The recent Court of Appeal case of Wells v Devani has clarified that where a contract is unenforceable because it is missing an essential term, the court will not imply a term into the contract to ‘plug the gap’ and make it enforceable.

The law

It goes without saying that a legally binding contract can only exist once the parties have reached an agreement on its key terms.  A level of certainty is required in order to enforce a contract and that would obviously be difficult if the parties were unsure as to exactly what they had agreed.

Disputes regarding whether a contract has been entered into or not are common however.  When considering this issue, the courts will often apply the ‘objective bystander’ test whereby the court will ask whether it could be said from the parties actions that they had agreed all the terms necessary in order to create legal relations.  In some circumstances, even if what would appear that a key term had not been agreed, the court may still find that the parties’ conduct confirms that such a term was not an essential precondition to the formation of the contract.

The facts

Mr Wells had spent a significant amount of money developing a block of flats.  Seven flats remained unsold and Mr Wells made contact with a local estate agent, Mr Devani, to discuss marketing the flats.  During a conversation Mr Devani informed Mr Wells of his commission and how it was calculated.  He failed however to confirm what event would actually trigger the commission payment if Mr Devani found a buyer.

Unfortunately for Mr Devani, he sent his terms of business to Mr Wells after he had found a buyer for the flats and after Mr Wells had accepted the buyer’s offer.  Mr Devani’s terms stated that commission was payable on exchange of contracts.  Mr Wells completed on the sale but refused to pay the commission.  Mr Devani issued a claim for breach of contract in the County Court.

The County Court decision

The court found that a legally binding contract had been made during the conversation between Mr Wells and Mr Devani.  Accordingly, Mr Wells was liable to pay the commission.  The court accepted that the parties did not actually discuss or agree what event would trigger the obligation to pay commission.  In the circumstances it found that the law could imply a term into the contract in order to give business efficacy to the parties’ intentions.

Mr Wells appealed to the Court of Appeal arguing that the court had erred in finding that an oral contract had been made.

Decision in the Court of Appeal

The Court of Appeal overturned the County Court’s decision and held that the failure to agree the event triggering the payment of commission rendered the contract incomplete and unenforceable.

In particular the Court of Appeal held that it was critically important in a contract of this nature to identify the specific event triggering the agent’s entitlement to commission.  In the circumstances, the parties’ negotiations were incomplete and the law cannot imply such a crucial term into the contract to make it complete.  The Court of Appeal noted that whilst Mr Devani had the trigger event “in his head” during his conversation with Mr Wells, it was simply not enough.  He should have voiced it and ensured that it was agreed before proceeding.

The Court Appeal accepted that terms could be implied into an existing contract but that was not the case here because a contract had not been formed.

Mr Wells therefore avoided payment of any commission.


This case serves as a useful reminder that parties to any contract should always ensure that all key terms are both communicated and agreed before any aspect of the contract is performed.  This is especially important for the receiving party because, as this case shows, the court will not imply a missing term into an incomplete contract in order to render it enforceable.   As the above demonstrates, proceeding before all terms have been agreed can be a costly mistake.

If unsure, the safest course of action would be to only perform the contract after both parties have received and agreed (and preferably signed) the relevant terms.

Jeremy Crook works in our disputes legal team.  If  you have any questions about the issues raised in this article or any others get in touch by telephone 0345 450 5558 or email