Agreement to Agree in English Law: What You Need to Know
In English law, an agreement to agree is a type of contract that has been a topic of discussion amongst legal professionals for many years. This type of agreement is often used in negotiations where parties cannot reach an agreement on all terms at the time of the initial contract. Instead, they agree to negotiate the outstanding terms at a later date and include them in the contract once they have been agreed upon.
An agreement to agree can be a valuable tool for parties who want to avoid a complete breakdown in negotiations. However, it can also be a source of confusion and uncertainty for both parties involved. As a professional, it`s important to understand the legal implications of agreement to agree in English law.
The Law on Agreement to Agree
The general rule in English law is that an agreement to agree is not enforceable as a contract. This is because it lacks the necessary certainty required for a legally binding agreement. A contract must be clear and concise, with all the essential terms agreed upon by both parties. An agreement to agree does not meet this requirement, as the parties have not agreed to the critical terms of the contract.
In some cases, however, a court may enforce an agreement to agree if it can be demonstrated that the parties intended to be bound by the agreement. To determine whether an agreement to agree is enforceable, the court will look at the language of the agreement, the conduct of the parties, and the surrounding circumstances.
When an Agreement to Agree Is Enforceable
A court may enforce an agreement to agree if it meets the following criteria:
1. The parties must have reached a consensus on the material terms of the contract.
2. The parties must have intended to be bound by the agreement.
3. The outstanding terms must be capable of being ascertained with reasonable certainty.
4. The outstanding terms must not be essential to the contract`s validity or performance.
In some cases, it may be possible for the parties to include a mechanism in the agreement that sets out how the outstanding terms will be agreed upon. For example, the parties may agree to use a mediator or an arbitrator to resolve any disputes that arise during the negotiation process.
The Risks of an Agreement to Agree
Agreements to agree can be risky for both parties. For example, if one party is relying on the outstanding terms to be agreed upon in the future and the other party refuses to agree to those terms, the first party may be left without recourse. Additionally, if the agreement is not enforceable as a contract, one party may use it to avoid their obligations under the contract.
An agreement to agree can be a useful tool in negotiations, but it can also be a source of uncertainty and confusion. As a professional, it`s important to be aware of the legal implications of this type of agreement in English law. If you are considering entering into an agreement to agree, it`s important to seek legal advice to understand your rights and obligations under the agreement.