The decision of the Supreme Court in Barton v Morris and another (in place of Gwyn Jones, dead) [2023] UKSC 3 contains an interesting analysis of the extent to which terms can be implied into a contract.
The Facts
Mr Barton sought to buy a property (“Nash House”) from Foxpace Ltd (“Foxpace”). On two separate occasions he, or a company he controlled, entered into an agreement to purchase the property from Foxpace. On both occasions the deposit was paid but the remaining money for completion was not. On both occasions Foxpace rescinded the agreement. Mr Barton accordingly incurred wasted expenditure of about £1.2m.
In order to try to recover his £1.2m Mr Barton made an oral agreement with a Mr Rooke acting for Foxpace. The agreement was a unilateral contract under which: “Foxpace was liable to pay Mr Barton the sum of £1.2m in the event that Nash House was sold to a purchaser introduced by Mr Barton for the sum £6.5m” (as found at first instance). That was the full extent of the agreement. Further, there was not even a discussion as to what would happen if the property were sold for less than £6.5m.
Mr Barton introduced a buyer. Mr Barton and Foxpace envisaged that the buyer would buy for at least £6.5m. Documents were drawn up for a sale at £6.55m. The purchase price was then reduced to £6m when it came to light that Nash House was within an area safeguarded for the purpose of the construction of HS2. It was expressly found by Pearce J at first instance that the reduction in the purchase price had nothing to do with Foxpace trying to avoid paying Mr Barton the agreed sum above.
Foxpace consequently refused to pay Mr Barton any sum. Mr Barton issued a claim, asserting a) that he was entitled to be paid a reasonable sum by the implication of a term to that effect, and/or b) that he was entitled to the same in unjust enrichment/quantum meruit.
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Please click on this link for the full article by Paul de la Piquerie on the extent to which terms can be implied into a contract.