The parties to the Delgardo case were involved in legal action. To settle the dispute, they agreed to buy and sell a business for $75,000, with a decrease of $3,000 and $1,000 in monthly payments thereafter. They did not agree on other terms of purchase, but agreed in writing to work together in good faith to reach agreement on these terms in the future. The future came and, when the parties discussed and negotiated these additional conditions, they failed to reach an agreement. One party argued that there was an agreement to buy and sell the business; the other stated that no agreement had been reached. Id. at 880-81 (footnotes omitted). The court noted that the treaty, in good faith, «occurs precisely when the parties are subject to a contractual obligation to negotiate.» Id. at 883. In the contracting phase, you can only have one agreement to agree on an agreement when awarding important issues for future negotiations, instead of fulfilling an enforceable obligation. But what if you include in the treaty an explicit obligation to renegotiate certain conditions during the term of the contract? In the case of a long-term contract, this can often be prudent when circumstances may change over the life of the agreement in a way that the parties are unable to predict. Or if you conclude the contract, you may be aware of a future event – such as Brexit or the planned withdrawal of LIBOR – that may require a renegotiation of the relevant clauses as soon as the alternatives have been clear.
How can you design a renegotiation obligation so that it has the best chance of being applicable if you have to rely on it? A recent case, Associated British Ports v. Tata Steel UK Limited  EWHC 694 (Ch), provides helpful advice. The case law has identified a number of key indicators to determine whether an agreement is an agreement that needs to be concluded and is not applicable. The court confirmed that there was a distinction between two types of cases. First, the agreement gives rise to a dispute over whether the parties have entered into a binding contract. Second, the obligation to negotiate, as here, is part of an enforceable contract that the parties have already partially executed. In the first case, the question often arises as to whether the parties intended to form legal ties. (Note, however, that the parties may have this intention, but the agreement may still fail if the conditions they must agree and the basis of this agreement are too vague.
Barbudev v. Eurocom Cable Management Bulgaria EOOD  EWCA Civ 548 is a recent example.) However, if there is a valid contract and the parties have partially executed it, the courts should be reluctant to remove a clause requiring them to agree on certain points. The aim should be to preserve the good business of the parties rather than destroy them. But even in such a case, the clause may still fail because of uncertainty. The question is whether the court can give the practical content of the provision. This is generally possible when there is only a simple difficulty of interpretation, but not when the clause is ambiguous in its meaning and effect. There are two possible aspects. First, is the clause clear as to when the obligation to negotiate? Second, does the clause contain sufficient objective criteria to determine the outcome of the renegotiation? «When a person, by virtue of an existing court order, act or agreement, or by his statement, action or omission, has deliberately considered or admitted something as true, and does so, neither he nor his representatives of interests are in a proceeding between him or her and that person`s person or the person`s representative of interests to deny the truth about that thing.» In Yam Seng PTE vs. International Trade Corporation, the Tribunal stated that the obligation of a contracting party to act in good faith was not consistent with the position of a party in the negotiations.