MRI Trading AG v Erdenet Mining Corporation LLC  EWHC 1988
Contract – Long Term Agreement – Enforceability – Agreement to Agree
By a contract governed by an English choice of law clause a Mongolian mining company, Erdenet, and a Swiss trading company MRI entered into an agreement for the purchase of copper concentrates. After disputes between the two resulted in arbitration at the London Metals Exchange (LME), an arbitration settlement agreement was drawn up which provided that MRI would enter into three separate and new agreements with Erdenet, with the terms attached to the settlement order on draft terms. Some of the terms, such as shipping schedules and some charges were left to be determined in the future. The first two of the contracts were performed, and the parties operated on these terms for over a year before the relationship again broke down.
Were the agreements agreed to be entered into as part of the settlement agreement enforceable? Whether or not these agreements were mere agreements to agree.
The agreements were a valid contract and was not a mere agreement to agree. The parties had acted and operated on the first two agreements for over a year, and the third contract should not therefore be read in isolation to the others. Instead, the court was to look at the totality of the agreement, and by doing so, the fact that a few of the ancillary arrangements such as charges and shipping schedules had yet to be agreed did not render the entirety of the agreement invalid on these facts. These ancillary arrangements would not prevent the core of the agreement from remaining valid where the essential terms are established and clear, and where it has been shown that the parties objectively intend to be bound by the agreement. In these circumstances, this was not a mere agreement to agree.