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Articles | Wed 13th Feb, 2019
In Wells v Devani [2019] UKSC 1106 the Supreme Court has ruled that it is possible to imply a term into an agreement to render it sufficiently certain to constitute a binding contract. Indeed, it is possible to imply something that is so obvious that it goes without saying into anything, including something which the law regards as no more than an offer. In so holding, the Supreme Court overturned the decision of the Court of Appeal, which by a majority had held that an estate agency contract was insufficiently complete to be binding because the parties had not expressly agreed the specific commission triggering event.
The essential facts were that Mr Wells had developed some flats but was having some difficulty selling them. An acquaintance provided his details to Mr Devani, who was an estate agent. During a telephone conversation Mr Wells asked Mr Devani about his fees and was told that they were 2%. Thereafter, Mr Devani introduced a purchaser who met Mr Wells at the development and agreed to buy all of the unsold flats for the asking price and duly did so. Mr Devani submitted an invoice and Mr Wells declined to pay it. At trial, the judge rejected Mr Wells’ factual case that he thought that Mr Devani was an investor interested in buying the flats himself. He further rejected a submission that the terms of the agreement were too uncertain to be unenforceable, holding that in the absence of any express term as to the commission triggering event the law would imply the minimum term necessary to give business efficacy to the parties’ intentions and that that term was that commission would become payable upon the completion of a purchase by a party introduced by Mr Devani. The Court of Appeal, by a majority, overturned that ruling, Lewison and McCombe LJJ holding that specification of the commission triggering event was critical to the formation of a binding contract. Arden LJ dissented; she considered that on the facts Mr Devani had agreed to “find a purchaser” for Mr Wells, even if those words had not been used and that as a matter of interpretation that meant find a purchaser who completed. The Supreme Court unanimously held that both the Judge and Arden LJ were right. The parties had plainly intended that Mr Devani would find a purchaser of the flats and there was a consistent line of authority in support of Arden LJ’s construction of that term. Although this meant that it had not been necessary for the judge to imply a term, his approach was also consistent with authority and the term he implied met the test of being necessary to give business efficacy to the contract or being so obvious as to “go without saying”.
The Supreme Court’s decision gives welcome clarification to the law concerning contractual certainty. It also provides a useful reminder that at common law contracts may be formed not just by reason of words spoken but also by conduct. As Lord Briggs said, conduct may often tell you as much, or even more, about the essential terms of a bargain than do words themselves.
The Supreme Court also considered the applicant of section 18 of the Estate Agents Act 1979, which provides that an estate agency contract may not be enforced if certain procedural requirements (including reducing the agreement to writing) are not complied with unless the court grants the agent relief. The judge had granted Mr Devani relief in this case, but reduced his fee by 1/3rd. The Supreme Court rejected Mr Wells’ cross-appeal in which he argued that such relief should not have been granted, holding that the judge had made no material error in his approach to the issue.
Andrew Warnock QC acted for Mr Devani on his appeal to the Supreme Court and Maurice Rifat represented Mr Devani at trial.
