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Walford v Miles

[1992] 1 All ER 453

Case summary last updated at 03/01/2020 15:38 by the Oxbridge Notes in-house law team.

Judgement for the case Walford v Miles

W agreed that if M could prove his financial resources to pay for M’s business, then he would (1) not negotiate or accept offers from other parties, and (2) deal exclusively with M with a view to concluding the deal as soon as possible. They failed to reach a deal and W sold to a 3rd part, and M sued W. The HL held that the agreement was unenforceable as impractical and inherently contrary to the negotiating process (which required the threats of being able to go elsewhere). It also held that agreements no to negotiate with other parties cold be enforceable IF they were time-limited (it wasn’t in this case), while agreements to exclusively deal with one party were unworkable (what if they simply never came to agreement- would W be bound to never sell his business? On the three arguments 
 
(1)  Lord Ackner: A lock in or timeless lockout (which IS a lock in) is “inherently repugnant to the adversarial position of the negotiating parties” who are entitled to act self-interestedly. This is because there is no ability to threaten to or actually go elsewhere. CW says wrong because not all negotiations are adversarial: some are consensual/problem solving in nature+ a party might only have incentive to put together a proposal if he can guarantee acceptance at the end. This is WRONG: it is anti-competitive, and will actually incentivise the purchasing party to offer v low sums since the seller has no option except acceptance. 
 
(2)  Lord Ackner: In a “good faith” arrangement such as this, it will be impossible for a court to tell whether the reason for leaving the exclusive BF arrangements was a good one because the definition of a “good reason” is subjective. Wrong. As CW says, the courts have no problem in defining a “reasonableness” standard elsewhere. 
 
(3)  Lord Ackner: the damage for breach of this type of agreement would be impossible to quantify. True, there is no way of determining whether or not such an arrangement would have been successful, and therefore the court is being asked to put a value on the unknown likelihood that a deal of an unknown value would have been reached. Impossible to do with any accuracy. 

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