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A harsh outcome does not an implied term make

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The sanctity of the parties’ agreement is preserved as the UK Supreme Court adopts a cautious approach to implied terms. It reiterates that no term may be implied into an agreement where the implied term contradicts its express terms. 

The dispute concerns a commission payable in connection with the sale of a property, Nash House, owned by Foxpace. Under an oral agreement with Barton, Foxpace agreed to pay Barton GBP1.2 million if the property sold for at least GBP6.5m to a purchaser introduced by Barton. The parties did not consider the consequences of a sale for less than than that.

Barton introduced a purchaser who ultimately acquired Nash House for GBP6m. Barton argued he was entitled to payment for his services.

The judge at first instance held that no fee was payable to Barton. The Court of Appeal disagreed, holding that Barton was entitled to reasonable remuneration. 

A divided Supreme Court held that no term could be implied in fact to the effect that an unspecified sum would be due upon a sale for less than GBP6.5m. Key factors included that:

  • this outcome would contradict the express terms of the agreement;
  • there was not a particular fee to which the parties would clearly have agreed; and
  • such an implied term was not necessary to give the contract business efficacy. 

Equally, a term could not be implied at law. Barton could not rely on statutory implication where a contract is silent as to consideration. Remuneration in this case had been agreed. Moreover, while the courts have implied an estate agent’s entitlement to commission, this line of cases was distinguished: Barton was not an estate agent. Further, the agreed sum greatly exceeded a reasonable fee for such an introduction. 

Barton also failed to persuade the court that the circumstances gave rise to unjust enrichment. The agreement expressly stipulated the limited circumstances in which Barton was entitled to receive the commission. The law of unjust enrichment “mends no-one’s bargain”.

Judgment: Barton v Morris 

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