Certainty in English contract law


Certainty in English contract law

Certainty in English contract law set out rules for how judges will interpret, sever or put contracts into effect.

If the terms of the contract are uncertain or incomplete, the parties cannot have reached an agreement in the eyes of the law.[1] An agreement to agree does not constitute a contract, and an inability to agree on key issues, which may include such things as price or safety, may cause the entire contract to fail. However, a court will attempt to give effect to commercial contracts where possible, by construing a reasonable construction of the contract.[2]

Courts may also look to external standards, which are either mentioned explicitly in the contract[3] or implied by common practice in a certain field.[4] In addition, the court may also imply a term; if price is excluded, the court may imply a reasonable price, with the exception of land, and second-hand goods, which are unique.

If there are uncertain or incomplete clauses in the contract, and all options in resolving its true meaning have failed, it may be possible to sever and void just those affected clauses if the contract includes a severability clause. The test of whether a clause is severable is an objective test—whether a reasonable person would see the contract standing even without the clause.

Contents

Failure to specify subject matters

  • Mercantile Credits Ltd v Harry [1969] 2 NSWR 248

Certainty of terms

  • Hillas & Co v Arcos Ltd [1932] UKHL 2
  • Sale of Goods Act 1979, s.8(2), 9
  • Brown v Gould [1972] Ch 53
  • Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444
  • Nicolene Ltd v Simmons [1953] 1QB 543

Agreement to agree

  • May & Butcher v The King [1934] 2 KB 17
  • Foley v Classique Coaches Ltd [1934] 2 KB 1

Agreement to negotiate

  • Walford v Miles [1992] 2 AC 128
  • Pitt v PHH Asset Managemen Ltd [1994] 1 WLR 327

Agreement “Subject to Contract”

  • Branca v Cobarro [1947] KB 854
  • Masters v Cameron (1954) 91 CLR 353
  • Carlton Communications and Granada Media plc v The Football League [2002] EWHC 1650 (Comm)

See also

  • Three certainties
  • English tort law
  • English trusts law
  • Attorney-General v Barker Bros Ltd [1976] 2 NZLR 495.
  • Electricity Corporation of New Zealand v Fletcher Challenge Energy Ltd [2002] NZLR.

Notes

  1. ^ Fry v Barnes (1953) 2 D.L.R. 817 (B.C.S.C)
  2. ^ Hillas and Co Ltd v Arcos Ltd (1932) 147 LT 503
  3. ^ Whitlock v Brew (1968) 118 CLR 445
  4. ^ Three Rivers Trading Co Ltd v Gwinear & District Farmers Ltd (1967) 111 Sol. J. 831

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