Enforcing agreements

In the previous article, we reviewed decisions on the enforceability of clauses in commercial contracts requiring parties to negotiate in good faith.

The article identified a tension between, at one extreme, the refusal to enforce, exemplified in the decision in Walford v Miles [1992] 2 AC 128, House of Lords, and a number of Court of Appeal decisions which distinguished it and enforced such clauses. 

We noted the clarification and guidance to be found in the Court of Appeal decision in Petromec Inc Petro-Deep Societa Armamento Navi Appoggio SPA v Petrobras Brasileiro SA [2006] 1 Lloyd’s 121, which this article reviews.

Petromec

This was a complex case. The relevant part for present purposes relates to a number of contracts concerning the purchase, charter and insurance of an oil production platform. The transactions anticipated the need to upgrade the platform at some future stage. As a result of the discovery of a new oil field (Rocandor) while