The price is right – Or is it? Drafting lessons from the Court of Appeal

Flexibility is often essential in commercial contracts, but so is certainty. The recent Court of Appeal decision in KSY Juice Blends UK Ltd v Citrosuco GMBH [2025] EWCA Civ 730 offers a timely reminder of how courts interpret flexible pricing clauses.

What happened

The contract in question included a clause stating that part of the price was flexible and was to be fixed between the parties by a certain time, namely December of each year. The High Court initially ruled this clause unenforceable, as a result of its open-ended nature and the absence of defined parameters to determine how this was to be interpreted by the parties. However, the Court of Appeal reversed that decision, holding the clause enforceable and instead, that in the absence of an agreed price, a reasonable market rate could be implied.

KSY Juice Blends Ltd had entered into a three-year supply contract with Citrosuco GMBH for 1,200 metric tonnes of orange juice pulp wash per year. The contract split the annual volume into two parts: 400 metric tonnes at a fixed price, and a further 800 metric tonnes at an open price to be fixed. No agreement was ever reached on the open price portion of the contract. Citrosuco refused to accept delivery of a cargo of pulp from KSY, prompting KSY to claim repudiatory breach, terminate the contract, and seek damages for lost profits. The court had to consider whether the open pricing clause was enforceable.

What matters

There is a tension between the Court’s desire to uphold the parties’ contractual bargain and the uncertainty of clauses that leave matters to be agreed upon at a later date. 
It is not unusual for parties to leave some aspects of a contract open to be agreed at a later date. However, this carries the risk that the clause (or the contract) will be an unenforceable ‘agreement to agree’.

KSY reinforces that the Court will strive to enforce the parties’ agreement where the drafting and surrounding circumstances allow.

Zacaroli LJ (with whom Baker LJ and Popplewell LJ agreed) placed considerable emphasis on the availability of objective pricing benchmarks - specifically, market data for frozen orange juice - which offered a credible foundation for assessing price. Although such benchmarks are unlikely to be available in all cases. Other relevant factors included the contract’s provisions on delivery schedules, minimum purchase volumes, and an initial fixed price. Taken together, these elements led the Court to imply a term that in the absence of reaching agreement the price would be a reasonable or market price.

However, the Court also acknowledged that with different wording or without reference points, the outcome may have differed. Particular care needs to be taken when leaving a matter to be agreed at a later date.

What now

Given how context-dependent the enforceability of open pricing clauses is, clear drafting is essential. The more certain the original drafting is, the less likely it is that a dispute about enforceability will arise. If flexibility is needed particular care should be taken and the parties could consider quantifiable mechanisms - such as indexation clauses tied to published benchmarks or formula-based pricing that adjusts automatically.

It is often sensible to build in dispute resolution mechanisms, such as expert determination or arbitration. When doing so, it is wise to consider carefully the question the decision-maker is expected to resolve, the criteria to be applied, and the scope of their authority. KSY indicates that a solid resolution process (while not necessary) can go a long way in giving the court comfort about the certainty of the agreement to maintain enforceability.

The Court of Appeal preserved the bargain this time - but that won’t always be the case. The line between commercial flexibility and legal uncertainty is thin and context dependent. Ultimately, the KSY decision underscores that while flexibility in pricing can be commercially valuable, clarity in drafting is what ensures enforceability - so make sure your contracts speak as clearly as your intentions. Ensuring clarity also helps avoid a dispute arising in the first instance. While the contract was upheld in KSY, it was a long (and no doubt costly) road to get there.

Permission to appeal to the Supreme Court was refused by the Court of Appeal.