Certainty of terms
what does certainty of terms mean?
A contact is only valid if the essential elements of the contract are certain/definite, and complete. If the terms are vague, or imprecise, then the contract fails.
May and Butcher v. The King [1934] 2 K.B. 17 (H.L.). [tents]
A contract to enter into a contract is not a contract. A contract is a concluded agreement where all essentials elements are agreed and determined. Price is an essential element. If an arbitrator can determine the price, then the price is not incomplete, but if that person "would not or could not act, there would be no contract because the price was to be settled in a certain way and it has become impossible to settle it in that way, and therefore there is no settlement."
Commertec Capital Corp v Stabler (B.C.C.A.)
An agreement to agree is unenforceable. [P2.] The option clause in this case "is clearly so vague and uncertain as to be incapable of enforcement." [p2]
is an agreement to negotiate a valid agreement?
An agreement to negotiate the terms of a contract fails for uncertainty unless the terms are in fact negotiated and agreed
Walford v. Miles, [1992] 1 All E.R. 453 (H.L.).
In this case, the lockout agreement was uncertain because it was lacking a specific duration. Lock-out agreement: an agreement where the parties agree not to negotiate with anyone else. For a lock-out agreement to be valid, there must be consideration, and a specified period of time.
Must all the terms be precise?
No, so long as there is a definite method of ascertaining the term, e.g. Parties can provide mechanisms for determining uncertain terms (arbitration clauses, appointment of valuers/umpires)
Foley v. Classique Coaches Ltd., [1934] 2 K.B. 1 (C.A.). [petrol]
The contract is valid and binding. The parties acted as though it was valid and binding for 3 years. There was an arbitration clause, and therefore it can be implied that the price of the petrol, the disputed term, can be ascertained by a reasonable observer.
R. v. C.A.E. Ind. Ltd. [1985] 5 W.W.R. 481 (Fed. C.A.). [hanger re gov]
The contract was complete, because despite some loose words such as "assurance" "set aside," etc, the contract sufficiently conveyed the intentions of the parties. The court was capable of determining the intentions of the parties, and the parties had intended to enter into a legally binding contract.
What does "indefiniteness" mean re certainty of terms?
The language is too vague/incohate
Courtney Ltd. v. Tolaini Bros.Ltd.,[1975] 1 W.L.R. 297 (C.A.).
The law does not recognize a contract to negotiate fundamental terms of an agreement. The price in a contract is a fundamental term. A contract is uncertain if the price has not been determined, or if there is not a method for determining it.
Sudbrook Trading Estate Ltd. v. Eggleton, [1982] 3 W.L.R. 315 (H.L.). [option to purchase]
The option clause is not uncertain, and not an agreement to make an agreement. It is a valid means of ascertaining a price. Parties appoint valuers, and the valuers will determine a fair and reasonable price. NOTE: the parties intended the option to have legal effect. HL was also concerned about intent to intentionally defeat the contract.
Friesen v. Braun, [1950] 1 W.W.R. 97 (Man. K.B.). [sisters]
The parties did not agree on the terms of the purchase price. The Jugde could not imply a reasonable price because the price was mentioned in the contract. The issue was when and how the purchase price was to be paid.
Montana Mustard Seed Co. v. Gates, [1963] 42 W.W.R. 303 (Sask. Q.B.). 161
There was a contract between the parties for the purchase of both kinds of seeds. The price for the second kind was not discussed, therefore doctrine of reasonable price applies. NOTE: term cannot be inconsistent with or contradict the express terms of the contract.
Scammell v. Ouston, [1941] 1 All E.R. 14 (H.L.). [van]
There was no concluded contract, because the language was too vague and inchoate. The parties never determined the terms of the hire-purchase agreement.
Can the court imply terms?
Yes, the court can imply certain terms that don't require negotiation. Price, or terms that are part of a custom or trade EG: Price. If the parties are silent on the price, then the court can imply a reasonable price. But, the moment the parties say the price "is to be negotiated," then the court cannot imply terms. goal is to give effect to the intention (judged objectively) of the parties.
