What is certainty and how does an individual create a legally binding agreement
with another?
Certainty
Once an offer and acceptance are considered valid, an agreement is formed.
Certainty Is the next requirement to make the agreement legally enforceable. If an
agreement is not considered certain and thereby lacks this requirement, then it will not
be enforceable - Gunthing v Lynn.1
Every case involved with a dispute as to whether a contract lacks certainty is
heavily fact based and individual. As such, it is always important to pay close
attention to the facts surrounding the agreement, and any clauses or wording relating
to said agreement.
The two areas that need to be considered when reviewing whether an
agreement is certain can be broadly placed into two categories: (a) vagueness of the
agreement and (b) whether it is incomplete.
Vagueness
If an agreement is considered too vague or abstract, and without altering the
agreements’ terms, or without adding new terms it could not be reconciled, no effect
will be given to the agreement - Mileform Ltd v Interserve Security Ltd.2
In G Scammell & Nephew v Ouston3 it was held that an agreement concerning
goods subject to a hire purchase clause could not be given effect as the terms of this
1
(1831) 2 B7 Ad 232.
2
[2013] EWHC 3386.
3
[1941] AC 251
clause were not actually specified.
As considering all vague agreements to be contractually unenforceable would
not be realistically appropriate, the Court has various methods at its disposal, that can
provide certain agreements with legally enforceability.
Methods for resolving vagueness
Use of business customs and trade usages: In the interest of contractual and
commercial certainty, a Court will often give effect to vague agreements by filling
their gaps in with business, customs and trade usages - Courtney v Fairbairn Ltd v
Tolaini Bros (Hotels) Ltd.4. If a party however is not used to any such business,
customs and trade usages the Court may not find it appropriate to use this method of
curing vagueness - Hollingworth v Southern Ferries.5
Reasonableness: Where a contract would fail through virtue of an uncertainty the
Court will apply an objective standard to the agreement to fix the issue. A great case
example to illustrate this fact, would be Hillas & Co v Arcos Ltd. 6. In this case, a
contract was made for the supply of goods described as “fair”. As “fair” in terms of
goods is not an adequate description, the Court applied an objective assessment and
determined that “fair” in the context of the agreement could be adequately defined.
Doctrine of severability: If a clause is irreconcilable with the agreement due to how
vague it is the Court may completely strike it from the agreement so the rest of said
agreement can be legally enforced. In Nicolene Ltd v Simmonds 7, an agreement was
subject to “usual conditions of acceptance”, as the Court considered this phrase
4
[1975] 1 All ER 453
5
[1977] 2 Lloyd’s Rep 70.
6
(1932) 147 LT 503
7
[1953] 1 QB 543
meaningless they excluded them from the agreement. Similarly, if a phrase
contradicts itself then the Court may remove it from the agreement - ERJ Lovelock v
Exportles8.
The contract itself: The contract itself may also be able to resolve any ambiguity in
the work. In Foley v Classique Coaches Ltd. 9, all disputes concerning the potential
vagueness of the contract were to be resolved by an arbitrator.
Remember:
Look out for terms that are ambiguous e.g. lots, many, large, -ish (the suffix).
Make sure the type of contract is reviewed e.g. commercial or private.
Are the parties aware of each-others’ needs?
Is there a clause that seems contradictory or meaningless within the terms?
Check whether the contract contains terms within itself to resolve disputes.
Incompleteness
An agreement does not require every minute detail to be addressed for it to be
capable of legal enforceability. Every vital/essential piece of information however is
required - Grow With Us Ltd v Green Thumb (UK) Ltd. 10
The degree to which a term is considered vital/essential within an agreement
varies depending of the facts surrounding the agreement. Where in one case a period
of a lease and the property being conveyed are essential terms within the agreement
(Harvey v Pratt11in another the price of goods being sold may not actually be
8
[1968] 1 Lloyd’s Rep 163
9
[1934] 2 KB 1
10
[2006] EWCA Civ 1201
11
[1965] 1 WLR 1025)
considered important (Bushwall Properties v Vortex Properties 12
It is always prudent then to pay direct attention to the facts when making a conclusion
based on potential incompleteness of a contract, the key thing to consider is the extent
to which a term is in fact vital to the agreement. The other important things to
consider are the other methods in which a contracts’ potential incompleteness can be
resolved.
12
[1976] 1 WLR 591).
