Cases - Walford v Miles
Record details
- Name
- Walford v Miles
- Date
- [1992]
- Citation
- 2 A.C. 128
- Legislation
- Keywords
- Tendering and procurement
- Summary
-
In 1992, the House of Lords had held that an agreement for consideration to deal exclusively with one potential contractor and to terminate any other negotiations then current with others lacked certainty and was unenforceable as being, in effect, a bare agreement to negotiate. The leading speech was by Lord Ackner, with whom the other Lords agreed, where he said:
'The reason why an agreement to negotiate, like an agreement to agree, is unenforceable is simply because it lacks the necessary certainty. The same does not apply to an agreement to use best endeavours. This uncertainty is demonstrated in the instant case by the provision which it is said has to be implied in the agreement for the determination of the negotiations. How can courts be expected to decide whether, subjectively, a proper reason existed for the termination of negotiations? The answer suggested depends upon whether the negotiations have been determined "in good faith". However, the concept of a duty to carry on negotiations in good faith is inherently repugnant to the adversarial position of the parties when involved in negotiations. Each party to the negotiations is entitled to pursue his (or her) own interest, so long as he avoids making misrepresentations. To advance that interest he must be entitled, if he thinks it is appropriate, to threaten to withdraw from further negotiations or to withdraw in fact, in the hope that the opposite party may seek to reopen negotiations by offering improved terms. Mr. Naughton, of course, accepts that the agreement upon which he relies does not contain a duty to complete the negotiations. But that still leaves the vital question - how is a vendor ever to know that he is entitled to withdraw from further negotiations? How is the court to police such an "agreement"? A duty to negotiate in good faith is as unworkable in practice as it is inherently inconsistent with the position of a negotiating party. It is here that the uncertainty lies. In my judgment, while negotiations are in existence either party is entitled to withdraw from these negotiations, at any time for any reason. There can be thus no obligation to continue to negotiate until there is "a proper reason" to withdraw. Accordingly, a bare agreement to negotiate has no legal content.'