When Is an Agreement to Agree Enforceable

Courts try to enact contracts where they can, but will not enforce agreements that are uncertain. As a result, “agreements to agreements” are often considered unenforceable, and this is the case where the point to be agreed concerns an essential provision. As a result, the Commercial Court held that while the parties considered the option contract to be binding, it was not enforceable due to uncertainties, as the delivery dates were essentially agreed and remained for future agreements between the parties. The court also concluded that had it not made this finding, it would have concluded that the defendant`s conduct constituted a waiver of the contract and that it was liable to the plaintiff. The applicant did not dispute that the delivery dates were essential. However, it argued that the parties could not intend that the option agreement would not be binding and that it contained an effective mechanism for determining delivery dates, without the need for a future agreement. The plaintiff argued the latter point on the basis of two alternative implicit conditions. Their main argument was that the delivery date was the earliest date the defendant offered to the best of its ability in 2016 (option one) or 2017 (options two and three), and if not the earliest date it could offer to the best of its ability. In the alternative, it argued that the delivery date was objectively reasonable, having regard to the defendant`s obligation to be determined by the court if that was not agreed.

Notwithstanding the above, it is often the case that the parties – especially the commercial parties – have lengthy negotiations before entering into a contract between them. These negotiations may even involve exchanging or signing documents. These may include, for example, letters of intent, letters of intent or communications in which the parties agree to reach a settlement of a dispute. But when will these “agreements on agreement” become enforceable? something has not yet been determined, but this determination should not depend on the consent of the parties An agreement is a manifestation of the mutual consent of two or more persons to each other. To be an enforceable contract, the parties must agree on its important terms. What is an important condition can vary from one contract to another and depends on the intentions of the parties. An agreement to the agreement may occur if an agreement contains obligations to conclude a subsequent agreement in the future, the terms of which are not certain at the time of the initial agreement. As a result, such agreements often lack sufficient certainty to establish a legally enforceable contract – but what constitutes sufficient certainty can be difficult to determine. The idea that an agreement to the agreement is a valid contract may be supported by some, but the fact is that in the eyes of the law, accepting future terms that are not certain is not a sufficient reason to conclude a legally enforceable agreement. Thus, an agreement to the agreement remains an unenforceable agreement that simply involves the binding of two parties to a future agreement, but does not guarantee it.

Courts will be even more willing to comply with an agreement if the contract provides for a mechanism (e.B. expertise) or objective criteria (e.B. fairness or adequacy) to resolve uncertainty.9 If the specified mechanism “collapses” or if the courts conclude that the parties` true intention, although not expressly stated, was to settle any disagreement by objective criteria, then the courts may even provide new “mechanisms” to settle the dispute.10 The commercial court accepted the plaintiff`s argument that the parties intended to enter into a binding contract and should therefore endeavour to promulgate the option contract. ==References== pointed out that the option agreement was part of a “package” of contracts and that the counterparty for the defendant to grant the options included the plaintiff`s subsidiaries that entered into the shipbuilding contracts […].