Harsh realities – contractual allocation of risk and implied terms

Pleon Limited v Leonis Yachting Limited (“The Maltese Falcon”) [2025] EWHC 3144 (Comm)

The question

Would a court be willing to imply a term into a business to business sale agreement in conflict with expressly allocated risk where the obligations on one party appear to lack commercial or practical coherence.

The key takeaway

Where commercial parties to a contract have expressly allocated risk, terms suggesting otherwise are unlikely to be implied.

The background

The Maltese Falcon, one of the largest masted yachts in the world, was sold by the claimant, Pleon, to Leonis. The sale agreement stipulated that the yacht would be delivered on 7 April 2022; it also provided for a sea trial before delivery and an option for Leonis to carry out a condition survey. The sale agreement contained the following clause:

“[The Yacht] shall be delivered safely afloat … in the same condition (fair wear and tear excepted) and outfitted as at the time of the Sea Trial, if any, and the Condition Survey…”.

By an access agreement (under the sale agreement) Leonis agreed that having purchased the yacht from Pleon and taken delivery, it would grant Pleon use of and access to the yacht for 61 days from 20 April 2022 to 20 June 2022. The access agreement contained clause 3.3:

"The [Yacht] and her tenders and gear shall be in commission and in full working order and [the Yacht] shall be seaworthy,…"

During the period of Pleon’s use and access, the yacht's starboard generator suffered an immobilising breakdown cutting short the use and access period.

The issue in this appeal of the arbitral tribunal's finding, was whether a term should be implied into the access agreement that Leonis’s obligations were “conditional on the [Yacht’s] hull and machinery on delivery under [the Agreement for Sale] having been properly maintained”. In the arbitration, the tribunal held that the above term was implied as without it, the contract would 'lack commercial or practical coherence'. The window between the delivery of the Maltese to the Defendant and the beginning of the Use Period was 12-13 days, not allowing enough time 'to effect any transformative maintenance'.

The decision

The High Court held that the standards set by clause 3.3 of the access agreement were clear. It was therefore required to determine whether a qualification to the circumstances in which that standard would apply was “necessary” (in the sense explained by the decisions referred to, principally Marks and Spencer plc v BNP Paribas Securities Services Trust Company [2016] AC 742) for the agreement between the parties to have business efficacy.

As at the time of delivery, under the sale agreement, the contractual possibilities were that the yacht was seaworthy or was unseaworthy. The provision for the sea trial and the option for a condition survey evidenced this. The risk that the yacht was unseaworthy at delivery to Leonis was, with Leonis as buyer and not Pleon as seller. Clause 3.3 of the access agreement confirmed that the risk that the yacht was unseaworthy remained with Leonis. It was not necessary to imply the suggested term into the agreement between the parties to give it business efficacy.

Pleon's appeal was allowed.

Why is this important?

The High Court's decision makes clear that the courts remain unwilling to imply terms that contravene clear and express allocations of obligation and risk – even where the obligations may seem harsh or impractical. The case reinforces the purpose of implied terms. They exist to make a contract workable, not fair.

Any practical tips?

Contracting parties should protect themselves when allocating risk; focusing on clear, joined up drafting to avoid a potential mismatch between key terms or obligations in related contracts.

Parties should ensure that they are comfortable with any risks they are assuming especially when these may be onerous. They should scrutinise the terms they are agreeing to and their practical implications. Are deadlines feasible? Is it possible to carry out obligations within the explicit and implied timeframes created by the contract?

Spring 2026