Failure to reach agreement on price fatal to existence of sub-contract

In Merit Process Engineering Ltd v Balfour Beatty Engineering Service (HY) Ltd [2012] EWHC 1376 (TCC), [2012] All ER (D) 09 (Jun) Mr Justice Edwards-Stuart held that the failure of the parties to reach agreement on the price of the works had the consequence that the parties had not entered into a sub-contract on the terms alleged by the defendant. While he recognised that parties can commit themselves to binding legal relations even though there are further terms still be agreed, a court is likely to be slow to reach this conclusion where the failure to agree relates to an important term of the contract, such as the price. Nor had the parties provided any objective criteria by which the price could be ascertained and so it was held that the failure to reach agreement was fatal to the existence of a contract on the terms put forward by the defendant.

In Merit ProcessEngineering Ltd v Balfour Beatty Engineering Service (HY) Ltd [2012] EWHC 1376 (TCC), [2012] All ER (D) 09 (Jun) Mr Justice Edwards-Stuart held that the failure of the parties to reach agreement on the price of the works had the consequence that the parties had not entered into a sub-contract on the terms alleged by the defendant. While he recognised that parties can commit themselves to binding legal relations even though there are further terms still be agreed, a court is likely to be slow to reach this conclusion where the failure to agree relates to an important term of the contract, such as the price. Nor had the parties provided any objective criteria by which the price could be ascertained and so it was held that the failure to reach agreement was fatal to the existence of a contract on the terms put forward by the defendant.