Certainty

Question 1

Certainty

Answer 1

Contracts require certainty to function, they cannot lack a material term or sometimes formalization

Question 2

British American Timber Co v Elk River Timber Facts

Answer 2

• Parties went into a contract to purchase timber limits
• Missed formalization -> plaintiff asked for specific performance
• Great depression disincentivized the defendant from wanting to perform the contract

Question 3

British American Timber Issue

Answer 3

Was there a contract

Question 4

British American Timber Holding

Answer 4

Appeal dismissed, there was a contract

Question 5

British American Timber Reasoning

Answer 5

• Parties agreed to all terms -> nothing further for negotiation
• Case law rendered invalid
• They talked about installments, so there was nothing left for the future negotiation

Question 6

British American Timber Ratio

Answer 6

• When nothing left to negotiate, and it is complete, there is no need for formalization
• If contract requires further terms prior to formalization then no contract
• If contract has all terms and they are agreed to, no need for formalization
• Motives behind someone’s desire to evade a contract is irrelevant to the law

Question 7

May and Butcher Ltd v The King Facts

Answer 7

• Contracts for tents left over from WW1
• Government agreed to sell but no price term or quantity term for the tents
• Arbitration clause in case of dispute, government wants to keep their tents and tries to renege

Question 8

May and Butcher Issue

Answer 8

Was there a concluded contract (because some terms are missing)

Question 9

May and Butcher Holding

Answer 9

Appeal dismissed, there was no contract

Question 10

May and Butcher Reasoning

Answer 10

• Buckmaster J:
  
  • There was never a concluded agreement, there was just an agreement for a future agreement
• The price adjustment clauses are the same
• The arbitration clause does not take effect until the agreement is completed (and is currently invalid)
• Dunedin J: Sale of Goods act does not help
  - SOGA says that if no agreed price then a term can be read in, but clause 3 states that they have to agree together which voids SOGA

Question 11

May and Butcher Ratio

Answer 11

• Agreement to agree is not a contract
• Arbitration clause cannot bootstrap an agreement together retroactively
• The material terms (or the essentials) of a contract may vary depending on the contract

Question 12

WN Hillas v Arcos Squib

Answer 12

• There is no contract to enter a contract, it is either a contract or not
• Take people seriously on their own terms

Question 13

Foley v Classique Coaches Facts

Answer 13

• Foley had land with petrol pumps
• Neighbors wanted to use the land next to it
• Foley would sell, on the condition that they got all of their petrol from him
• There was also an arbitration clause
• Classique issued a letter repudiating the contract

Question 14

Foley Issue

Answer 14

• Was there a contract
• Was the repudiation successful

Question 15

Foley Holding

Answer 15

Appeal dismissed, there was a contract and the repudiation was not successful

Question 16

Foley Reasoning

Answer 16

• They had a contract, could not repudiate after three years of acting on it
• Land agreement contract bounded them, the arbitration clause was in force
• Here a reasonable price can be implied because gas is a commonly priced object -> missing price term was not fatal

Question 17

Foley Ratio

Answer 17

• Absence of a price term may not be fatal
• If there is a contract based on material terms depends on a case by case basis

Question 18

Scammell v Ouston Facts

Answer 18

• Trade their old van with the defendants
• Agreement was uncertain, then defendants pulled out
• Required mutual agreement before the transfer, term included a hire purchase agreement (rent to own)

Question 19

Scammell Issue

Answer 19

Was there a contract

Question 20

Scammell Holding

Answer 20

No contract, terms were too vague

Question 21

Scammell Reasoning

Answer 21

• Failure to agree on HPA led to no contract
• Terms were indefinite
• They never reached an agreement
• There was no detrimental reliance
• Cannot imply for a HPA because the law does not define a reasonable term for this, it is not a sale but a bailment (complex transaction)

Question 22

Scammell Ratio

Answer 22

• Rare case where it is too uncertain to enforce
• Limits on when reasonable terms can be implied

Question 23

Calvan v Manning Facts

Answer 23

• Manning had a 20% interest in Calvan’s oil and gas permits, Calvan wanted to buy M out
• There was an arbitration clause in place
• Manning reneged on the contract
• Calvan said there was only a contract if it was formalized, did not make those terms, not binding until formalization

Question 24

Calvan Issue

Answer 24

Was there a contract

Question 25

Calvan Holding

Answer 25

Appeal allowed, judgment for Calvan

Question 26

Calvan reasoning

Answer 26

Informal agreement included an arbitration clause that any disputes would be settled by a third party arbitrator, gave arbitrator power to make terms

Question 27

Calvan Ratio

Answer 27

- Informal agreement was a binding as the formal contract was a mere technicality - Contrasts with May and Butcher, arbitration has power to make terms in this case, not just power to resolve disputes - “Subject to contract” is an example of the wording required to that would make formalization necessary - Question of construction: what was the behavior / intention of the parties - Role of arbitrators have expanded: can add terms etc