Introduction

In its recent decision, KSY Juice Blends UK Limited v Citrosuco GMBH [2025] Civ 760, the Court of Appeal considered when terms in a contract for the sale of goods will be held to be unenforceable agreements to agree.

The case concerned the interpretation of a term requiring KSY Juice Blends UK Limited (“KSY”), the UK subsidiary of a Greece orange juice producer, to supply Citrosuco GMBH (“Citrosuco”),a Brazilian company and the world’s largest producer of orange juice concentrate, with 800MT of wesos, a secondary juice product, each year, at an “open price to be fixed latest by December of the previous year”.

The case is illustrative of the approach the English courts may take when construing flexible pricing mechanisms in commercial contracts, particularly in volatile markets.

Enyo Law acted for Citrosuco.

Overview

The parties entered into a three-year supply agreement in 2018 (“Supply Agreement”).

The salient terms of the Supply Agreement were as follows.

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.

10. Quantity: 3600MT…

(emphasis added)

Several of the terms within the Supply Agreement referred to “free trucks”. While the exact role of free trucks within the Supply Agreement was disputed, it was common ground that they were (at a minimum) a mechanism for adjusting the actual price of wesos to accord with the invoice price.

As set out above, the Supply Agreement provided for KSY to supply Citrosuco with 400MT of wesos per year at a “fixed price” and a further 800MT at an “open price to be fixed latest by December of the previous year”.

The Dispute

The parties initially dealt in the “fixed price” wesos without incident. However, they were unable to agree a price for the 800MT of “open price” wesos in 2019 or 2020. Citrosuco, therefore, refused to take delivery of the “open price” wesos. KSY claimed that this was a repudiatory breach and purported to terminate the Supply Agreement. Citrosuco claimed that this was itself a repudiatory breach.

The case was heard by HHJ Pearce sitting as a judge of the High Court at first instance. He held that the term requiring KSY to provide 800MT of wesos per year at an “open price to be fixed latest by December of the previous year” was an unenforceable agreement to agree.

He held that while the parties had intended to deal in the full 3,600 MT of wesos per year, they had intended that the “open price” would be fixed by their agreement and that they would be free to negotiate in accordance with their own best interests (at [82], [114], [121], and [123]).

He went on to hold that it was not possible to imply a term fixing the “open price” at a reasonable, or market, price, under the Sale of Goods Act 1979, or the common law (at [120]).

Specifically, he held that such a term could not be implied under the Sale of Goods Act as the Agreement expressly included a basis for determining the “open price”, namely the parties’ agreement, whereas terms can only be implied under the s 8 (2) of the Sale of Goods Act where a contract is silent as to price (at [121]).

He also held that such a term could not be implied at common law as it lacked precision, as it was not possible to identify a market price. While the price of wesos tended to be around 70% of the price of another orange juice product called FCOJ, it was also influenced by a number of other factors (at [124]). Similarly, he held that the Court could not determine what price would be “reasonable” in circumstances where the parties were free to pursue their own interests in negotiating the “open price” and may have different views as to what was reasonable (at [124]).

The Court of Appeal

KSY appealed. In allowing the appeal, the Court of Appeal held that the Agreement was within the territory of contracts that the courts should strive to uphold (at [58]). In reaching this view, it held that the parties intended to be bound in relation to the full quantity of wesos. They considered that the purpose of maintaining flexibility through the “open price” was to enable the parties to respond to volatility in the market price, rather than to preserve each parties’ autonomy to negotiate the price in their perceived best interests (at [58]).

The Court of Appeal noted that while the open price was required to be “fixed”, the Agreement was silent as to how this was to be achieved (at [51]). However, while the Court considered that the parties would have intended to set this price through their agreement in the first instance, this did not preclude the implication of a term that the price would be a reasonable or a market price, if they were unable to agree (at [53]). It found that such a term could be determined with precision. In doing so, the Court relied on the fact that the price of FCOJ provided a generally accepted method of calculating the price of wesos (at [62] and [69]). Further, it considered that while the price of wesos is influenced by factors other than the price of FCOJ, these factors were all readily susceptible to determination on the basis of a standard of reasonableness (at [73]).

In reaching this conclusion, the Court rejected an argument that the parties cannot have intended the “open price” to be fixed other than by their agreement, as this was the only method which could fix a price with the required speed and precision ahead of the production season. Citrosuco had submitted that it was necessary for the price to be determined with precision, as the free trucks mechanism meant that the price effectively determined the quantity of wesos. The Court held that there was less force in this argument in circumstances where there was considerable time for the parties to reach agreement, and the parties knew the quantity that they would need to produce, apart from the quantity to be provided via free trucks (at [70).

The Court also held that section 8 (2) of the Sale of Goods Act 1979 does not preclude the implication of a term that a product is to be sold at a reasonable or market price where such terms can be implied at common law (at [50]).

Comment

While in this instance the Court of Appeal held that a reasonable or market price could be implied, the case is an important reminder to commercial parties of the inherent uncertainty in relying upon implied pricing terms in commercial contracts, particularly in volatile markets.

If you would like to discuss the contents of this article further, please contact Matt Marshall.