The English Court of Appeal’s judgment in KSY Juice Blends UK Ltd v. Citrosuco GmbH[1] provides helpful guidance on the enforceability of long-term supply contracts where the price for part of the goods is left open to be agreed in the future. The judgment is particularly notable for its analysis of when a court will imply a term for a reasonable or market price, and its willingness to uphold commercial bargains in the face of contractual uncertainty.
Background
The dispute arose from a 2018 contract under which KSY agreed to supply Citrosuco with “Wesos” (water-extracted soluble orange solids, a byproduct of orange juice production) over three years. The contract specified a fixed price for part of the annual quantity to be delivered (approximately 400 metric tons), but left the price for the remaining tonnage (approximately 800 metric tons) open to be fixed by the parties each year.
Citrosuco took delivery of the fixed quantity in 2019, but as market conditions changed, it declined to take further deliveries. KSY terminated the contract for repudiatory breach and claimed damages. Citrosuco argued the contract was unenforceable in respect of the remaining tonnage, contending it was a mere “agreement to agree” on price
At first instance, the High Court held that the contract was unenforceable in respect of the 800 metric tons per year. The parties had not agreed on a mechanism by which to determine the price, and it was not possible to imply a term as to reasonable price because that “supposes the court can determine what is reasonable”, which the judge considered it could not. Accordingly, that part of the contract failed for uncertainty.
Takeaways
A degree of flexibility is often required in long-term contracts, and this judgment provides welcome reassurance that English courts will take a pragmatic approach to upholding commercial contracts where some terms are left to be agreed. However, contract drafters shouldn’t get too comfortable – this judgment is specific to the term in question (i.e., price), the contract, the relationship between the parties and the rest of the factual matrix. Instead of relying on the courts’ desire to uphold contracts, it is always better to specify how any future failure by the parties to agree on an open contract term will be determined, whether that is by reference to an industry standard or dispute resolution mechanism.
[1] [2025] EWCA Civ 760.
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