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Certainty of terms
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Even where offer and acceptance are apparently complete, there may still be no agreement. There can be no contract at all if it is not possible to say what the parties have agreed upon because the terms are too uncertain. In particular, this will be the case where the parties have still left essential terms to be settled between them. They are still at the stage of negotiation, and an agreement to agree in future is not a contract.
In Scammell v. Ouston (1941), Ouston agreed to take a van 'on the understanding that the balance of the purchase price can be had on hire-purchase terms over a period of two years'. It was held that this contract was void for uncertainty, because no one could say what hire-purchase terms were envisaged.
In King's Motors (Oxford) Ltd v. Lax (1969), an option to renew a lease 'at such rental as may be agreed upon between the parties' was similarly held void.
On the other hand, this rule is subject to some qualifications. Indeed the courts have often made every effort to resolve the uncertainty.
1. The parties may be bound if the unsettled terms are only part of a larger agreement, the rest of which is already being or has been performed, and which is agreed to be binding. This is particularly so if there has been some provision for arbitration to settle potential disputes.
In Foley v. Classigue Coaches Ltd (1934), a garage sold land to the bus company on condition (inter alia) that the company buy all of its petrol from the garage 'at a price to be agreed between the parties... from time to time'. A later clause provided that any dispute as to the subject-matter or content of the agreement should be referred to arbitration. The land was conveyed, and the bus company duly bought its petrol for three years, but then claimed that it need no longer do so. It was held bound. A reasonable price could be settled under the arbitration clause.
In Sudbrook Trading Estate Ltd v. Eggleton (1982), the claimant was tenant of some land, but had the right to buy it before his lease expired. The price was to be fixed b) two arbitrators, one appointed by the landlord, the other by the tenant. The landlord refused to appoint an arbitrator. The House of Lords held that since the parties had clearly intended to be bound at the outset, and were already performing the lease, the court would make alternative arrangements to settle the sale price, and would order the transfer.
2. If the parties have agreed criteria according to which the price can be calculated, or have had previous dealings similar to the present transaction, the courts can use these matters to ascertain the terms of the contract.
In Hillas & Co. Ltd v. Areas Ltd (1932), an option to buy 100000 standards of softwood goods in 1931, without mention of detailed terms, was held binding because it was assumed to be on terms similar to those agreed in previous dealings between the parties.
In Brown v. Gould (1972), an option was given to renew a lease 'at a rent to be fixed having regard to the market value of the premises at the time of exercising this option taking into account... structural improvement made by the Tenant...'. This was held binding, because the court could, if necessary, discover the market price and the value of the improvements from independent valuers.
3. If only a fairly minor term is meaningless, it may simply be ignored, and the rest of the contract treated as binding.
In Nicolene Ltd v. Simmonds (1953), the defendant agreed to sell 3000 tons of steel bars at £ 45 per ton, and added that he assumed that 'the usual conditions of acceptance apply'. There were no usual conditions. The court held that he was bound; the rest of the agreement made good sense, and the meaningless phrase could, therefore, be ignored.
Note that in most of the above cases a well drafted arbitration and/or valuation clause could have prevented the expensive court proceedings.
If there is doubt about the meaning of any written term in a consumer contract, the Unfair Terms in Consumer Contracts Regulations 1999 simply provide that the interpretation most favourable to the consumer shall apply.
Task 1. Read the text and translate it into Russian.
Task 2. Study the following legal terms ant their definitions, supply corresponding Russian terms, use them in situations of your own.
1. absolute, adj. 1. Free from restriction, qualification, or condition < absolute ownership>. 2. Conclusive and not liable to revision < absolute delivery>. 3. Unrestrained in the exercise of governmental power < absolute monarchy>.
2. qualified acceptance. A conditional or partial acceptance that varies the original terms of an offer and operates as a counteroffer; esp.; in negotiable instruments, an acceptor’s variation of the terms of the instrument.
3. incorporate, vb. 1. To form a legal corporation. 2. To combine with something else < incorporate the exhibits into the agreement>. 3. To make the terms of another (esp. earlier) document part of a document by specific reference; esp., to apply the provisions of the Bill of Rights to the states by interpreting the 14th Amendment’s Due Process Clause as encompassing those provisions.
4. assent, n. Agreement, approval, or permission. – assent, vb.
5. constructive assent. Assent imputed to someone based on contract.
6. express assent. Assent that is clearly and unmistakably communicated.
7. implied assent. Assent inferred from one’s conduct rather than from direct expression.
8. dispensation, n. An exemption from a law, duty, or penalty; permission to do something that is ordinarily forbidden.
9. goods, n. 1. Tangible or movable personal property other than money; esp., articles of trade or items of merchandise < goods and services>. · The sale of goods is governed by Article 2 of the UCC. 2. Things that have value, whether tangible or not.
10. dealer, n. 1. A person who purchases goods or property for sale to others; a retailer. 2. A person or firm that buys and sells securities for its own account as a principal, and then sells to a customer.
11. communication, n. 1. The expression or exchange of information by speech, writing, or gestures. 2. The information so expressed or exchanged.
12. retailer, n. A person or entity engaged in the business of selling personal property to the public or to customers, as opposed to selling to those who intend to resell the items.
13. vendor, n. A seller, usu. of real property. – Also termed venditor.
14. renewal, n. 1. The act of restoring or re-establishing. 2. The re-creation of a legal relationship or the replacement of an old contract with a new contract, as opposed to the mere extension of a previous relationship or contract. – renew, vb.
15. rental, n. 1. The amount received as rent. 2. The income received from rent. 3. A record of payments received from rent. – rental, adj.
16. qualification, n. 1. The possession of qualities or properties (such as fitness or capacity) inherently or legally necessary to make one eligible for a position or office, or to perform a public duty or function. 2. A modification or limitation of terms or language; esp., a restriction of terms that would otherwise be interpreted broadly. – qualify, vb.
17. qualified, adj. 1. Possessing the necessary qualifications; capable or competent < a qualified medical examiner>. 2. Limited; restricted < qualified immunity>.
18. inter alia, adv. [Latin] Among other things.
19. t enant, n. 1. One who holds or possesses lands or tenements by any kind of right or title. 2. One who pays rent for the temporary use and occupation of another’s land under a lease or similar arrangement.
20. expiration, n. A coming to an end; esp., a formal termination on a closing date. < expiration of the insurance policy>. – expire, vb.
21. arbitrator, n. A neutral person who resolves disputed between parties, esp. by means of formal arbitration.
Task 3. Answer the following questions.
1. What are the main characteristics of acceptance?
2. Should acceptance be made in written form?
3. What rules apply to contracts dealing with unsolicited goods?
4. What can you say about communication of acceptance?
5. Are there any exceptions to the rule, that acceptance is only effective on communication? Give examples.
6. Is the way the posting rule applies to acceptance similar to its application to an offer?
7. Does the posting rule apply to all means of communication? Why (not)? Give examples.
8. Is it enough to complete an offer and acceptance to have agreement? why (not)?
9. What do the courts do to resolve the uncertainty? Give examples.
Task 4. Fill in the appropriate legal term.
| qualification (2) · incorporated (2) · goods |
1. She … the family business. 2. The codicil … the terms of the will. 3. The importance of social … varies from society to society. 4. Voter … requires one to meet residency, age, and registration requirements. 5. The contract contained a … requiring the lessor’s permission before exercising the right to sublet.
Task 5. Translate into Russian.
1. ‘Goods’ means all things, including specially manufactures goods, that are movable at the time of identification to a contract for sale and future goods. The term includes the unborn young of animals, growing crops, and other identified things to be severed from real property. … The term does not include money in which the price is to be paid, the subject matter of foreign exchange transactions, documents, letters of credit, letter-of-credit rights, instruments, investment property, accounts, chattel paper, deposit accounts, or general intangibles. 2. Acceptance completes the contract, and the place where acceptance is made is, therefore, the place of the contract. 3. … unless they are returned within a specified time the recipient will be bound to pay the price… 4. Acceptance is only effective on communication. 5. Unlike revocation, acceptance cannot be communicated by an unauthorized third party, however reliable. 6. … the rule applies only where it must have been in the contemplation of the parties that the post would be used as a means of communicating the acceptance. 7. The posting rule applies only to acceptance; an offer, or a letter of revocation or rejection, will be effective only on arrival. 8. Ouston agreed to take a van ‘on the understanding that the balance of the purchase price can be had on hire-purchase terms over a period of two years’. It was held that this contract was void for uncertainty. 9. The land was conveyed, and the bus company duly bought its petrol for three years, but then claimed that it need no longer do so. It was held bound. A reasonable price could be settled under the arbitration clause.
Task 6. Put in the appropriate article.
1. And in some instances, … insurance companies have even specified in … application forms that acceptance of … applicant’s offer will not occur until … insurance policy is literally delivered to … applicant – that is, … insurer chooses to structure … arrangement so that acceptance is to be manifested by … physical delivery of … insurance policy to … applicant. 2. … requirement of ‘assent’, which is fundamental to … formation of … binding contract, implies in … general way that both parties to … exchange shall have … reasonably clear conception of what they are getting and what they are giving up.
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