Certainty in English law sets out rules for how judges will interpret, sever or put contracts, trusts and other voluntary obligations 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.
While agreement is the basis for all contracts, not all agreements are enforceable. A preliminary question is whether the contract is reasonably certain in its essential terms,[5] such as price, subject matter and the identity of the parties. Generally the courts endeavour to "make the agreement work", so in Hillas & Co Ltd v Arcos Ltd,[6] the House of Lords held that an option to buy softwood of "fair specification" was sufficiently certain to be enforced, when read in the context of previous agreements between the parties. However, the courts do not wish to "make contracts for people", and so in Scammell and Nephew Ltd v Ouston,[7] a clause stipulating the price of buying a new van as "on hire purchase terms" for two years was held unenforceable because there was no objective standard by which the court could know what price was intended or what a reasonable price might be.[8] Similarly, in Baird Textile Holdings Ltd v M&S plc[9] the Court of Appeal held that because the price and quantity to buy would be uncertain, in part, no term could be implied for M&S to give reasonable notice before terminating its purchasing agreement. Controversially, the House of Lords extended this idea by holding an agreement to negotiate towards a future contract in good faith is insufficiently certain to be enforceable.[10]
Mercantile Credits Ltd v Harry [1969] 2 NSWR 248, failure to specify subject matters
^nb Sale of Goods Act 1979 s 8(2) stipulates that where a contract for goods is silent on price, a reasonable price must be paid. See also May and Butcher Ltd v R [1929] UKHL 2
^Walford v Miles [1992] 2 AC 128, overturning a decision of Bingham LJ in the Court of Appeal.
December 12, 2023
certainty, english, sets, rules, judges, will, interpret, sever, contracts, trusts, other, voluntary, obligations, into, effect, terms, contract, uncertain, incomplete, parties, cannot, have, reached, agreement, eyes, agreement, agree, does, constitute, contra. Certainty in English law sets out rules for how judges will interpret sever or put contracts trusts and other voluntary obligations 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 1 Contract law 2 Trusts law 3 See also 4 NotesContract law editSee also English contract law While agreement is the basis for all contracts not all agreements are enforceable A preliminary question is whether the contract is reasonably certain in its essential terms 5 such as price subject matter and the identity of the parties Generally the courts endeavour to make the agreement work so in Hillas amp Co Ltd v Arcos Ltd 6 the House of Lords held that an option to buy softwood of fair specification was sufficiently certain to be enforced when read in the context of previous agreements between the parties However the courts do not wish to make contracts for people and so in Scammell and Nephew Ltd v Ouston 7 a clause stipulating the price of buying a new van as on hire purchase terms for two years was held unenforceable because there was no objective standard by which the court could know what price was intended or what a reasonable price might be 8 Similarly in Baird Textile Holdings Ltd v M amp S plc 9 the Court of Appeal held that because the price and quantity to buy would be uncertain in part no term could be implied for M amp S to give reasonable notice before terminating its purchasing agreement Controversially the House of Lords extended this idea by holding an agreement to negotiate towards a future contract in good faith is insufficiently certain to be enforceable 10 Mercantile Credits Ltd v Harry 1969 2 NSWR 248 failure to specify subject matters Sale of Goods Act 1979 s 8 2 9 certainty of terms Brown v Gould 1972 Ch 53 Sudbrook Trading Estate Ltd v Eggleton 1983 1 AC 444 Nicolene Ltd v Simmons 1953 1QB 543 May amp Butcher v The King 1934 2 KB 17 agreement to agree Foley v Classique Coaches Ltd 1934 2 KB 1 Walford v Miles 1992 2 AC 128 agreement to negotiate Pitt v PHH Asset Management Ltd 1994 1 WLR 327 Branca v Cobarro 1947 KB 854 agreement Subject to Contract Masters v Cameron 1954 91 CLR 353 Carlton Communications and Granada Media plc v The Football League 2002 EWHC 1650 Comm Trusts law editSee also English trusts law and Three certainties Jones v Lock 1865 1 Ch App 25 Paul v Constance 1977 1 WLR 527 Hunter v Moss 1994 1 WLR 452 Re Barlow s Will Trusts 1979 1 WLR 278 McPhail v Doulton 1971 AC 424 Re Baden s Deed Trusts no 2 1973 Ch 9 Re Tuck s Settlement Trusts 1978 Ch 49See also editEnglish tort law Contra proferentem Attorney General v Barker Bros Ltd 1976 2 NZLR 495 Notes edit Fry v Barnes 1953 2 D L R 817 B C S C Hillas and Co Ltd v Arcos Ltd 1932 147 LT 503 Whitlock v Brew 1968 118 CLR 445 Three Rivers Trading Co Ltd v Gwinear amp District Farmers Ltd 1967 111 Sol J 831 essentialia negotii Hillas amp Co Ltd v Arcos Ltd 1932 UKHL 2 1941 1 AC 251 nb Sale of Goods Act 1979 s 8 2 stipulates that where a contract for goods is silent on price a reasonable price must be paid See also May and Butcher Ltd v R 1929 UKHL 2 2001 EWCA Civ 274 Walford v Miles 1992 2 AC 128 overturning a decision of Bingham LJ in the Court of Appeal Retrieved from https en wikipedia org w index php title Certainty in English law amp oldid 1090042683, wikipedia, wiki, book, books, library,
