Certainty of Terms CONTRACT
Certainty of Terms CONTRACT
from the end of that season. The plaintiff sought damages on the basis of
that the arrangement could only be terminated on reasonable notice of
three years. This was in part based on an allegation that there was an
implied contractual obligation to that effect, there being no express
contract between parties. The Court of Appeal held that because the price
and quantity to buy would be uncertain, hence, no term could be implied
for Mark & Spencer to give reasonable notice before terminating its
purchasing agreement. Therefore, the argument based on the implied
contract failed because there was no intention to create legal relations
since the contract was insufficiently certain in its terms.
Furthermore, if an agreement leaves undecided, and
undeterminable, some important aspect of the contract, then the courts
will not enforce it. In May and Butcher v R, the agreement provided that
the price, and the date of payment, under a contract of sale, was to be
agreed upon from time to time. The House of Lords held that there was
no contract in this case. The parties had not left the price open, they had
specifically stated that they would agree in the future. The contract
contained an arbitration clause, but the House of Lords considered that
this was only meant to be used in the event of disputes, and could not be
the means of determining basic obligations.
In Foley v Classique Cooachess case, a contract is enforceable for
whether a price was reasonable. This meant that the contract was more
certain than it seems because there was nothing left discussed. The court
decided that there was a contract. Under Section 8(2) of the Sale of Goods
Act 1979 also provides that where the price is not determined by any of
these methods, the buyer must pay a reasonable price.
However, in some cases where two parties have had dealings in the
past, their previous agreements may be used to clarify uncertain terms in
a contract. In Hillas v Arcos, Hillas had contracted to buy timber of fair
specification from Arcos in 1930. The agreement also included an option
to purchase the following year, which did not detail the type or size of the
wood to be bought. When Hillas tried to exercise the option, they
discovered that Arcos had in fact already sold all the wood they had that
year, and so Hillas sued for breach of contract. The House of Lords held
that although the terms used were apparently unspecific, the parties were
both very familiar with the way business was done in the timber industry,
and had done a large amount of business with each other in the past.
Consequently, the terms could be interpreted in the light of what they
would usually mean in that industry and between those parties. They were
therefore sufficiently certain to create a contract.
Other than that, the term memorandum of understanding (MOU)
by itself connotes that it is only a memorandum witnessing the mutual
understanding of the parties to do a certain act. It is only a preparatory
agreement for preliminary arrangements and therefore, it is not valid to
create a contract. In the case of Abdul Rahim bin Syed Mohd v
Ramakrishnan Kandasamy, this was an action brought by the plaintiff who
is a purchaser against the defendant who is a vendor for specific
performance of a contract of sale and purchase of a house based on a
memorandum of understanding (MOU). In accordance with the MOU, the
purchaser paid a deposit of 1% of the purchase price and further agreed
to pay another 9% upon signing of a formal sale and purchase agreement
on or before 8 October 1993. The purchaser did not sign the formal sale
and purchase agreement on 8 October 1993 as stated in the MOU, but on
11 October 1993. The vendor then sold the property to another party, who
were the interveners in these proceedings. The purchaser argued that
upon signing the MOU, a binding contract came into existence. The vendor
argued that there was no binding contract between the parties the MOU
by itself was not a legally binding contract for the sale and purchase of the
property and the purchaser's failure to sign the formal sale and purchase agreement on or
before 8 October 1993, as required by the MOU.
Section 56 of the Contracts Act 1950 states that when a party to a contract promises
to do something at or before the specified time, and fails to do any such thing at or before the
specified time, the contract becomes voidable at the option of the promisee if the intention of
the parties was that time should be of the essence of the contract. In this case, time is of the
essence where the intention of the parties was such that time was of the essence of the
contract for the fulfilment of their respective obligations. When the purchaser failed to sign
agreement at or before specified time, the contract becomes voidable at the option of the
vendor. Thus, vendor has the right to sell the property to anyone whom he wants. The court
held that there was no contract between parties because it was under the term of
memorandum of understanding (MOU) and MOU is not a legally binding contract.
http://www.lexinter.net/LOTWVers4/certainty.htm
http://en.wikipedia.org/wiki/Certainty_in_English_law
http://www.scribd.com/doc/87422438/2001-Construction-of-Terms-of-Contract
http://casebrief.wikia.com/wiki/Foley_v_Classique_Coaches_Ltd.
http://www.inbrief.co.uk/contract-law/offer-and-acceptance-in-contracts.htm
http://catalogue.pearsoned.co.uk/assets/hip/gb/hip_gb_pearsonhighered/samplec
hapter/1408282917.pdf