Certainty

Question 1

Certainty intro

Answer 1

• agreement only binding if it is sufficiently certain and complete
• party claiming contract not been formed has burden of proving uncertainty

Question 2

when may a court say an agreement is void for uncertainty

Answer 2

—> terms are too vague/ambiguous to indicate parties’ intentions
—> is an illusory agreement
—> it is incomplete
—> merely an agreement to agree or an agreement to negotiate

Question 3

when may a court say an agreement is NOT void for uncertainty

Answer 3

contract will not be void if uncertain part of it can be severed leaving rest of agreement intact

Question 4

Vague or ambiguous terms

Answer 4

• impossible to find meaning and determine parties’ intentions
• difficult to articulate agreement with only one possible interpretation & parties may prefer leaving some terms vague to ensure they can continue to be flexible in negotiations
• courts generally keen to resolve uncertainty, give effect to clear common intention of parties and thereby uphold agreements ESPECIALLY for commercial agreements AND agreements already partly performed w/o problem

Question 5

How will courts attempt to resolve vague or ambiguous terms

Answer 5

• courts will attempt to resolve ambiguity by discovering meaning of parties’ agreement objectively
  —> refer to features of agreement, parties’ relo’s and extrinsic evidence
  —> BUT it will not make a contract for the parties by articulating what they failed to agree on or clarifying something that is irremediably obscure

Question 6

Illusory promise

Answer 6

• appears promise is there but not rlly
• gives promisor unfettered discretion regarding performance of their promise

Question 7

Completeness

Answer 7

• parties must have agreed on all essential terms→ parties, subject matter & consideration
• term is essential if contract can not be enforced w/o it
  —> e.g. lease→ length of lease term, rent to be paid

Question 8

How can incompleteness still be binding

Answer 8

—> agreement can still be binding if it leaves SOME important matters for final determination in future by 3rd party OR subsidiary matters to be decided by one of the parties provided parties don’t need to reach further agreement
- parties can include formula or machinery provisions to ensure essential matters can be determined in future w/o further agreement
—> both ensure essential matters can be determined in future w/o parties needing to reach further agreement

Question 9

Completeness: Formula provision

Answer 9

• formula provision= parties agree on formula mechanism for settling term of agreement that a court can apply
  —> validity of contract then determined on whether court considers formula sufficiently certain

Question 10

Completeness: Machinery provision

Answer 10

• machinery provision= parties agree on mechanism to resolve content of a term in the future
  —> parties use this if they don’t know at time of making agreement what would be appropriate
  —> e.g. nominate specific person to fix the sale price of land
  —> however if provision fails (person nominated refuses to do so) courts held that parties have contractual obligations to cooperate to enable a formula/machinery provision to operate

Question 11

Agreement to agree or negotiate

Answer 11

• generally considered uncertain and therefore not binding
  HOWEVER some Aus intermediate courts have regarded agreement to negotiate in good faith as enforceable in certain contexts
  —> if consideration is provided for promise & ‘the promise is clear and part of an undoubted agreement’

Question 12

When can agreement to agree or negotiate be enforceable

Answer 12

→ a clearly-worded dispute resolution clause that included an agreement to ‘meet and undertake genuine and good faith negotiations with a view to resolving the dispute’ was enforceable and not uncertain.
→ the promise referred to a known body of rights and obligations, respected the parties’ contractual rights and gave due allowance for honest and genuinely held views about those rights, and the parties willingly accepted the duty.
- altho not in agreeance with NSW court, court indicated lock out agreements may be enforceable

Question 13

Agreement to agree or negotiate: lock out agreements

Answer 13

lock out agreements= a deed is executed or party provides consideration in exchange for other party agreeing not to negotiate with other parties for specified time

Question 14

Severance

Answer 14

• if only provision of agreement is uncertain/incomplete/illusory may be possible for court to sever uncertain term so rest of agreement is enforceable
• uncertain term essential= can’t be severed
• uncertain term inessential & court can infer parties intended agreement would be binding w/o it= can be severed