In KSY Juice Blends UK Ltd v Citrosuco GmbH* [2025] EWCA Civ 760 the Court of Appeal reversed a High Court ruling that found an agreement where part of the price was to be fixed to be merely an agreement to agree- and therefore unenforceable. In this case, which concerned an agreement for the supply of 3600 metric tons (MT) of an orange juice by-product known as "Wesos", the Court considered whether, and determined that, it was possible to imply a term that the price should be a reasonable or market price.
This ruling reasserts the courts' willingness to preserve business bargains where the intent to be bound is clear and provides helpful clarification on the enforceability of commercial contracts with open pricing terms – including the relevance of "reasonable price" determinations under section 8 of the Sale of Goods Act 1979.
How is the contract price determined under UK contract law?
Sections 8(1) and 8(2) of the Sale of Goods Act 1979 (SGA), govern price-setting mechanisms in commercial contracts:
- Section 8(1) allows the price to be set by agreement, by a defined method, or by the parties' previous dealings.
- Section 8(2) acts as a safety net: where no price is determined, the buyer must pay a reasonable price, assessed as a question of fact based on the circumstances.
As mentioned above, the relevance of Section 8(2) of the SGA was a central focus of this case and the Courts.
Case analysis: KSY Juice Blends UK Ltd v Citrosuco GmbH
1. The dispute: open pricing in long-term supply agreements
The dispute arose from a contract for the supply of WESOS (orange juice pulp wash), where the price for a portion of the volume to be supplied was left to be agreed at a later stage.
In 2018 the parties entered into a contract to agree the supply of WESOS for three years, starting on the 1st of January 2019. The contract provided for 400MT of the WESOS supply at a fixed pre-agreed price, with 800MT then to be supplied annually at a price agreed by December of each preceding year.
In 2019 KSY supplied 400MT, followed by 126MT in 2020, with Citrosuco paying only part of the 2020 delivery which consequently led to KSY terminating the contract in September 2020 citing repudiatory breach.
The High Court initially held that the contract was enforceable only in respect of 400MT annually, with the additional 800MT unenforceable, citing that the uncertainty of price invalidated part of the contract. In reaching this judgment, the Court applied the principle from May & Butcher Ltd v R, namely that an "agreement to agree" is not enforceable.
2. Disputed pricing terms: what each party argued
Citrosuco relied heavily on May & Butcher, arguing that no price was agreed and no implied pricing term could be inferred- and that therefore the part of the contract for the supply of 800 metric tons was unenforceable. This was on the basis that the contract specifically required the price for the remaining WESOS to be agreed between the parties annually and that given this requirement it would be inconsistent for a price to be imposed upon them by the Courts. Therefore reliance on Section 8(2) of the Sale of Goods Act 1979 was precluded.
KSY Juice Blends, on the other hand, argued that the contract reflected a clear mutual intention to trade the full quantity of WESOS and that the Court should imply a reasonable price term to uphold performance. KSY argued that the 2018 contract was a binding agreement and that the price to be implied by the court was to be determined on a reasonable or market price, as supported by Section 8(2) of the Sale of Goods Act 1979.
3. Court of Appeal's decision: enforcing open pricing through implied terms
The Court of Appeal disagreed with the High Court and agreed with KSY. Drawing on the principles set out in earlier precedents such as Mamidoil-Jetoil and BJ Aviation, the Court held that:
- The parties intended to be legally bound;
- They had a track record of dealing flexibly on price;
- Objective market data existed to support the determination of price, specifically that WESOS typically traded at around 70% of the price of frozen concentrated orange juice, a market with publicly available pricing; and
- The Court emphasised the need to interpret commercial contracts in a manner that preserves enforceability.
This formed a sufficient basis for implying a term that pricing would default to a reasonable market rate if no agreement was reached.
4. Key takeaways: enforceability, risk, and drafting guidance for open pricing contracts
This judgment reinforces that the courts are committed to preserving commercial agreements where there is clear evidence of intent to be bound, even when all terms are not perfectly defined at the outset. It also highlights the risks that uncertainty brings with flexible pricing mechanisms. To counter some of this risk, parties to long term complex agreements with pricing which is subject to market fluctuations might consider including provisions to assist where the parties cannot agree- such as industry benchmarks or to allow for third party price determination.
Read the original article on GowlingWLG.com
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
