NOT AN ‘AGREEMENT TO AGREE’: ENGLISH COURT OF APPEAL SAVES LONG-TERM SUPPLY CONTRACT DESPITE OPEN PRICE CLAUSE

Legal Updates from YHA Law Firm

1. Summary and Facts:
In KSY Juice Blends UK Ltd v Citrosuco GmbH [2025] 2 Lloyd’s Rep 581, KSY and Citrosuco entered into a three-year supply contract in 2018 for wesos, a residual orange product. Under the contract, Citrosuco agreed to purchase 1,200 metric tonnes per year: 400 mt at a fixed price, and the remaining 800 mt at an “open price” to be fixed later under a pricing mechanism based on “free trucks”, where the actual quantity delivered could vary depending on the market price. Over time, Citrosuco’s demand for wesos fell, and it refused to take delivery beyond part of the fixed-price quantity. KSY treated this refusal as a breach, terminated the contract, and claimed damages on the basis that the contract was still legally binding and enforceable despite the open-price element.

English High Court held that the price for the 800 mt was left open with no implied term as to a reasonable or market price, rendering that portion of the contract unenforceable.

KSY Juice Blend UK Ltd appealed.

2. Legal Issues:
• Whether Section 8(2) of the Sale of Goods Act 1979 apply.
• Whether the court can imply a term that the price would be a reasonable or market price.
• Whether the agreement for the 800 mt at an open price was unenforceable as an agreement to agree.

3. Court’s Findings:
• The Court of Appeal allowed the appeal.
• A term should be implied that, if the parties failed to agree on price, it would be a reasonable or marketplace.
• Even though the wesos was not fully defined, its price roughly mirrored 70% of the FCOJ market, making it sufficiently determinable.
• The contract clearly showed an intention to be binding, shown by the parties’ prior dealings, partial performance and a detailed contractual framework.
• Section 8(2) SOGA 1979 does not bar the implication of such a term but the purpose is to uphold contracts and not invalidate them.

4. Practical Implications:
This judgment affirms the several principle of laws including:
• Commercial contracts with open price clauses can still be enforceable.
• Courts may imply a reasonable or market price even where parties initially intented to negotiate.
• Reinforces a modern, flexible approach to contractual certainty in long-term supply agreements.

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