Morris v Swanton Care & Community Ltd [2018] EWCA Civ 2763 (11 December 2018)

Morris v Swanton Care & Community Ltd [2018] EWCA Civ 2763 (11 December 2018)

The relevant SPA provisions regarding a further period for Earn-Out Consideration amounted to an agreement to agree, which is unenforceable due to uncertainty and lack of objective criteria. The court cannot determine a reasonable period in the absence of agreement, and the parties are not obliged to negotiate in good faith or to reach agreement on the further period.

Citation
[2018] EWCA Civ 2763
Parties
Appellant/claimant: Philip Morris; Respondent/defendant: Swanton Care & Community Limited
Jurisdiction
England and Wales
Judgment Date
11 December 2018
Procedural Posture
Civil Appeal / Appeal From High Court Judgment
Outcome
Appeal dismissed
Legal Topics
Agreements to Agree, Contractual Interpretation, Earn Out Provisions, Uncertainty in Contracts
Contract Law Commercial Law Agreements to Agree Contractual Interpretation Earn Out Provisions Uncertainty in Contracts

Case Brief

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Parties

Philip Morris

Appellant/claimant

Swanton Care & Community Limited

Respondent/defendant

Procedural Posture

Civil Appeal / Appeal From High Court Judgment

Legal Issues

  1. 1 Whether the SPA provisions regarding a further period for Earn-Out Consideration constitute an enforceable obligation or an unenforceable agreement to agree
  2. 2 Whether the court can determine a reasonable further period in the absence of agreement between the parties

Ratio Decidendi

The relevant SPA provisions regarding a further period for Earn-Out Consideration amounted to an agreement to agree, which is unenforceable due to uncertainty and lack of objective criteria. The court cannot determine a reasonable period in the absence of agreement, and the parties are not obliged to negotiate in good faith or to reach agreement on the further period.

Court Disposition

Appeal dismissed

Orders

  • The appeal is dismissed.
  • The claimant is to pay the costs of the action incurred by the defendant.