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Barton v Morris: Beware contractual silence – draft carefully to avoid being caught out

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By Alexandra Hammond

19 Apr 2023 | 3 minute read
contract

Careful drafting is vitally important when negotiating and concluding a contract. Extensive litigation can often be avoided by ensuring that a contract accurately reflects the intentions of the parties and covers all possible scenarios. This can be seen clearly in the recent Supreme Court decision in Barton and others v Morris and another in place of Gwyn-Jones [2023] UKSC 3.

The Barton v Morris case highlights the difficulty of relying on implied terms and unjust enrichment and stresses the importance of thorough drafting. This case also reiterates the Court's reluctance to interfere with what the parties have agreed, even if it appears fair or reasonable.

In this article, we will explore express and implied contract terms, how the Supreme Court interpreted them in this case, and how businesses can avoid finding themselves in an unfavourable position.

Express terms, implied terms, and unjust enrichment

To understand the reasoning behind the decision in Barton v Morris, it is important to understand the law around express and implied terms and unjust enrichment.

An express term is a term expressly stated by parties when a contract is made. Contracts can consist of both written and oral express terms.

An implied term is not stated in the contract, but may arise in the future, to give effect to the parties’ intention at the time the contract was made.

A term may be implied by:

  • fact;
  • law;
  • usage and custom; or
  • the parties’ previous course of dealing.

In BP Refinery v Hastings [1977] UKPC 13 the Supreme Court held that one of the following conditions must be satisfied for a term to be implied:

  • the term meets the business efficacy test: the term is implied if it is necessary to give effectiveness to the contract (i.e. the contract doesn’t make sense without it); or
  • the term meets the officious bystander test: the term is implied if an interfering bystander would consider it is so obvious it goes without saying (Marks and Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72).

Additionally, an implied term must not contradict any express term of a contract, and the party arguing in favour of an implied term must rebut the presumption that the parties have expressed all the terms in the agreement.

Unjust enrichment is an equitable term which applies when there is a transfer of value with nothing in return i.e., where one party unjustly gains at the expense of another. The desired resolution for the impacted party would be enrichment (usually in the form of payment).

The following must apply in a successful case of unjust enrichment:

  • the defendant was enriched at the claimant’s expense;
  • the enrichment was unjust; and
  • there are no defences available to the defendant.

Barton v Morris

The case of Barton v Morris concerned an oral contract between Mr Barton and Foxpace Limited for the sale of Foxpace's property, Nash House. The parties agreed that if Mr Barton introduced a buyer to purchase Nash House for £6.5 million, Foxpace would pay Mr Barton an introductory fee of £1.2 million. The contract contained no provisions regarding what would happen if the buyer introduced by Mr Barton purchased the property for less than £6.5 million. Subsequently, the property was sold to the buyer introduced by Mr Barton for £6 million. Foxpace offered Mr Barton £400,000 as a gesture of goodwill, which he rejected. Mr Barton claimed that he was entitled to a higher introductory fee.

The Supreme Court concluded that Mr Barton was not entitled to remuneration for the introduction (though note this was only by a 3-2 majority) on the following basis:

  • No implied term by fact: A reasonable fee could not be implied in the circumstances as, using the business efficacy test, the contract worked without it. Implying an introduction fee in the circumstances was not necessary to ensure the effectiveness of the contract.
  • No implied term by law: No applicable legislation applied to the contract which could be used to imply the right for Mr Barton to be paid an introduction fee.
  • No unjust enrichment:It must have been contemplated by the parties that the property may have sold for less than £6.5 million. To require Foxpace to pay a commission even though the £6.5 million was not met would seem at odds with the agreement. To permit an unjust enrichment claim would undermine the agreed contractual terms.

Barton v Morris serves as an important reminder that parties should pay close attention to the wording and clauses in a contract. Loose drafting will likely lead to disputes and the Court will be unwilling to fill in gaps left by the parties.

Key takeaways

  • You should record all agreements in writing as this can prompt more critical thought about the terms and help to ensure that the agreed contractual terms are accurately recorded.
  • You should not seek to rely on implied terms and unjust enrichment; the Courts are generally reluctant to interfere with a contract that has been agreed between the parties.  
  • When drafting a contract, businesses should cover all eventualities likely to arise to avoid blind spots which could lead to disputes. It can be a useful exercise to take a step back and make a note of what events and issues might arise during the course of the agreement and ensure that they are covered in in the contract.

If you would like to discuss the issues or consequences raised in this article, please do not hesitate to contact us.

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