Foley v Classique Coaches Ltd
Court of Appeal
Citations: [1934] 2 KB 1.
Facts
The claimant agreed to sell land to the defendant for the defendant to use for their motor coach business. The land adjoined the claimant’s existing land. The parties also made a second agreement. This second agreement stipulated that the defendant would buy all the petrol he needed for the business from the claimant. The price was ‘to be agreed by the parties in writing from time to time’. The second agreement also barred the defendant from buying petrol from any other person unless the claimant proved unable to meet their needs.
The defendant later alleged that the second agreement was not binding, for two reasons. The first was that the parties had never agreed on a price in writing. They contended that agreement was uncertain and void as a result. The second was that the agreement was an unreasonable restraint on trade.
Issue(s)
- Was the agreement sufficiently certain?
- Was the agreement void for being an unreasonable restraint on trade?
Decision
The Court held that the agreement was sufficiently certain. This was because it was an implied term of the agreement that the petrol would be of reasonable quality and sold at a ‘reasonable price’. This something which the court could determine objectively.
The Court also held that the agreement was sufficiently limited, meaning it was not an unreasonable restraint on trade. This was because it only limited the defendant’s activities on a particular piece of land and the petrol had to be of reasonable quality and sold at a reasonable price. The agreement was therefore valid and binding.
This Case is Authority For…
An agreement may be sufficiently certain if any gaps can be filled with implied terms. However, the usual rules for implying terms must be met: the court cannot make a contract for the parties.
Other
The judges in this case were influenced by the fact that the second agreement was part of the consideration for the land being transferred to the defendant. This made it very undesirable to hold the contract void for uncertainty or restraint of trade.
