Courtney & Fairburn Ltd v Tolaini Bros

Courtney & Fairburn Ltd v Tolaini Bros (Hotels) Ltd [1975] 1 All ER 453

Contract Law – Agreement to Agree – Enforceability

Facts

The respondents, Tolaini Bros, wished to develop a hotel. The appellants were property developers. During negotiations between the parties, it was proposed that the appellants were to find a third party who would be able to provide finance for the project. This then required the respondent’s quantity surveyor to agree terms, with the appellants, on what was described as ‘fair and reasonable’ terms for the project. After this, the respondents would employ the appellants for the construction work itself once finance had been arranged. The appellants did successfully find a lender who arranged finance with the respondents, but Tolaini Bros then employed another contractor to carry out the work using the finance that the appellants had arranged.

Issues

Whether or not there was a complete and enforceable agreement between the parties that the appellants would be employed to carry out construction of the hotel. Whether or not the agreement was a contract, or an agreement to agree.

Decision/Outcome

There was no enforceable agreement. Instead, there was only an incomplete ‘agreement to agree’. This was because the result was dependant on the respondent’s quantity surveyor agreeing terms with the appellants. This was not possible as there were disagreements between the parties on price and nothing was ultimately agreed. Whilst the respondents had taken advantage of the finance arranged by the appellants, the only agreement between the parties was to ‘negotiate’ fair and reasonable terms, and this had ultimately proved impossible. Because there were required terms that were yet to be agreed between the parties, there was not an enforceable agreement for the respondents to employ the appellants as contractors for their hotel.