Foley v Classique Coaches Ltd

Foley v Classique Coaches Ltd (1943) 2 KB 1

Contract – Uncertainty – Enforceability

Facts

Foley owned some land and a petrol station. He sold part of the land adjoining the station to Classique Coaches Ltd, a coach company. One of the conditions of the agreement was that the company purchase all of their fuel for the coaches from Foley’s filling station as long as it could be provided by him. The agreement also contained an arbitration clause. It did not, however, provide a price for the agreement. Classique complied with the terms of this agreement for three years until one of their lawyers advised them that as a price had not been indicated, it was unlikely in his opinion that there was a binding agreement. After this, Classique stopped buying fuel from Foley, who sued them for breach of contract.

Issues

Whether or not the agreement was void for uncertainty because a price had not been mentioned in the agreement.

Decision/Outcome

The agreement was not void for uncertainty simply because the price for the fuel had not been mentioned in the agreement. Classique had performed their agreement for several years, and this obligation could not simply be repudiated. Where the parties had acted as though an agreement had been created and performed their obligations in this way, there was instead an implied term that the price of the fuel to be purchased under the agreement was to be reasonable. Furthermore, if agreement could not be reached on what was a reasonable or fair price, the agreement contained an arbitration clause specifically designed to resolve disputes of this nature. Classique coaches were therefore in breach of contract by failing to purchase fuel from Foley, as required by the agreement.