O&A - Certainty Flashcards
Why won’t courts enforce contracts with terms deemed to be insufficiently certain?
Because, this they argue, would drag them from their role as interpreter (and supplier of reasonable terms in line with the perceived intentions of the parties) to a role of re-writing contracts - something they think is beyond their jurisdiction.
What is the role of the courts regarding contracts?
The role of the courts is to preserve the parties’ contracts, not re-write them.
What is the general rule of certainty of contracts?
The agreement must be sufficiently precise so that the courts can be confident they are enforcing the parties actual intentions (objectively assessed through the reasonable and honest businessman test) rather than any imputed to them by the parties.
What are the two key categories of uncertainty?
- Vagueness
2. Incomplete (missing terms)
What is the general principle of vagueness of contract? (1)
Where there is a high level of ambiguity the court generally won’t provide the required details to fill out the contract and will find that no agreement has been concluded
Authority - Raffles v Wichelhaus
What role does the ‘objective bystander’ play in determining too vague contracts? (1)
Where the courts cannot ascertain the meaning which would be received by the objective bystander (reasonable and honest businessman test) the court will deem the contract too vague to enforce
Authority - Hillas v Arcos
What are the two situations in which the court will be more willing to treat a somewhat vague agreement as enforceable and fill in the gaps themselves? (2)
- Where it is possible to do so based on clear business practice
Authority - Hillas v Arcos - Where the agreement has already been ‘executed’ or performance has already occurred
Authority - Trentham Ltd v Archital Luxfer
Is it possible to sever a clause in a contract? (1)
Yes, it’s possible to sever a clause in a contract if it’s deemed to be meaningless (or unduly vague etc) so as to prevent parties escaping contracts through deliberately uncertain and meaningless clauses
Authority - Nicolene Ltd v Simmonds
What is the general principle of incomplete or missing terms within contracts? (1)
Where important matters are still to be agreed upon by the parties, the assumption is that the parties are still negotiating and therefore no contract is intended
Authority - British Steel Corporation Case
Are ‘agreements to agree’ sufficiently certain? (1)
No, generally even in cases where the parties have agreed to determine some element of the contract at a later date the contract will be held to be insufficiently certain
Authority - Walford v Miles
What are the exceptions to the general rule that ‘agreements to agree’ render contracts too uncertain to be enforced? (2)
- Where the agreement has been executed or performance has occurred but no price has been agreed
Authority - Foley v Classique Coaches Ltd - Where machinery or a clause exists purely for the purpose of fixing a fair price and it breaks down the court may substitute it’s own machinery to calculate a fair price
Authority - Sudbrook Trading Estate Ltd v Eggleton
Which case should Sudbrook be distinguished from in regards to mechanisms designed to fix fair prices? (1)
Gillatt v Sky TV Ltd - here it was found that the machinery itself was integral/essential to the contract and was not in place purely to ‘fix’ the price.
What can happen if a contract leaves no mechanism for fixing the price?
Statute may be used to provide for a ‘reasonable price’
- s. 8(1) of the Sale of Goods Act 1979 (one statuary provision that serves this function, there are a couple of others)
What happens if there is a mechanism for determining the price but it merely hasn’t been implemented? (1)
In such situations statutes cannot be used to find a ‘reasonable price’
Authority - Mary and Butcher Ltd v R
What is the general rule regarding promises to negotiate in good faith? (1)
They are generally regarded as being unenforceable
Authority - Lord Ackner in Walford v Miles
What is the exception to the position that promises to negotiate in good faith are unenforceable? (1)
They may be treated as enforceable where there is some readily ascertainable objective with which to compare it
Authority - Pitt v PHA Asset Management
What is the general rule regarding promises made subject to contract? (1)
…
Authority - Chillingworth v Esche & Newbury v Sun Microsystems
What is the consequence of a finding that a contract is insufficiently certain?
Said contract will be declared void and thus held to have never existed.
Can parties be made to pay for performance conducted under subsequently voided contracts? (1)
Yes, under the concepts of ‘Quantum Meruit’ and restitutionary remedy parties may be held to pay for performance conducted under a subsequently voided contract
Authority - British Steel Corporation Case
What condition is placed on recovery under ‘Quantum Meruit’? (2)
It is only possible to recover performance expenses where the performance was specifically requested by the other party
Authority - Regalian Properties plc v London Dockland Development Corporation
&
The defendant must have acquired some benefit from the performance
Authority - Countrywide Communications Ltd v ICL Pathway Ltd
In judging whether the conditions for recovery of performance expenses under subsequently voided contracts are met what should be considered?
- The terms in which the request to perform were made - was it reasonable to assume the claimant would be compensated?
- Were the services provided those that would normally be provided free of charge?
- Was the defendant at fault for the failure of the contract?
