Agreement to Agree Unenforceable

Agreement to Agree Unenforceable: What Does it Mean?

Have you ever signed a contract that contained a provision that required both parties to reach an agreement on certain terms at a later date? This type of provision is called an «agreement to agree,» and it`s important to understand why it might be unenforceable.

An agreement to agree is a contractual provision that requires the parties to reach an agreement on certain terms in the future. For example, a contract might require parties to negotiate the price for a service before agreeing to it. This type of provision is often included in contracts when final details cannot be fully agreed upon at the time of signing.

However, an agreement to agree may be unenforceable if the terms of the agreement are too vague or ambiguous. Courts will not enforce agreements to agree that are too vague or uncertain because it is impossible to know if the parties have reached an agreement. Therefore, it is important that any agreement to agree be specific enough to be enforceable.

For example, a provision that states that the parties will agree on «reasonable terms» in the future may not be enforceable. «Reasonable terms» is a subjective standard that is open to interpretation. However, a provision that states that the parties will agree on a specific price for a service in the future is likely enforceable.

Furthermore, an agreement to agree may not be enforceable if it is not a firm commitment to negotiate in good faith. For example, a provision that requires parties to negotiate in good faith before agreeing to a final price is likely enforceable. However, a provision that requires parties to negotiate, but does not require them to reach an agreement, may not be enforceable.

In conclusion, a carefully-worded agreement to agree can be an important provision in a contract. However, it is important to ensure that the terms of the agreement to agree are specific enough to be enforceable. In addition, the provision should require the parties to negotiate in good faith and reach a final agreement. Otherwise, the agreement to agree may be unenforceable and lead to confusion and potential legal disputes.