LLB202 Study Guide - Final Guide: Meeting Of The Minds, Scammell, Softwood
3.1 CERTAINTY
The parties’ intentions must be able to be determined with a reasonable degree of certainty
otherwise there would be no consenses ad idem (Whitlock v Brew).
The law attempts to uphold agreements wherever possible and the fact that a clause has more
than one possible meaning will not render it void for uncertainty (Hillas v Acros).
3.1.1 Saving the contract
If the language of the contract is so ambiguous and incapable of any precise meaning; the
contract will be unenforceable (G Scammell and Nephew Ltd v HC and JG Ousten).
However, the courts do not want to be ‘the destroyer of bargains’ and can use a number of
techniques to enforce the contract non-withstanding the ambiguous clause:
3.1.1.1 Link to external standard
A clause which appears uncertain may be enforceable if a meaning can be attributed to it by
reference to an external standard.
This may be achieved by directly incorporating the standards into the contract, or indirectly
where the contract does not provide for that link.
For example in Hillas and Co Ltd v Arcos Ltd (1932) 147 LT 503 the House of Lords relied
in part on certain specifications agreed in a previous contract in order to determine the size
and quality of timber to be supplied.
However, in Biotechnology Australia Pty Ltd v Pace (1998) 15 NSWLR 130 the court was
unable to establish an external standard, thereby resulting in a senior research scientist being
denied relief when he sued to obtain employment benefits under his employment package.
3.1.1.2 Link to a reasonable standard
The courts are willing to adopt principles of reasonableness to make otherwise uncertain
contract certain.
In Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503. the House of Lords was prepared to
uphold a clause relating to ‘softwood goods of fair specification’ on the basis that, if the
parties failed to agree, ‘the law can be invoked to determine what is reasonable in the way of
specification, and thus the machinery is always available to give the necessary certainty.’ Per
Lord Wright.
3.1.1.3 Severance
The uncertainty of one term does not necessarily mean the contract will be invalid. In certain
circumstances an uncertain term may be severed, thereby allowing the remaining contract to
be enforced.
In Fitzgerald v Masters (1956) 95 CLR 420 clause 8 in a contract for the sale of an interest in
land incorporated a set of non-existent conditions.
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Document Summary
The parties" intentions must be able to be determined with a reasonable degree of certainty otherwise there would be no consenses ad idem (whitlock v brew). The law attempts to uphold agreements wherever possible and the fact that a clause has more than one possible meaning will not render it void for uncertainty (hillas v acros). If the language of the contract is so ambiguous and incapable of any precise meaning; the contract will be unenforceable (g scammell and nephew ltd v hc and jg ousten). However, the courts do not want to be the destroyer of bargains" and can use a number of techniques to enforce the contract non-withstanding the ambiguous clause: A clause which appears uncertain may be enforceable if a meaning can be attributed to it by reference to an external standard. This may be achieved by directly incorporating the standards into the contract, or indirectly where the contract does not provide for that link.
