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Grow With Us Ltd v Green Thumb (UK) Ltd [2006] EWCA Civ 1201

Contract – Implied Terms – Agreement to Agree

Facts

Grow With Us Ltd entered into a franchise agreement with Green Thumb to set up a lawn treatment business in accordance with Green Thumbs methods, expertise and intellectual property. By virtue of a clause in the franchise agreement, Grow With Us were required to keep a list of clients, and potential clients, and to supply it to the franchisors on request. In addition, the contract provided that to be able to renew the agreement at the end of the franchise term, the franchisee must have fulfilled uplifted minimum performance requirements. The agreement did not specify who should decide on the extent of the new minimum performance requirements. The franchisee wished to renew the franchise after the end of the original term, but the franchisor did not wish to allow them to because they had not provided them with the necessary client data because of the restrictions imposed on them by the Data Protection Act 1998.

Issues

Whether or not the term requiring minimum performance requirements was too vague or uncertain. Whether or not, if this was so, the franchise agreement was not an enforceable agreement. Whether or not the franchisee was entitled to renew.

Held

There was no enforceable agreement to renew in this case. All the agreement regarding the renewal of the franchise could be described as was an ‘agreement to agree’. There could not be a term implied into the agreement that the minimum performance requirements were to be ‘reasonable’ as the imposition of such a term was not necessary for the business efficacy of the agreement. If the franchisee did not accept the terms as precursors to renewal, then there was no automatic right to renewal. There was as a result no agreement to renew at all.


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