The plaintiffs are builders/contractors, the defendants are developers. The defendants got in touch with the plaintiffs to discuss construction on their acreage. The plaintiff's offered the defendants to help them attain financing for the project, in return for being contractors, with a promise to negotiate between them to come to agree on a price for construction (through the defendants surveyor). The plaintiff's sent a letter to the defendants in this regard. The defendants replied with a letter of agreement.
The defendants negotiated with the plaintiffs but did not agree on terms, and instead the defendants hired another contracting company do to the construction. The defendants then solicited the financing from the company introduced to them by the plaintiffs. The plaintiffs sued on breach of contract.
Lord Denning:
Held: Appeal allowed
1) There was no agreement on any price between the plaintiff and defendant, only an agreement to negotiate, and price is essential in construction contracts. There was no mechanism to determine the price (no third party), and the decision was left between the two parties, hence it is too vague to determine by the court.
2) A contract to negotiate is not a contract, differentiated from Hillas v Arcos (in fact, it was stated to be a bad law). Since the law does not recognize a contract to enter a contract as binding, there is no way for a contract to negotiate to be binding. "It is too uncertain to have any binding force".
3) "A fundamental matter was left undecided" and there was no agreement between the parties.
The plaintiff should have attached a "finder's fee" to the loan on condition that the defendant did not take the plaintiff to do the work but did take the loan.
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