Lloyd's Maritime and Commercial Law Quarterly
THE UNCERTAIN FUTURE OF WALFORD V. MILES
Alistair Mills and Rebecca Loveridge *
In Walford v. Miles, the House of Lords decided that a contractual clause containing an agreement to agree, or to negotiate in good faith, would not be enforceable. Lord Ackner suggested that there were two reasons for this decision: first, such a clause would be too uncertain to enforce, since the court could not be certain as to what terms to impose; and secondly, such a clause would be out of line with the inherently adversarial position of contracting parties. It is argued that the reasoning in Walford is faulty and that recent decisions of the Court of Appeal and the High Court concerning mediation and the Civil Procedural Rules indicate that the fears of the House of Lords in that case were ill-founded. Furthermore, French courts have not entertained such fears. The decision in Walford pays insufficient respect to the intentions of the parties as enshrined in the text of the written contract.
1. INTRODUCTION
Agreements to use reasonable endeavours to agree, or to negotiate in good faith, were found to be unenforceable in a number of notable decisions, the highest in terms of authority being that of the House of Lords in Walford v. Miles.1 The reasoning behind the decision of the House of Lords in Walford on this point appears to be twofold. First, the courts could never be certain of what constituted reasonable behaviour in a negotiation process and could therefore not determine whether the parties had in fact breached this duty.2 Secondly, the positions of parties negotiating a contract are inherently adversarial and, as such, enforcement of an agreement to negotiate in good faith would be out of line with this.3
This decision has been subject to some refinement and criticism in subsequent cases but, as will be discussed below, its substance remains intact. It will be argued that Lord Ackner’s reasoning was flawed in respect of both of the grounds for his decision. The case
* Pupil Barrister, Landmark Chambers, and Pupil Barrister, Fountain Court Chambers, respectively. Some work contributing to this article was begun when both authors were candidates for the Bachelor of Civil Law at Trinity College, Oxford, funded by the Arts and Humanities Research Council Professional Preparation Masters Scheme. The award of this funding is gratefully acknowledged. We are furthermore grateful for the extremely helpful comments and corrections of Neil Andrews, John Bell, Charles Mitchell and Edwin Peel on an earlier draft of this article. All errors, of course, remain our own.
1. Walford v. Miles [1992] 2 AC 128; followed in Little v. Courage Ltd (1995) 70 P & CR 469; London & Regional Investments Ltd v. TBI Plc [2002] EWCA Civ 355.
2. [1992] 2 AC 128, 138.
3. Ibid.
THE UNCERTAIN FUTURE OF WALFORD V. MILES
529