Certainty

Question 1

How does the court determine certainty?

Answer 1

• A binding contract requires all material terms to be certain and complete. Only then can an agreement be enforced by the court.
• To determine certainty, the court applies an objective test asking whether in all circumstances of the case, the parties have agreed all the terms they considered to be a precondition to creating legal relations (RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH & Company KG (UKProduction) [2010 UKSC 14).
• A court won’t strike down an agreement simply because it lacks certainty – this is a last resort.

Question 2

Two pieces of case law as examples.

Answer 2

• Scammell v Ouston [1941] AC 25: an agreement based on ‘hire-purchase terms’ was too uncertain to be enforced. The court considered that as there are so many different types of hire-purchase agreements based on a variety of different terms this agreement was too vague to be an enforceable contract.
• Hillas v Arcos (1932) 147 LT 503: an agreement to buy ‘timber of fair specification’ was enforceable. The court considered that the words would be given a reasonable meaning (particularly in light of the parties previous dealings) and the agreement was binding.