Definitiness Flashcards
What happens if a material aspect of an agreement is left indefinite?
No contract comes into being if the uncertainty cannot be resolved by interpretation or construction.
What are the two conditions for a contract to fail for indefiniteness?
(1) There must be an incurable uncertainty about what the parties agreed to, or the court cannot establish a basis for enforcing what was agreed. (2) The uncertainty must relate to a material aspect of the relationship.
What is the treatment of indefinite nonmaterial terms?
Must be settled by the court if relevant to the dispute but does not preclude contract formation.
What is the difference between vague and ambiguous terms?
A term is vague if it is stated obscurely or in general language, while a term is ambiguous if it is capable of more than one meaning.
What is the contextual approach in contract interpretation?
If extrinsic evidence is available, most courts will consider it to determine what the parties intended.
What happens if terms are omitted due to lack of agreement?
No contract actually came into being.
What happens if terms are omitted because of reliance on a market standard?
A contract came into being because the parties already ‘agreed’ on what to do based on the ‘off-the-shelf’ standard.
What is an ‘agreement to agree’?
If an unresolved term is material, no contract is formed; the relationship is described as an ‘agreement to agree.’
What is the agreement to settle an open term by an objective standard?
A contract can provide for the final determination of a term at a later date as long as it sets out a standard for settlement.
What is the treatment of an unresolved price term?
(1) The price term will be ‘a reasonable price at the time for delivery.’ (2) The parties may agree to use an ‘escalator clause.’
What are the two types on the contract spectrum?
‘Ideal’ Transactional Type: discrete, simple, immediate exchanges. ‘Ideal’ Relational Type: complex, extended, repeated exchanges.
How is definiteness found in contracts?
Looking for intent to be bound; not necessary for the option agreement to contain all terms as long as it has a method for determining essential terms.
How are indefinite price terms resolved?
If the parties intended to be bound, the court can determine a reasonable rate.
