his commission to be paid in the amount of £42,000.00 plus VAT. Mr Wells refused to pay.
When the case first got to court the judge found that a legally binding contract had been formed and that Mr Wells owed the commission to Mr Devani. This decision was reached even though the judge accepted that Mr Wells and Mr Devani did not discuss or agree on the event that would trigger the payment of Mr Devani’s commission.
The judge’s view was that even in the absence of a specific clause in a contract, the law would imply the minimum term necessary to give effect to the parties’ intentions.
However, the Court of Appeal didn’t agree with this position and overturned the decision, expressing their view that the parties had not reached a legally binding contract in the circumstances. The Court of Appeal went on to say that unless Mr Wells and Mr Devani had specifically agreed the events to trigger the payment of commission, then their bargain remained incomplete.
Ultimately, the Court decided that it did not agree with Mr Devani’s argument that there was no need to imply a term as to the trigger event for the commission payment as it could be established by interpretation.
Consider yourself warned.
By Daniel Gardener
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