Pagnan SpA v Feed Products Ltd [1987] 2 Lloyd’s Rep 601
Contract – Uncertainty – Agreement to Agree
Facts
Pagnan SpA were an Italian company seeking to buy corn gluten feed pellets from Feed Products, a company based in Utrecht in the Netherlands. The contract was governed by English law. The parties had reached agreement on the main points of the contract, such as the price, the product, the quantity and the period of shipment. However, they had not yet reached agreement on several other important parts of the contract, such as the rate of loading, demurrage and despatch, and carrying charges. The buyers sought a declaration that no binding contract had been made. Bingham J found that a contract had been concluded on 1 February 1982, and the buyers appealed.
Law Teacher writing support
Writing a law essay?
We choose a writer who is an expert in your area of law and qualified to at least the academic level you select. Most of our writers hold a master’s degree or PhD, have teaching experience, or both.
Send us your question and, if you wish, any marking criteria. We’ll write an essay to your instructions.
Issues
Whether or not the contract was enforceable. Whether or not the contract could be considered void for uncertainty as important matters were yet to be agreed.
Decision/Outcome
The Court of Appeal upheld the finding that the agreement had contractual force and could be enforced. Parties may be bound by an agreement even where there are further terms to agree, if they intend to be bound immediately. If agreement on these terms is not reached then the existing agreement does not become void unless it renders the entire contract unworkable or void for uncertainty. Whether a contract has been concluded or not depends on the court looking at the whole course of correspondence. In this case, the agreement was not stated to be ‘subject to contract’, and agreement on the outstanding terms was not intended to be a precondition to a binding contract. The parties can make agreement on a particular term a condition of being bound. But the economic importance of a term does not, by itself, prevent them from agreeing to be bound while leaving it for later decision.
