May and Butcher Ltd v The King [1934] 2 KB 17

Contract – Certainty – Enforceability – Agreement to Agree

Facts

After the end of the First World War, the Government had a surplus of tents which were no longer required by the army. As a result, the Government’s disposal’s board was set up to sell these tents. They agreed to sell tents to May and Butcher Ltd who left £1,000 as a security deposit for their purchases. According to the written agreement between the disposals board and the company, the price for the tents, and the dates on which payment was to be made were to be agreed between the parties, as and when the tents became available. In 1923 a new disposal’s board took over and refused to sell the tents. They stated that they no longer considered themselves bound by the contract. May and Butcher sued but were unsuccessful.  They appealed to the House of Lords.

Issues

Were the terms of the agreement sufficiently certain to constitute a legally binding agreement between the parties?

Held

There was no agreement between the parties. A contract for the sale of the tents had never in fact been concluded. This was because a fundamental term of the agreement that was necessary for the sale to be completed had not been agreed. As such, there could not be a contract. Whilst s8 Sale of Goods Act 1893 provided that a price could be fixed in the future, s9 Sale of Goods Act 1893 also provided that if that price could not be fixed by a third party, then no agreement could be made. No third party could set the price for the tents, and the court could not imply a price into the agreement. Therefore, no agreement had been made. The agreement between the claimants and defendant therefore was simply an agreement to agree, and not enforceable.