Certainty Flashcards
Council of the Upper Hunter County District v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429
The threshold for uncertainty is that a term is so obscure and incapable of any definite or precise meaning that the court is unable to attribute to the parties any particular contractual intention.
Just because a term has more than one meaning does not mean that it is uncertain.
“Suppliers costs” was held to be merely vague.
Whitlock v Brew (1968) 118 CLR 445
You can’t sever a clause if it would turn the contract into a different sort of contract from which the parties contemplated.
In this case, there was no consensus ad idem as to the duration of the term, the rent, or anything else except the commencing date and the premises intended to be let. If the court were to fill in the blanks it would essentially change the nature of the contract even if clause 5 provided that Brew would immediately grant a lease to a petrol service station company ‘upon such reasonable terms as commonly govern such a lease’
Godecke v Kirwan (1973) 129 CLR 629
AGREEMENT TO AGREE
The agreement included a clause which provided that Godecke would, if required by Kirwan, ‘execute a further agreement to be prepared at my costs by (Kirwan’s) solicitors containing… such other covenants and conditions as (Kirwan’s solicitors) may reasonably require’
This was a complete agreement as they agreed to accept, as part of the bargain, additional provisions later if required. This does not mean they are making an agreement to later agree upon additional provisions to govern the bargain.
Biotechnology Australia P/L v Pace (1988) 15 NSWLR 130
Extrinsic materials can be used to resolve uncertainty (e.g. industry standards, outside standards) and determine what the meaning of a term is.
Where there is a range, the court can enforce the minimum figure.
Placer Development Ltd v The Commonwealth (1969) 121 CLR 353
It was a term of this agreement (clause 14) that the Commonwealth would reimburse Placer for any import duties paid on the timber, but that this subsidy would be “for an amount or at a rate determined by the Commonwealth from time to time’ and would ‘not exceed the amount of duty paid by the company’. The Commonwealth ceased doing so and Pace sued.
A promise combined with a discretion as to whether it will be carried out amounts to no contract. A promise to pay an unspecified amount is not enforceable.
Placer loses.
Coal Cliff Collieries P/L v Sijehama P/L (1991) 23 NSWLR 1
AGREEMENT TO NEGOTIATE IN GOOD FAITH
In this case, the agreement to negotiate in good faith about the joint venture in mining was an illusory promise.
Agreements to agree are not certain, neither are agreements to negotiate in good faith as there wasn’t enough certainty to enforce it.
United Group Rail Services Ltd v Rail Corporation NSW (2009) 74 NSWLR 618
United Group Rail Services Ltd entered an agreement to design and build new rolling stock for Rail Corporation NSW. The agreement contained a dispute resolution clause that provided the parties would meet and have “genuine and good faith negotiations” if a dispute arose.
Issue: Whether the “good faith” agreement was enforceable.
The promise to negotiate in honest, good faith was “not vague, illusory, or uncertain” because the business people expressly chose to constrain themselves using broad language that does still have “sensible and ascribed meaning” then it is not up to the courts to impede these business choices.
Meehan v Jones (1982) 149 CLR 571
Conditional contracts
“Subject to _____” clauses are NOT certain and usually illusory, but the exception is “subject to finance”, which IS A SUFFICIENTLY CERTAIN clause. It is held to standards of honesty or honesty and reasonableness.
