Certainty

Question 1

What does a binding contract require?

Answer 1

A binding contract requires all material terms to be certain and complete. Only an agreement which is sufficiently certain can be enforced by a court.

Question 2

What test does the court apply, to determine whether the parties have reached an agreement on all material terms (with the case law)?

Answer 2

The court applies an objective test, asking whether, in all the circumstances of the case, the parties have agreed all the terms they considered to be a precondition to creating legal relations (RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Company KG (UK Production [2010]).

If an agreement is incomplete or uncertain, a court may not be able to enforce it.

Question 3

What happened in Scammell v Ouston [1941]?

Answer 3

• An agreement on ‘hire-purchase terms’ was too uncertain to be enforced.
• Court considered that as there are so many different kinds of hire-purchase agreements based on a variety of different terms, this agreement was too vague to be an enforceable contract.

Question 4

What does Scammell v Ouston [1941] demonstrate?

Answer 4

The courts will not enforce an agreement if it is too vague or ambiguous.

HOWEVER, this is seen as a last resort and the courts will look to enforce the agreement, reflecting the intentions of the parties, where this is possible.

Question 5

What happend in Hillas v Arcos (1932)?

Answer 5

An agreement to buy ‘timber of fair specification’ was enforceable. The court considered that the words could be given a reasonable meaning (particularly in light of the parties previous dealings) and the agreement was binding.