“5. Those accustomed to purchasing pure orange juice from their local supermarket will be aware that it comes in two forms, of which one is typically labelled “not from concentrate” (NFC). Both NFC orange juice and the other type of pure orange juice, which is made by reconstituting frozen concentrated orange juice (FCOJ), are made by the extraction of juice from oranges. Both processes leave a residue of orange pulp. That orange pulp can be subject to a water extraction process producing the product known as wesos. 6. Wesos is not itself an orange juice and cannot be marketed as such in many countries (including the European Union and the United Kingdom). However it is a natural product in the sense that it is made only from oranges and water. It has a number of uses including (in some countries) being reconstituted into a drink similar to orange juice but more widely being used as a base for orange flavoured drinks. 7. The FCOJ market is dominated by Brazilian producers, the three largest being Cutrale, [Citrosuco] and Louis Dreyfus. However, Northern Hemisphere orange-producing countries such as Greece have a significant place in the market because their peak production time, December to March, is six months before/after the peak production time in the Southern Hemisphere. This is particularly significant given that wesos has a shelf life of 12 months so that Northern Hemisphere production may assist in making up for a prospective gap in the supply of Southern Hemisphere production. 8. Two other concepts should be noted. “Brix” is a measure of the amount of dissolved solids in a liquid via its specific gravity. The “Brix unit” is commonly used in the orange juice business as a means of pricing, the price being fixed on the basis of an assumption as to the Brix level with an adjustment to reflect the actual level. 9. The concept of "free trucks" is of relevance to the calculation of price in this case. It is described by Professor Koutoupis, [KSY’s] expert, in the Joint Statement of the experts as "a promotional pricing strategy used in contractual agreements. The mechanism is used to adjust the contracted price in response to market price fluctuations. It involves providing free product on top of the contracted volume, thus aligning the price of the goods with the current market conditions." It is not a concept with which [Citrosuco’s] expert, Mr Apa, has been familiar in Brazil. Indeed, there is some suggestion that it is a practice of the wholesale drinks industry, rather than the food and drinks manufacturing industry. In addition it may be that the concept is used in some countries rather than others. In any event, it appears to be more familiar to some of the players in this case than to others. However, there seems no reason to doubt that Mr Lansbergen and Mr Kaden [i.e. those who negotiated on behalf of KSY and Citrosuco respectively] each understood it to mean as defined by Professor Koutoupis.”
“The free trucks mechanism works to offset the difference of price between the contract price and the market price.”
“Invoicing price is 1.600euro/mt for 60brixPrice adjustable according to brix value +-5 brixFree trucks will be offered from the seller according to the agreed volume & price of each year.Calculation basis for the 1.200mt fixed is 1.350euro/mt which corresponds to the 400mt/year 2019-2020-2021”
“I. Ex works Bulk 5928 RH Venlo II. Ex works in used new drums 5928 RH Venlo III. DDP Alphonse Sifferdok 990 ,Geraard Van den Daelelaan 990 (GPS) B-9000 Gent with dry truck (Tel.+ 32/9.255.9.255- contact person Mr. Peter Van Laere) IV. DDP Alphonse Sifferdok 990 ,Geraard Van den Daelelaan 990 (GPS) B-9000 Gent with tank truck (Tel.+32/9.255.9.255- contact person Mr. Peter Van Laere)”
“1.200MT per each yearDeliveries to start January to December with the following split:400mt fixed at 1.350euro/mt – invoicing price is 1600euro/mt Difference of price in free trucks800mt at open price to be fixed latest by December of the previous yearDifference of price in free trucks”
“(1) The price in a contract of sale may be fixed by the contract, or may be left to be fixed in manner thereby agreed, or may be determined by the course of dealing between the parties. (2) Where the price is not determined in accordance with the foregoing provisions the buyer must pay a reasonable price. What is a reasonable price is a question of fact dependent on the circumstances of each particular case.”
“The simple answer in this case is that the Sale of Goods Act provides for silence on the point and here there is no silence, because there is a provision that the two parties are to agree.”
“It is said that this case is to be treated on the same footing as if there had been no fixing of the price; as if the contract had been silent as to the price, and the law may then imply a reasonable price; but in the present case the facts preclude the application of any such principle. To do that would not be to imply something about which the parties have been silent; it would be to insert in the contract a stipulation contrary to that for which they have bargained to give them, not the result of their own agreement, but possibly the verdict of a jury, or some other means of ascertaining the stipulated price. To do that would be to contradict the express terms of the document which they have signed.”
“…is to make a contract for the parties, or to go outside the words they have used, except in so far as there are appropriate implications of law, as for instance, the implication of what is just and reasonable to be ascertained by the court as a matter of machinery where the contractual intention is clear but the contract is silent on some detail. Thus in contracts for future performance over a period, the parties may neither be able nor desire to specify many matters of detail, but leave them to be adjusted in the working out of the contract. Save for the legal implication I have mentioned, such contracts might well be incomplete or uncertain; with that implication in reserve they are neither incomplete nor uncertain. As obvious illustrations I may refer to such matters as prices or times of delivery in contracts for the sale of goods, or times for loading or discharging in a contract of sea carriage. Furthermore, even if the construction of the words used may be difficult, that is not a reason for holding them too ambiguous or uncertain to be enforced if the fair meaning of the parties can be extracted.”
“No one would dispute such a rule, and its application to the instrument before the House in May and Butcher Limited v. The King has been finally determined in that case; but in my judgment the Court of Appeal were not justified in thinking that this House intended to lay down universal principles of construction or to negative the rule that it must be in each case a question of the true construction of the particular instrument. In my judgment, the parties here did intend to enter into, and did enter into, a complete and binding agreement, not dependent on any future agreement for its validity. But in any event the cases cited by the Court of Appeal do not, in my judgment, apply here, because this contract contains no such terms as were considered in those cases; it is not stipulated in the contract now in question that such matters as prices or times or quantities were to be agreed. I should certainly share the regret of the Lords Justices if I were compelled to think such important forward contracts as the present could have no legal effect, and were mere “gentlemen's agreements" or honourable obligations.”
“[I]t is plain from the surrounding circumstances that the agreement as to the sale and purchase of the petrol was intended to be a binding contract and it formed part of the inducement for the sale of the land. Secondly, the agreement was duly stamped and bears all the signs of a legal contract, and was not, as in May & Butcher v The King, a mere informal letter.”
“This general rule, however, applies somewhat differently in different cases. In commercial documents connected with dealings in a trade with which the parties are perfectly familiar the court is very willing, if satisfied that the parties thought that they made a binding contract, to imply terms and in particular terms as to the method of carrying out the contract which it would be impossible to supply in other kinds of contract.”
“i) Each case must be decided on its own facts and on the construction of its own agreement. Subject to that: ii) Where no contract exists, the use of an expression such as “to be agreed" in relation to an essential term is likely to prevent any contract coming into existence, on the ground of uncertainty. This may be summed up by the principle that “you cannot agree to agree’’. iii) Similarly, where no contract exists, the absence of agreement on essential terms of the agreement may prevent any contract coming into existence, again on the ground of uncertainty. iv) However, particularly in commercial dealings between parties who are familiar with the trade in question, and particularly where the parties have acted in the belief that they had a binding contract, the Courts are willing to imply terms, where that is possible, to enable the contract to be carried out. v) Where a contract has once come into existence, even the expression "to be agreed" in relation to future executory obligations is not necessarily fatal to its continued existence. vi) Particularly in the case of contracts for future performance over a period, where the parties may desire or need to leave matters to be adjusted in the working out of their contract, the Courts will assist the parties to do so, so as to preserve rather than destroy bargains, on the basis that what can be made certain is itself certain... vii) This is particularly the case where one party has either already had the advantage of some performance which reflects the parties’ agreement on a long term relationship, or has had to make an investment premised on that agreement. viii) For these purposes, an express stipulation for a reasonable or fair measure or price will be a sufficient criterion for the courts to act on. But even in the absence of express language, the Courts are prepared to imply an obligation in terms of what is reasonable. ix) Such implications are reflected but not exhausted by the statutory provision for the implication of a reasonable price now to be found in s. 8(2) of the Sale of Goods Act, 1979 (and, in the case of services, in s. 15(1) of the Supply of Goods and Services Act, 1982). x) The presence of an arbitration clause may assist the Courts to hold a contract to be sufficiently certain or to be capable of being rendered so, presumably as indicating a commercial and contractual mechanism, which can be operated with the assistance of experts in the field, by which the parties, in the absence of agreement, may resolve their dispute.”
“20. First, each case must be decided on its own facts and on the construction of the words used in the particular agreement. Decisions on other words, in other agreements, construed against the background of other facts, are not determinative and may not be of any real assistance. 21. Secondly, if on the true construction of the words which they have used in the circumstances in which they have used them, the parties must be taken to have intended to leave some essential matter, such as price or rent, to be agreed between them in the future— on the basis that either will remain free to agree or disagree about that matter— there is no bargain which the courts can enforce. 22. Thirdly, in such a case, there is no obligation on the parties to negotiate in good faith about the matter which remains to be agreed between them —see Walford v. Miles [1992] A.C. 128, at page 138G. 23. Fourthly, where the court is satisfied that the parties intended that their bargain should be enforceable, it will strive to give effect to that intention by construing the words which they have used in a way which does not leave the matter to be agreed in the future incapable of being determined in the absence of future agreement. In order to achieve that result the court may feel able to imply a term in the original bargain that the price or rent, or other matter to be agreed, shall be a “fair” price, or a “market” price, or a “reasonable” price; or by quantifying whatever matter it is that has to be agreed by some equivalent epithet. In a contract for sale of goods such a term may be implied bysection 8 of the Sale of Goods Act 1979 . But the court cannot imply a term which is inconsistent with what the parties have actually agreed. So if, on the true construction of the words which they have used, the court is driven to the conclusion that they must be taken to have intended that the matter should be left to their future agreement on the basis that either is to remain free to agree or disagree about that matter as his own perceived interest dictates there is no place for an implied term that, in the absence of agreement, the matter shall be determined by some objective criteria of fairness or reasonableness. 24. Fifthly, if the court concludes that the true intention of the parties was that the matter to be agreed in the future is capable of being determined, in the absence of future agreement, by some objective criteria of fairness or reasonableness, then the bargain does not fail because the parties have provided no machinery for such determination, or because the machinery which they have provided breaks down. In those circumstances the court will provide its own machinery for determining what needs to be determined —where appropriate by ordering an inquiry (see Sudbrook Trading Estate Ltd v. Eggleton [1983] A.C. 444).”
“However the difficulty with this approach is that the price of wesos is clearly not affected only by the price of FCOJ. That may give a suitable basis for estimating the likely price, but the reality will clearly depend on a series of other factors, including the general state of supply and demand in the wesos market, the remaining shelf life of the product and the likelihood that the parties will only contract if they have a history of working together.”
“it presupposes that there is such a thing as a reasonable period which everyone could equally recognise as being reasonable, rather than the different commercial interests and different perspectives involved in any extension of the Earn-Out Consideration. Moreover the court would have to identify some objective benchmark for determining the reasonable period without reaching an alternative subjective view or descending into the commercial fray: but that is not possible.”