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The ifs, buts and maybes…

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The Supreme Court has recently confirmed, on a 3:2 basis, that their role is not to mend bad deals made between parties acting in a commercial setting. In the case before them, the parties had verbally agreed that if the claimant found a buyer for a particular property at £6.5m, the defendants would pay them £1.2m. The parties did not discuss what would happen in any other scenario.

The property was eventually sold to a purchaser introduced by the claimant, but the sale price was only £6m. The defendant refused to pay the claimant anything on the basis that the trigger for any payment was a sale price of £6.5m and this had not been achieved. The claimant sought relief from the Court on the basis that either there was an implied term that a payment would be made if a lower price was achieved, presumably on a pro rata basis, or that the defendant would have been unjustly enriched to the claimant’s detriment if they did not have to pay anything.

4 of the 5 judges sitting in the Supreme Court agreed that the claim for unjust enrichment must fail as the “enrichment” (retention of the full £6m purchase price with no payment to the claimant) could not be unjust as it was the consequence of the express contractual terms that the parties had agreed. A smaller majority of 3 out of 5 also found that there could be no implied term for a reduced payment, whether in fact or in law. Whilst it was accepted that in certain scenarios a requirement for payment could be implied, for example pursuant to The Commercial Agents (Council Directive) Regulations 1993, none of those applied to the case before them.

It is clear therefore that the judges hearing the case were divided in their findings and it was only by the narrowest of margins that the defendant avoided, and the claimant missed out on, payment. Whilst no figures have been published that we are aware of, it is inevitable that the legal costs involved in this matter will have been very significant as it has made its way from the High Court, to the Court of Appeal and ultimately the Supreme Court. In addition, given that the proceedings have been ongoing since 2017 it must have absorbed a huge amount of preparation time for all the parties involved. This could all have been avoided if the original agreement had been fully negotiated and properly documented.

Whilst it might appear that there is a clear agreement in place, it is also important that the parties consider not only what “plan B” would be, but also any other eventualities that may arise due to unforeseen circumstances. Instructing a solicitor to assist in documenting that agreement may seem excessive but as this case shows, is clearly worth investing in so that all parties are clear on what will happen should the unexpected occur. This also applies if something has gone wrong. Getting expert legal advice early will assist in identifying whether there are any rules or regulations that may help in “filling the gap” and then in negotiating an outcome that takes account of how finally balanced the case law has been. Especially in a commercial setting, silence really isn’t golden.

Barton and others -v- Morris and another in place of Gwyn Jones (deceased) [2023] UKSC 3.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.
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