“Pulp” Fiction: when is an agreement not an agreement?
That was the question the Court of Appeal had to decide in its judgment in KSY Juice Blends UK Limited v Citrosuco GMBH [2025] EWCA Civ 760 handed down on 19 June 2025. Blake Morgan acted for KSY Juice Blends UK Limited (“KSY”), the successful appellant, throughout.
The Court of Appeal had to consider whether the three year agreement between the parties for the supply of 3,600 metric tons of orange juice “pulp wash” was binding or a mere “agreement to agree” and consequently unenforceable.
Background
On 18 May 2018 KSY Juice Blends UK Limited (“KSY”) and Citrosuco GMBH (“Citrosuco”) entered into a three year supply agreement for the supply of orange juice pulp wash (“Wesos”) commencing on 1 January 2019 (“the 2018 Contract”). The contract stated (emphasis added):
“3. Price
Invoicing price is 1.600euro/mt for 60 brix
Price adjustable according to Brix value +- 5 Brix
Free trucks will be offered from the seller according to the agreed volume & price of each year.
Calculation basis for the 1.200mt fixed is 1.350 euro/mt which corresponds to the 400mt/year 2019-2020-2021
…
5 . Delivery period:
1.200MT per each year
Deliveries to start January to December with the following split:
400mt fixed at 1.350euro/mt – invoicing price is 1600euro/mt
Difference of price in free trucks
800mt at open price to be fixed latest by December of the previous year
Difference of price in free trucks
…
9. Instructions for dispatch, Advice for Dispatch:
The Buyer should inform the Seller 15 days prior to every delivery.
The Buyer is obliged to inform the Seller concerning the receipt and condition of goods as well as any potential remarks within five (5) days from date of receipt of the Product.
10. Quantity: 3600MT…”
The parties had entered into two earlier contracts, in 2017, for the supply of Wesos which operated in similar way with the price “to be agreed” by a specified date. These contracts were performed without issue.
In late 2018, Citrosuco’s need for Wesos had diminished and they began declining to take delivery of product. No agreement was reached between the parties for the price of the 800MT of Wesos “at open price to be fixed” for any of the years of the 2018 Contract. In September 2020 KSY terminated the 2018 Contract alleging that Citrosuco was in repudiatory breach.
KSY subsequently issued a claim for the amount payable under the 2018 Contract or alternatively damages for breach of contract.
The decision at first instance
Following a four day trial, the Judge at first instance accepted that the Court should seek to give effect to the bargain that the parties believed they had reached and that the parties had intended to deal in the full quantity of 1200MT of Wesos per year for three years.
It was common ground between the parties that the price for the first 400MT of Wesos to be supplied under the 2018 Contract had been fixed and therefore for that part of the agreement the parties had reached an enforceable agreement. The dispute concerned the remaining 800MT of Wesos for which the price was left open “to be fixed”.
Citrosuco’s case was that as the price for the remaining 800MT was left open “to be fixed” and had not been, that part of the contract was unenforceable as a mere agreement to agree.
The Judge accepted Citrosuco’s argument and accordingly dismissed most of KSY’s claim for the price of the Wesos or alternatively damages.
KSY sought to appeal on two grounds:
- The judge failed to find:
- 1. That on a true construction of the 2018 Contract or by way of an implied term (implied by section 8(2) of the Sale of Goods Act 1979 or otherwise) the parties agreed that a reasonable, or a market, price was to be paid in relation to the 800 MT per year; or
- 2. That on a true construction of the 2018 Contract or by way of an implied term, the parties agreed to exercise reasonable endeavours to agree the number of free trucks (and therefore the price) and/or the price in relation to the 800 MT per year.
- In doing so the Learned Judge erred in (inter alia) finding that such terms would be too uncertain to be enforceable and/or inconsistent with the 2018 Contract, in particular the phrase “open price to be fixed” at Clause 5 of the 2018 Contract.
The first instance Judge granted KSY permission to appeal to the Court of Appeal. The hearing took place on 15 May 2025 before Lord Justice Baker, Lord Justice Popplewell and Lord Justice Zacaroli.
Appeal
The Court of Appeal reviewed the 2018 Contract and the High Court’s conclusions, focusing on the parties’ intentions and the feasibility of implying pricing terms. The Judgment provides a useful recap of the relevant authorities.
In May & Butcher Ltd v The King [1934] 2 KB 17, the court stated that contracts lacking agreed-upon pricing terms for essential elements are unenforceable. However, subsequent cases, including Hillas & Co v Arcos Limited [1932] 147 LT 503 and Mamidoil-Jetoil Greek Petroleum Company SA v OKTA Crude Oil Refinery AD [2001] EWCA Civ 406, established that courts could imply terms which upheld commercial contracts provided the parties’ intentions to be bound are clear.
The judges concluded that:
- KSY and Citrosuco agreed to trade Wesos for three years, suggesting a clear intention to be bound by the contract.
- Clause 5 of the agreement left the price for 800MT “open to be fixed,” but did not expressly stipulate that this process required mutual agreement.
- The contract was firmly in the territory of a contract which the court should strive to uphold and that the case for seeking to avoid the contract failing as to two-thirds of the amount to be supplied each year was compelling.
- That, irrespective of section s8(2) of the Sales of Goods Act, it is possible to construe a contract the sale of goods by reference to its express terms and terms properly implied under common law as to the method by which the price is to be fixed (and that section 8(2) does not provide the only method of implication of such a term).
- The presence or absence of an arbitration clause was not determinative as per Goff LJ in Beer v Bowden [1981] 1 WLR 522.
- Industry practices and market data, including the price of Wesos tracking 70% of frozen concentrated orange juice (FCOJ), provided sufficient objective criteria to establish a market price.
They consequently found that a term should be implied into the agreement that the price for the 800MT of Wesos left “open to be fixed” would, in the absence of agreement, default to a reasonable or market price.
Commercial implications
This judgment reinforces the longstanding principle that, wherever possible, the courts will strive to uphold commercial agreements which it is clear the parties, at least at their inception, intended to be bound by.
The judgment should also open the way for long-term complex commercial agreements to provide more flexible pricing mechanisms for goods which are subject to market forces and fluctuations.
Permission to appeal to the Supreme Court was refused by the Court of Appeal.
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