Barton –v– Morris – The Importance of Legal Certainty in Commercial Contracts

The case of Barton –v– Morris once again highlighted the importance of achieving a position of legal certainty in commercial contracts.

The case concerned an oral agreement under which a property owner agreed to pay Mr Barton £1.2m if a property was sold for £6.5m to a buyer introduced by him.

However, the agreement was silent on what would happen if the property was sold for less than £6.5m. The property was eventually sold for £6m to a buyer introduced by Mr Barton and the property owner argued that they had no obligation pay anything to Mr Barton because the property was sold for less than £6.5m.

Mr Barton disagreed and commenced legal proceedings claiming the right to receive reasonable payment for his services.

In the first instance, the court held that Mr Barton was not entitled to any payment because the agreement was silent on what was intended to happen in these circumstances. However, on appeal, the Court of Appeal held that Mr Barton was entitled to claim that the property owner had enjoyed “unjust enrichment” by denying Mr Barton a fair payment.

On further appeal, the Supreme Court reversed the decision of the Court of Appeal. The reasoning behind the Supreme Court decision included two key elements.

Firstly, because the agreement did not provide for what was intended to happen if the property was sold for less than £6.5m, it would be impossible for the court to imply a contractual term when there could be no certainty over what the parties would have agreed the position to be in such circumstances.

Secondly, based on such lack of provision, a claim for unjust enrichment must fail because although the property owner had undoubtedly been enriched, the original agreement reached between the parties created exactly that possibility.

Why is the case important?

The ultimate decision in Barton –v– Morris is important because it highlights the increasing reluctance of the courts to interfere with the terms agreed by contracting parties or to imply terms that the parties had not expressly agreed to. In other words, the lack of express agreement regarding a particular outcome may be construed to mean that the parties had not intended such an outcome to have any contractual implications.

It is therefore essential when drafting or negotiating commercial contracts that careful consideration is given to all potential eventualities and outcomes to reduce the risk of future disputes. Equally important is ensuring that the overall agreement is properly documented in writing which was not the case in Barton –v– Morris.

The Corporate and Commercial team at Wilson Browne Solicitors is ideally placed to advise on all aspects of drafting and negotiating commercial contracts to avoid potential issues such as those highlighted in Barton –v– Morris.

For a confidential and no obligation initial discussion about how we may be able to help, please contact the Corporate and Commercial team on 0800 088 6004