May & Butcher Ltd v The King
House of Lords
Citations: [1934] 2 KB 17; [1929] UKHL 2; [1929] All ER Rep 679.
Facts
At the end of WWI, the British Government was seeking to sell its surplus of tents. It set up a disposal board for this purposes. The board agreed to sell the tents May & Butcher Ltd. May & Butcher Ltd paid a £1000 deposit, and the parties produced a written agreement. The agreement stated that the parties would agree in future on a price and delivery dates. The composition of the board changed, and the new board refused to deliver the tents.
May & Butcher Ltd sued for breach of contract. The board responded that there was no contract, as the written agreement was too uncertain to be enforceable.
Issue(s)
- Were the terms of the agreement certain enough to form a contract?
Decision
The House of Lords held in favour of the board. The price of the tents was a fundamental term of the contract. The parties had not agreed on this key term. Therefore, the contract was too uncertain.
This Case is Authority For…
According to Lord Buckmasters, ‘an agreement between two parties to enter into an agreement in which some critical part of the contract matter is left undetermined is no contract at all.’ An agreement to agree in future is usually too uncertain.
Viscount Dunedin put the principle as follows: ‘To be a good contract there must be a concluded bargain, and a concluded contract is one which settles everything that is necessary to be settled and leaves nothing to be settled by agreement between the parties. Of course it may leave something which still has to be determined, but then that determination must be a determination which does not depend upon the agreement between the parties.’
The price of a sales contract is a fundamental term. It must be certain before an enforceable contract is formed. This means that the contract must either specify the price or provide a sufficiently certain method for determining the price (such as asking a specific third party to set the price).
Other
At the time, the Sale of Goods Act 1893 provided that in any contract which was silent on the price, there was an implied term for a ‘reasonable’ price. This has been replicated in s.8 of the modern Sale of Goods Act 1979. In any case, that provision did not apply in this case. This was because the contract was not silent on the price – it explicitly said that the parties would agree on it.
