In ED & F Man Commodity Advisers Ltd and another v Fluxo-Cane Overseas Ltd and another  EWCA Civ 406 there was an appeal against a decision of the lower court not to grant an application by the Claimant for summary judgment in relation to the question of whether or not an agreement had been reached by the parties on certain issues.
The first Claimant was a sugar broker and acted with the second Claimant as a clearing house. In January 2008 the New York Exchange became concerned about the Defendant’s equivalent short futures position and instructed brokers to collect additional margin on all positions held by them on the Defendant’s account. The New York Exchange also directed that the Defendant’s orders only be placed through a clearing member. The Claimants were also required to reduce the Defendant’s position. The Defendant organised a meeting with its brokers in an attempt to try and negotiate an agreement under which its positions could be dealt with in such a way so as to be compliant with the New York Exchange’s rules. The meeting took place on the 17th of January 2008. On the morning of the meeting the Claimants made margin calls which went unpaid and on the day following the meeting, the Claimants began to close out the Defendant’s short positions which they were entitled to do under their contract with the Defendant. The Claimants then made a further margin call later that day and eventually commenced proceedings when this remained unpaid. The Defendant argued in the lower court that at the meeting on the 17th of January, a legally binding contract was created between the Defendant and the brokers, the terms of which provided that the brokers would not act individually to close out any positions prior to a meeting organised for the following day. The Claimants submitted that it was clear that no contract of any kind was concluded at the meeting. The Defendant on the other hand, submitted that based on the transcript of the meeting and in light of the conduct of the brokers, there was at least an interim contract and that in the alternative, if the only reason the court could not make a decision on this basis was due to a lack of evidence on the surrounding circumstances, the matter should go to trial.
The Court of Appeal took the view that any evidence additional to the transcript of the meeting did nothing to support a finding that an agreement had been reached whereby the Claimant brokers would forego their contractual rights pending a further meeting. Waller LJ noted that without clear words intended to have legal effect that had been accepted either orally or by conduct, it would be difficult to find that there was even an argument that a contract existed. He further noted that where conduct is relied upon as evidence of a contract having been concluded, if the conduct is consistent with both a contract and no contract, the conclusion will have to be that there is no contract. The court did not consider that the agreement of the brokers to participate in the negotiations amounted to a binding agreement. The lower court had found that by the end of the meeting, agreement had been reached subject only to the question of whether the Defendant would be in a position to give a commitment to pay margin on the 18th of January. The Court of Appeal on the other hand, considered that the transcript indicated that certain of the brokers required more than an explanation of the commitment that the Defendant could give. The brokers required an actual commitment that the monies due would be paid the next day. Based on the transcript alone, it was unlikely that the Defendant would be able to establish the existence of a contract in the event that the matter went to trial. As the Defendant had submitted that a decision could be made on the transcript alone, it was not entitled to resile from that position on the basis that this resulted in an unfavourable decision.