Certainty in English contract law
Encyclopedia
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. 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.
Courts may also look to external standards, which are either mentioned explicitly in the contract or implied by common practice in a certain field. 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.
If the terms of the contract are uncertain or incomplete, the parties cannot have reached an agreement in the eyes of the law. An agreement to agree does not constitute a contract, and an inability to agree on key issues, which may include such things as price
Contract price
A contract price is the price listed in the contract for the good or services to be received in return.-Common law:In contract law, the contract price is a material term. The contract price is the price for the goods or services to be received in the contract. The contract price helps to ...
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.
Courts may also look to external standards, which are either mentioned explicitly in the contract or implied by common practice in a certain field. 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.
Certainty of terms
- Hillas & Co v Arcos Ltd [1932] UKHL 2
- Sale of Goods Act 1979Sale of Goods Act 1979The Sale of Goods Act 1979 is an Act of the Parliament of the United Kingdom which regulates English contract law and UK commercial law in respect of goods that are sold and bought. The Act consolidates the original Sale of Goods Act 1893 and subsequent legislation, which in turn had codified and...
, 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 certaintiesThree certaintiesThe three certainties refer to a rule within English trusts law on the creation of express trusts that, to be valid, the trust instrument must show certainty of intention, subject matter and object...
- English tort lawEnglish tort lawEnglish tort law concerns civil wrongs, as distinguished from criminal wrongs, in the law of England and Wales. Some wrongs are the concern of the state, and so the police can enforce the law on the wrongdoers in court – in a criminal case...
- English trusts lawEnglish trusts lawEnglish trusts law is the original and foundational law of trusts in the world, and a unique contribution of English law to the legal system. Trusts are part of the law of property, and arise where one person gives assets English trusts law is the original and foundational law of trusts in the...
- Attorney-General v Barker Bros Ltd [1976] 2 NZLR 495.
- Electricity Corporation of New Zealand v Fletcher Challenge Energy Ltd [2002] NZLR.