Wells v Devani [2019] UKSC 4

Key Point

  • A contract can be interpreted to be complete and binding if the context means it can naturally be understood as including the missing term; where interpretation suffices to complete the contract, it would be unnecessary for the judge to imply the missing term into the agreement

Facts

  • C, an estate agent, called D, a landowner struggling to sell flats, and offered his assistance
  • C stated his commission fee on call, and both parties essentially agreed that C would try to ‘find a purchaser’
  • C did not send his written terms to D, and neither party specified a point at which payment would be due
  • C found a purchaser, but D refused to pay after the sale was completed, claiming the terms were too uncertain for a binding contract
  • The Court of Appeal found for D, and so C appealed to the Supreme Court

Held (Supreme Court)

  • Appeal allowed
  • Through context, the contract could be interpreted to be complete

Lord Kitchin

Using Interpretation over Implication

  • “[A]bsent a provision to the contrary, I have no doubt it would naturally be understood that payment would become due on completion and made from the proceeds of sale. Indeed, it seems to me that is the only sensible interpretation of what they said to each other” [19]
  • “A reasonable person would understand that the parties intended the commission to be payable on completion and from the proceeds of sale” [26]

Implication available as fallback to interpretation

  • “[W]here, as here, the parties intended to create legal relations and have acted on that basis, I believe that it may be permissible to imply a term into the agreement between them where it is necessary to do so to give the agreement business efficacy or the term would be so obvious that ‘it goes without saying’, and where, without that term, the agreement would be regarded as incomplete or too uncertain to be enforceable” [35]
  • “[I]f, contrary to my view, the agreement, on its proper interpretation, did not provide for payment of the commission on completion then a term to that effect must be implied to make the contract work and to give it practical and commercial coherence” [29]

Lord Briggs

Using Interpretation over Implication

  • “The judge decided the case by reference to implied terms. But it follows from what I have set out above …  that a sufficiently certain and complete contract had been concluded between them, as a matter of construction of their words and conduct in their context rather than just by the implication of terms” [61]
  • “[T]he context in which the words are used, and the conduct of the parties at the time when the contract is made, tells you as much, or even more, about the essential terms of the bargain than do the words themselves” [59]

Commentary

Davies, ‘Interpretation and Implication in the Supreme Court’,  CLJ 2019

  • “Lord Briggs’ remarks chime much better with Lord Hoffmann’s approach [in Investors Compensation Scheme Ltd. v West Bromwich Building Society [1998] 1 W.L.R. 896] than with Lord Neuberger’s more recent leading decisions in cases such as Arnold v Britton and Marks and Spencer v BNP Paribas which have (it is suggested sensibly) stressed the primacy of the language chosen by the parties. Such tension in the authorities is regrettable”
  • Lord Hoffmann’s approach in ICS emphasised the importance of background factors, where as Lord Neuberger’s focused more on the “natural meaning of contractual language”