1.

The facts

1. At the time of the agreement between Foxpace and Mr Barton, Foxpace owned
a property known as Nash House in Northolt, London. Foxpace wished to sell Nash
House but arrangements did not go smoothly. In December 2012, a company with
which Mr Barton had strong links exchanged contracts for the purchase of Nash House
for £6.3 million. The purchaser failed to complete despite having paid substantial sums
to Foxpace in exchange for successive extensions of the period for completion.
Foxpace rescinded the contract in May 2013. On 7 June 2013, Mr Barton exchanged
contracts with Foxpace to buy Nash House himself for £5.9 million. Mr Barton paid an
initial deposit but failed to make further payments as they fell due and Foxpace

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rescinded the agreement. The upshot of those two failed transactions was that
deposits had been paid and costs incurred amounting in total to about £1.2 million,
money which the parties treated as coming from Mr Barton. The judge accepted that
Mr Barton “was about £1.2 million out of pocket across the two unsuccessful attempts
to purchase Nash House”: para 64.

2. The discussions which led to the agreement about a commission for the sale
ultimately to Western were conducted between Mr Barton on the one side and Mr
Gwyn Jones, Mr Marcus Rooke who was Mr Gwyn Jones’ assistant and Mr Nicholas
Morris a solicitor acting for Foxpace on the other side. Shortly after the failure of the
second sale of the property, Mr Barton discussed with them a possible sub-purchaser
for Nash House if Mr Barton bought the property himself for £5.7 million. There was
then a month or so of correspondence between the solicitors of the potential
purchaser, the solicitors for Foxpace and Mr Barton trying to finalise the arrangements.

3. In parallel with this correspondence, Mr Rooke was corresponding with Mr

Javed Hussain acting for a different potential purchaser who was interested in buying
Nash House for cash. Heads of terms for the sale of Nash House to a Mr Kherallah for a
price of £6.3 million were prepared. Those discussions contemplated the payment of
an introduction fee to Mr Hussain of £490,000. That alternative deal, of course, fell
away when the property was bought by Western.

4. I will come in more detail later to the judge’s findings as to what was agreed
between Mr Barton and Foxpace. Documents were drawn up for the sale of Nash
House to Western for £6.55 million. However, towards the end of August 2013, it came
to light that Nash House fell within an area safeguarded for the purpose of the
construction of the HS2 rail link. Western wanted to make the contract conditional on
the HS2 project not affecting the site, but Foxpace was not prepared to agree to that.
It was therefore agreed that Western would purchase the property unconditionally for
£6 million plus VAT. Contracts were exchanged on 10 September 2013 and the sale of
Nash House was completed.

2. Mr Barton’s claim in contract

5. For present purposes there are three potential routes by which one could arrive
at the conclusion that Foxpace is contractually bound to pay a fee to Mr Barton. The
first is that it was an express term of the contract that he should be paid a fee in the
events which have happened. The second is that a term should be implied into this
particular contract in order to give effect to the unexpressed intention of the parties.

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The third is that there is a term implied by law as an incident of this kind of contract. I
shall consider each of these in turn.

The consequence of saying nothing

6. The difficulty in this case derives from the fact that the parties’ contract did not
expressly state what was to happen if, as in fact occurred, Nash House was sold to the
purchaser introduced by Mr Barton at a price less than £6.5 million. The key question
is: what is the legal consequence of this omission? The appellants contend that the
consequence of failing to make express provision for Mr Barton to be paid a fee in the
event of such a sale is that no fee is payable. By contrast, Mr Barton argued in the
courts below that the consequence of this omission is that his entitlement or
otherwise to a fee in the event of such a sale is not governed by the law of contract at
all, so that it is open to him to claim payment for his services by relying on the law of
unjust enrichment.

7. In my view, both these contentions are mistaken and the result has been to take
the legal analysis of this case down a wrong path. The fact that the contract did not
expressly deal with whether a fee was payable in the circumstances which occurred

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does not mean that the law of contract is inapplicable. But nor does it entail that
pursuant to the law of contract nothing was payable in those circumstances. Both
approaches fail to recognise that the law of contract provides a set of rules for
ascertaining the legal rights and obligations of contracting parties which extend well
beyond their expressly stated intentions.

Sources of contractual obligations

8. The idea of freedom of contract is that contractual obligations should be freely

chosen. But that does not mean that the choice to be bound by an obligation must be
expressly stated. If it did, there would be very little to the law of contract. A principal
function of contract law is to provide a framework of rules which apply to contractual
relationships unless the parties expressly opt out of them.

9. The essential reason why such rules are necessary is, to put the point
colloquially, that life is too short to negotiate contract terms designed to cover every
contingency that may occur. Even the most comprehensive and carefully drafted
written contract cannot anticipate and provide expressly in advance for every possible
contingency. And even where contingencies are foreseeable, commerce would be
stultified if time and cost was routinely incurred in discussing and making provision for
situations that are not thought likely to happen.

10. Establishing default rules serves to reduce the costs and inconvenience of
negotiating terms and also to avoid unfair outcomes in cases where parties, whether
through inertia, lack of opportunity or foresight, or deliberate choice, have not
negotiated express terms to cover certain significant contingencies. Such default rules
are generally optimal when they reflect prevailing social norms and expectations and
therefore create rights and obligations which reasonable parties would be likely to
agree between themselves.

11. Many default rules that are part of English contract law apply to contracts of all
types. For example, contracts seldom state that a breach of a promissory term will
render the other party liable to pay damages for losses caused by the breach.
However, the law of contract has developed rules (including rules about remoteness of
damage, mitigation of loss, and so on) which govern when such liability will arise in the
absence of contrary agreement. Similarly, contracts frequently do not specify whether
or when a breach of a promissory term will release the other party from its own
obligations. Again, the law of contract provides rules which determine the rights and
obligations of the parties in such situations unless they expressly agree something
different. The same can be said of many other matters.
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12. There are other default rules that apply, not to all contracts, but to all contracts
of a particular type. Again, establishing such legal rules does not interfere with
freedom of contract because the parties remain free to agree something else. As Lord
Diplock explained in Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 at
848:

“… parties to a contract are free to determine for themselves

what primary obligations they will accept. They may state
these in express words in the contract itself and, where they
do, the statement is determinative; but in practice a
commercial contract never states all the primary obligations
of the parties in full; many are left to be incorporated by
implication of law from the legal nature of the contract into
which the parties are entering. But if the parties wish to
reject or modify primary obligations which would otherwise
be so incorporated, they are fully at liberty to do so by
express words.”

13. As the law of contract developed in the eighteenth and nineteenth centuries in
response to the rising volume of trade, the courts recognised the need, if they were to
reach decisions that accord with what people doing business with each other would
reasonably expect, to have regard not only to what the parties to a contract had
expressly agreed but also to unwritten usages and norms of commerce. Over time
many such usages and norms were transposed into rules of law: see Ross Cranston,
Making Commercial Law Through Practice 1830-1970 (2021), esp pp 47-60. Lord
Radcliffe did not much exaggerate when he said that “the corpus of commercial law
has been built up largely by [the] process of supplying from the common usage of the
trade what is the unexpressed intention of the parties”: Tsakiroglou & Co Ltd v Noblee
Thorl GmbH [1962] AC 93 at 122.

14. A familiar example of a body of commercial law which developed in this way is
the law applicable to contracts for the sale of goods. By the time the law was codified
in the Sale of Goods Act 1893 the common law had developed a sophisticated set of
rules that apply to this type of contract unless a contrary intention is expressed. Many
of these rules were (and are) expressed in the codifying legislation simply as rules of
law (eg sections 4 - 7 of the Sale of Goods Act 1979); others are expressed as duties or
rights of the seller or buyer (eg sections 8 and 27); and others as implied terms of the
contract of sale (eg sections 12, 14 and 15). Nothing turns, however, on these different
formulations. There is no difference in substance between a rule which says that there
is an implied term of the contract that the buyer must do X and a rule which says
simply that the buyer must do X. For example, section 8 of the 1979 Act (which

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replicates section 8 of the 1893 Act) provides that, if the price in a contract of sale is
not fixed by, or in a manner agreed by, the contract (or by a course of dealing), the
buyer must pay a reasonable price. The drafter could equally well have adopted the
device of providing that such an obligation is an implied term of a contract of sale.

15. In addition to these methods of supplementing what parties expressly agree,

English common law has developed rules which, when satisfied, require a tailor-made
term which the parties have not expressly agreed to be treated as part of their
contract. The principal criteria are that the term is necessary to give business efficacy
to the contract and/or so obvious that “it goes without saying”: see eg Marks and
Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72,
[2016] AC 742, paras 16-21. Terms implied in this way are now often referred to as
terms implied in fact to distinguish them from standardised terms that are treated as
terms of a contract of a particular type by virtue of a rule of law: see eg Chitty on
Contracts, 34th ed (2021), para 16-005.

The distinction between terms implied in law and terms implied in fact

16. The distinction between terms implied in law and terms implied in fact has
come to be recognised relatively recently in the development of the common law but
is now well established. There is an early statement of it in the speech of Lord Wright
in Luxor (Eastbourne) Ltd v Cooper [1941] AC 108 at 137. In Liverpool City Council v
Irwin [1977] AC 239, 257-258, the distinction was drawn with conspicuous clarity by
Lord Cross of Chelsea, who said:

“When it implies a term in a contract the court is sometimes

laying down a general rule that in all contracts of a certain
type - sale of goods, master and servant, landlord and tenant
and so on - some provision is to be implied unless the parties
have expressly excluded it. … Sometimes, however, there is
no question of laying down any prima facie rule applicable to
all cases of a defined type but what the court is being in
effect asked to do is to rectify a particular - often a very
detailed - contract by inserting in it a term which the parties
have not expressed.”

In Equitable Life Assurance Society v Hyman [2002] 1 AC 408, 458-459, Lord Steyn
(adopting terminology used in the United States) pithily described the two types of
implied term as operating, respectively, as “general default rules” and “ad hoc gap
fillers”.
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17. The distinction between the two types of implied term is not merely one of
generality. There are two more important differences. First, where a term is implied in
law, cases establishing the applicable rule of law have the force of precedent in
relation to other contracts of the same type. A term implied in fact, on the other hand,
is an individualised term “which is implied into a particular contract, in the light of the
express terms, commercial common sense, and the facts known to both parties at the
time the contract was made”: Marks and Spencer plc v BNP Paribas Securities Services
Trust Co (Jersey) Ltd [2015] UKSC 72, [2016] AC 742, para 15 (Lord Neuberger of
Abbotsbury). As with decisions on the interpretation of contract terms, judicial
decisions relating to different contracts made in different circumstances are usually of
little assistance. Second, there is a difference in who bears what may be called the
burden of expression: see E Allan Farnsworth, “Disputes over Omission in Contracts”
(1968) 68 Colum L Rev 860, 884. A contract is presumed to include any term implied in
law as a standard incident of a contract of that type, unless such a term is expressly
excluded: see eg the passage quoted above from the speech of Lord Cross in Liverpool
City Council v Irwin; Geys v Société Générale, London Branch [2012] UKSC 63, [2013] 1
AC 523, para 55 (Baroness Hale of Richmond); Marks and Spencer plc, para 15. By
contrast, a party contending that a term is to be implied in fact has to overcome a
presumption that, at any rate where the parties have entered into a detailed written
contract, they have expressed all the terms particular to their individual bargain. This
point was made by Lord Hoffmann in Attorney General of Belize v Belize Telecom Ltd
[2009] UKPC 10, [2009] 1 WLR 1998, para 17, when he said that, if the contract does
not expressly provide for what is to happen when some event occurs, the “most usual
inference … is that nothing is to happen. … If the event has caused loss to one or other
of the parties, the loss lies where it falls.” Lord Hoffmann was there concerned with
terms implied in fact. His remarks were not directed, and do not apply, to terms
implied in law, where the opposite presumption applies.

18. Who bears the burden of expression may be important and is potentially critical
in the present case. On the judge’s findings, the contract between Foxpace and Mr
Barton was silent about whether Foxpace was obliged to pay Mr Barton any
remuneration if it sold Nash House to the purchaser introduced by him for less than
£6.5 million. An argument that it is necessary to imply a term on the particular facts of
this case that Foxpace must pay a reasonable remuneration would therefore have to
overcome the presumption that, as nothing was said about what was to happen in
these circumstances, nothing was payable. By contrast, if the default position is that
Foxpace was obliged to pay Mr Barton a reasonable remuneration for such a service
pursuant to a term implied in law, it is Foxpace which bore the burden of expression
and must show that the parties agreed otherwise by express words

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