Head of General Counsel Services | Commercial | Retail & Consumer
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Careful drafting is vitally important when negotiating and concluding a contract. Extensive litigation can often be avoided by ensuring that a contract accurately reflects the intentions of the parties and covers all possible scenarios. This can be seen clearly in the recent Supreme Court decision in Barton and others v Morris and another in place of Gwyn-Jones  UKSC 3.
The Barton v Morris case highlights the difficulty of relying on implied terms and unjust enrichment and stresses the importance of thorough drafting. This case also reiterates the Court's reluctance to interfere with what the parties have agreed, even if it appears fair or reasonable.
In this article, we will explore express and implied contract terms, how the Supreme Court interpreted them in this case, and how businesses can avoid finding themselves in an unfavourable position.
To understand the reasoning behind the decision in Barton v Morris, it is important to understand the law around express and implied terms and unjust enrichment.
An express term is a term expressly stated by parties when a contract is made. Contracts can consist of both written and oral express terms.
An implied term is not stated in the contract, but may arise in the future, to give effect to the parties’ intention at the time the contract was made.
A term may be implied by:
In BP Refinery v Hastings  UKPC 13 the Supreme Court held that one of the following conditions must be satisfied for a term to be implied:
Additionally, an implied term must not contradict any express term of a contract, and the party arguing in favour of an implied term must rebut the presumption that the parties have expressed all the terms in the agreement.
Unjust enrichment is an equitable term which applies when there is a transfer of value with nothing in return i.e., where one party unjustly gains at the expense of another. The desired resolution for the impacted party would be enrichment (usually in the form of payment).
The following must apply in a successful case of unjust enrichment:
The case of Barton v Morris concerned an oral contract between Mr Barton and Foxpace Limited for the sale of Foxpace's property, Nash House. The parties agreed that if Mr Barton introduced a buyer to purchase Nash House for £6.5 million, Foxpace would pay Mr Barton an introductory fee of £1.2 million. The contract contained no provisions regarding what would happen if the buyer introduced by Mr Barton purchased the property for less than £6.5 million. Subsequently, the property was sold to the buyer introduced by Mr Barton for £6 million. Foxpace offered Mr Barton £400,000 as a gesture of goodwill, which he rejected. Mr Barton claimed that he was entitled to a higher introductory fee.
The Supreme Court concluded that Mr Barton was not entitled to remuneration for the introduction (though note this was only by a 3-2 majority) on the following basis:
Barton v Morris serves as an important reminder that parties should pay close attention to the wording and clauses in a contract. Loose drafting will likely lead to disputes and the Court will be unwilling to fill in gaps left by the parties.
If you would like to discuss the issues or consequences raised in this article, please do not hesitate to contact us.