Luxor (Eastbourne) Ltd v Cooper
House of Lords
Citations:  AC 108;  1 All ER 33.
The claimant was an agent. They entered into an oral agreement with the defendant to find buyers for the defendant’s properties. The defendant would pay the claimant commission if he successfully introduced to them buyers willing to pay a particular sum. The claimant produced appropriate buyers, but the defendant ultimately decided not to sell to them. They eventually sold the properties to another buyer they had found elsewhere.
The claimant argued that they were in breach of contract. He argued that the defendant implicitly undertook not to do anything to impede the claimant earning his commission. Accordingly, the defendant had to sell to any appropriate buyer which the claimant introduced to them.
- Did the implied term which the claimant contended for exist in this contract?
The House of Lords held in favour of the defendant. There was no such implied term in this contract, as a matter of fact or law.
This Case is Authority For…
An implied term will only be found where:
- It is necessary for the business efficacy of the contract; or
- A reasonable bystander would assume that the parties would obviously have agreed to the term had it been brought up at the time of contracting.
Viscount Simon noted that the implied term argued for in this case would cause serious difficulties. The claimant was not the only agent the defendant hired. What if, for example, immediately after meeting the claimant’s buyer, a competitor brought the defendants a buyer with a better offer? On the claimant’s case, the defendant would be bound to proceed with his buyer and ignore the better offer. This would defeat the point of having multiple, competing agents. It was unlikely, therefore, that a reasonable bystander would assume that the parties had obviously agreed to the term proposed. Similarly, the term was clearly not necessary for the contract to make any business sense.
Some prior cases held in similar circumstances that there is implied term to avoid impeding the agents without ‘reasonable cause’. Viscount Simon and Lord Wright thought that formulating what constitutes a reasonable cause is so uncertain that the better view is that either no such implied term exists or those cases should be confined to their particular facts.
This case also hints that there may be an exception to the rule that a unilateral offer cannot be revoked once performance has begun. Though there was a completed contract in this case, in a different version of the facts the defendant might have instead made a unilateral offer to pay commission to any agent who brought them a buyer which ultimately led to a concluded sale. The same circumstances which deterred the court from finding an implied term in this case would likely lead the court to conclude that the defendant is not barred from revoking the offer just because an agent has started looking for or has presented a buyer.