Against a background of high inflation and a challenging economic environment, many businesses are looking at whether they can raise prices. However, as we explain below, even where a contract appears to allow for this, much depends on the precise wording and what constraints the courts may decide to impose. This is the first in a series of briefings on pricing and payment issues in commercial contracts.
Is the customer's agreement always needed?
The courts have in the past upheld clauses which give one party a clearly drafted unilateral right to change its pricing without the other party's agreement. For example, in Esso Petroleum v Addison (2004), the Court of Appeal upheld Esso's right to adjust the margins, fees and allowances received by its petrol station licensees on a unilateral basis. However, if the contract merely makes a vague reference, such as fees being "subject to review as costs increase", without making it clear that there is a right for one party to change prices, this is unlikely to be sufficient (see for example the decision of the Court of Appeal in Amberley v West Sussex County Council (2011)).