Issue of Certainty in a Contract

Issue of Certainty in a iron out(p)The suit of clothess provide m all examples of judicial awareness of the danger that excessively strict an application of the requirement of sure thing could result in the striking down of organizations intended by businessmen to excite cover force Treitel.critically evaluate this statement in light of case law and carry in your reply whether the extent to which the parties dedicate acted on an system bows the judges.IntroductionIn looking to critically evaluate the above statement in view of the case law that has been decided in this area, so as to in whatsoever case be fitted to consider the extent to which parties have acted on a business agreement serves to work out any judge, this essay leave al cardinal first look to consider the importance of inference in agreements by recognising the importee where in that respect is a lack thereof. Then, this essay will to a fault look to reflect upon how a quash is generally formed and as to how the issue of certainty relates particular(prenominal)ally to a pacts formation in this regard for when it is said to come into being. side by side(p) on from this, this essay will look to de bournine the issues that a court will look to consider in evaluating as to whether a particular agreement ahead them is sufficiently certain to be considered a legally binding foreshorten, whilst also looking to consider the extent to which the parties have acted on an agreement serves to influence the judges in coming to their decisions in relation to these matters, before finally looking to conclude with a summary of the key points that have been derived from an understanding of this discussion.The significance of certaintyOn this base of operations, to begin with it must be cherishd that the issue of certainty in any business agreement is generally considered to be prevalent to the formation of a formal contract because it has been a long-held maxim of the law that that which is certain is that which can be made so leading to a binding contract being formed that is enforceable by the courts1. Consequently, a lack of certainty increases the costs of quarrels because the ability to avoid, manage and/or resolve any dis tack togethere early, and on a honest commercial basis, is clearly negated where there is a lack of accurate sustenance, whilst the lack of certainty also serves to create risks for those involved where there is a lack of a formally recognised agreement in place.Therefore, by substance of illustration, it was recognised in Montreal Gas Company v. Vasey2 that where the company in head word made a contract with the other party to this case with the promise that, if it was satisfied with them as a customer, the company would then look favourably on an application for renewal of their contract with them, this was not considered sufficiently certain to create a legal contract because of the indefinite or unsettled character of such a term. Nevertheless, it is also of the essence(predicate) to appreciate a transaction that may otherwise be considered to have left some essential term of their agreement un localized may provide some method of determination other than what is considered to be a future agreement.The formation of a contract Where do the hassles lie?Ostensibly, it is comm however understood that a contract is in effect formed where there is an offer, consideration and sufferance that is sufficiently certain so that it is then for the courts to make up ones mind whether the requisite elements are present in any business arrangement3. This is because the offer refers to a proposal that is expressed orally or in writing from one(a) party (the offeror) to another (the offeree) to do or give something for remuneration with a view to forming an agreement that is usually legally binding on the basis of the conduct the parties. such a view arises from the fact it was recognised in Adams v. Lindsell4 th e rules in relation to the recognition of a valid offer states that thus will be so where it is (a) made to definite person, class, or the world (b) it is effectively communicated and (c) it reaches the offeree. Then, with regards to the element of consideration required, this consists of a right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss, or responsibility presumptuousness, suffered or undertaken by the other, in keeping with the decision in Currie v. Misa5, that must be legal, not past, and move from the promisee to the promisor6.However, the problem with certainty in business agreements arguably arises most commonly in relation to the issue of acceptance of an offer to formalise the agreement between the parties in the prescribed manner. This is because it was recognised in Hyde v. Wrench7 that the offeree must accept the offer made by the offeror unequivocally without qualification in words or with conduct in conformation with the indicated or prescribed monetary value of the offer. But then, in the decision in Chillingworth v. Esche8, it was effectively understood that it is possible to have an acceptance of terms that are subject to contract where the parties will only be bound by a formal contract. Moreover, where the terms of an offer are not accepted by the offeree without alteration, then it could be argued that negotiations will continue because anything that the offeree then proposes may be considered to be a counter-offer so that the positions of the respective parties change (i.e. offeror becomes offeree and vice versa). Therefore, this effectively means that there is only likely to be an agreement on terms that are substantially different from those originally put forward by the parties in such circumstances9.Buying and sellingMore specifically, where there is an unequivocal desire to buy and sell, but a lack of certainty as to terms of the agreement, the courts will look to consider the nature of the transaction for themselves that may be determined by the standard of reasonableness (i.e. what is considered reasonable) in the specific circumstances of the case. Such a view is effectively illustrated by the examples of the decisions in Brown v. Gould10, where what was considered the market value of the proficients was determined by the courts, and Didymi pile v. Atlantic Lines glide Company Ltd11, where the idea that an agreement regarding a hire was to be equitably decreased was also determined by the courts. But, in the case of price of goods and operate in such cases, this has largely been governed by section 8 of the Sale of Goods Act 197912 which effectively means that the courts are able to allow actions for the recovery of reasonable sums of the value of the goods or services in interrogative13 so long as the contract itself is silent as to the issue of price14. Therefore, by way of illustration, in whitethorn Butcher v. The King15 when the supplicants agreed t o purchase all of the Crowns old tentage for a price agreed upon as the quantities of the said old tentage become uncommitted and are offered to the purchasers it was held there was no cogitate contract because the price would be agreed subsequently for the transference of the goods in question.The influence of parties to an agreement upon the courtsHowever, more generally, the determination of any court is to put a fair construction on what the parties have said and done because Lord Wright in Hillas Co v. Arcos Ltd16 said occupancy men often record the most significant agreements in crude and summary fashion, that are far from complete or precise to those unacquainted(predicate) so that it is arguable that the parties to such agreements may be considered to have some influence over the approach that the courts may take in such cases. On this basis, this means that it is the duty of the court to construe such documents fairly and broadly17 because the courts neediness to be satisfied that parties to an agreement have concluded a contract, whilst also still considering what has been said and done in its context, the relative importance of the unsettled matter and whether the parties have provided machinery within the terms of their agreement for settling any dispute.By way of further illustration, in the decision in Hillas Co v. Arcos Ltd18 the court decided that the terms of the contract in this case were based on forward transactions (the original contract) between the parties and the custom of the timber trade because it was determined that in view of their previous agreements there was still sufficient intention to be bound in the future. Therefore, with this in mind, in view of the influence of the parties in acting on the same basis as under their previous transaction, clearly, in such circumstances it will be extremely difficult for the courts to say that a contract is void for vagueness or uncertainty, where it has been either or completel y or partially performed, since this serves to make it easier to imply a term into an agreement to resolve such problems19.However, as well as the influence acceded to the parties to agreements by the courts, it is also definitive to appreciate that a court will not commonly allow a contract to fail for uncertainty more generally if the contract also provides the means to acquire the level of certainty required for the particular contract. For example, in cases including Foley v. Classique Coaches Ltd20, it was recognised that if the contract in question provides parties are to agree a price or quantities for delivery, but also contains an arbitration clause in this regard, the courts will imply a reasonable price will be nonrecreational where there is otherwise default on the part of the parties to the agreement determined by arbitration so that parties to the agreement still retain a level of influence even where they are in dispute.Moreover, matters in this regard may actually only be further complicated by the fact that parties in business often act on their informal agreements even their version of events pending the formalising of their agreement into a contract21. Then, where a contract is formalised, the courts may allow this contract to take on a retrospective effect to cover the work done during the period when the parties were working on the basis of an informal agreement22. But where there is no formalisation of an agreement between parties, work that is done, or goods that are delivered, under a letter of intent may lead to a restitutionary obligation to pay a reasionable sum by way of remuneration for this23 so that the parties actions continue to have an effect on any decision that is reached.The problem with documentationIn spite of the influence of the parties themselves on the decisions reached by the courts, however, in looking to consider how the courts deal with the issue of certainty (or lack thereof) in business contracts, it is impo rtant to appreciate that matters are also complicated somewhat by the use of other documents in the build up to the recognition of a formal agreement. Such a view is effectively illustrated by the use of letters of intent in the construction industry with a view to formalising a contract at a later date. This is because whilst, in the past, in decisions including British Steel Corporation v. Cleveland Engineering Co24, such a document may have been considered akin to a conditional contract by the courts since it is effectively looked upon as a sign that one party is likely to want to contract with another, in Regalian Properties Plc v. capital of the United Kingdom Dockland exploitation Corporation25 there was an unsuccessful action for reimbursement of expenses incurred by a property developer regarding preparatory work regarding a contract that also never materialised in spite of the straw man of a letter of intent since it is a matter of interpretation.Consequently, it is impor tant to appreciate that the courts have become prone to taking a differing view from case to casxe because they do not consider cases decided in this area to be analogous in the circumstances. Such a view is reflected in the fact that whilst one party, in British Steel Corporation v. Cleveland Bridge Engineering Co26, requested the other to perform services and supply goods needed under the expected contract, the costs Regalian Properties Plc v. London Dockland Development Corporation27 sought reimbursements for what it did in an effort to put itself in a position to obtain and then perform the contract that was unsuccessful. This is largely because the court in such cases may be unwilling to imply a contract on the basis of a letter of intent because the language used is often uncertain and, in view of previous negotiations, it may also be argued that all that is assumed is a moral responsibility and not something that is contractual but, again, that is something for the courts to determine on the facts as they arise as a matter of interpretation28.Nevertheless, matters in this regard are also not helped in relation to the recognition of certainty in business agreements where the contract between the parties is considered incomplete because of a failure to cover all of the pertinent points that are considered significant by the parties so that one party asserts that a contract has been formalised and the other claims that it has not. Therefore, it is important to appreciate that in such cases the courts will need to consider whether an agreement is reached by the parties to a contract at a particular time, or as to whether there are other terms of the intended contract without the settlement of which the parties to the agreement have no hope of formalising a contract29.But where documentation produced in correspondence between the parties in dispute shows the parties have definitely come to terms contempt having some material points left open a subsequent revival of negotiations will not affect the contract that is believed to have been made in the eyeball of the court without the consent of the parties to the agreement that has been made so that they retain some influence over the courts that look to resolve their disputes30. More specifically, Justice Parker recognised in the decision in Von Hatzfeldt-Wildenburg v. Alexander31 that if documents or letters relied on as constituting a contract contemplate the execution of a further contract it is a question of construction whether the execution of the further contract is a condition or term of the bargain or whether it is a mere expression of the desire of the parties as to the manner in which the transaction already agreed to will in fact go finished32. Consequently, it is matter upon which the courts could arguably go either way on in looking to interpret because it is really something to be decided upon on the facts of each individual case.NegotiationsHowever, even where negoti ations are successful, it was recognised in practice, as long ago as the decision in Kennedy v. Lee33 that it may prove difficult to say with certainty when an agreement has been reached. This is because of the fact that it was recognised in this case that negotiations can often be long and complex with significant variations derived from offers and counter offers that may serve to detract or embellish the original basis of try agreement between the parties. Nevertheless, in the dcecision in Davies v. Sweet34 it was understood that in spite of a prolonged period of negotiations courts may still find a concluded bargain by the conduct of the parties thus seemingly bypassing the need for certainty so that any continuance of the negotiations will not necessarily serve to turn back an agreement between the parties. Such a need largely arises from the fact it is important to look to give effect to the reasonable expectations of business people that is an important object of the law of contract to facilitate in relation to their ongoing relations35.But, in the context of negotiations, a lock out has also come to be considered to be unenforceable where it does not specify a time term for its duration because it would indirectly impose a duty to negotiate in good faith which could not be considered a contract36 although such an agreement may be considered thuse if it is for a fixed period37 regardless of this it has been argued that certainty should have been resolveable in the interests of the parties through the recognition of the standard of reasonableness alluded to earlier in this discussion. Moreover, the courts have also felt at liberty to strike out indefinite, but subsidiary, provisions as being insignificant so as to be able to give effect to the rest of the agreement38. Furthermore, with regards to an agreement to negotiate, the House of Lords recognised in Walford v. Miles39 that such an agreement was effectively an agreement to agree so it was consi dered unenforceable because it lacks the demand certainty40. Such a view has arisen because negotiations are, by their very nature, adversarial and allowed them to pursue their own interests, so long as they do not make misrepresentations, and withdraw where they see fit41, whilst damages were also out of the question because no can tell whether the negotiations would be successful and what the result would be42.ConclusionIn conclusion, in looking to critically evaluate the aforementioned statement so as to also be able to consider the extent to which parties have acted on a business agreement serves to influence any judge, it must be recognised that certainty within any agreement perpetrated by a business is extremely important. This is because certainty in relation to the agreements that are formed between parties clearly goes some way to limit and even negate the need to go to seek the resolution of their disputes. However, by its very nature, business negotiations are somewhat adversarial. Everyone involved with business wants to get ahead(predicate) so it is perhaps little wonder that disputes do arise. But just because a dispute arises does not mean that the parties want to end the relationship that they have built up just because there is a lack of certainty in some aspect of the agreement that has been formed.Therefore, whilst the courts may look to resolve issues of certainty between the parties on the basis of the law as it stands and the understanding of what is considered reasonable in the circumstances, the parties themselves can and do retain an element of influence over proceeding between them. Consequently, the respective parties intentions when forming an agreement must be taken into account when determining the binding nature of any agreement. However, that is not meant to assuage the role that the courts do play in the resolution of disputes. It is just that the area is actually somewhat complicated by the lack of certainty in aspects of a n agreement that is formed that need to be effectively headstrong and, in view of the close proximity of the parties to their dispute, it is sometimes considered best for the parties to accede to the resolution of their dispute to the courts where they cannot otherwise be resolved between the parties themselves despite the influence that the courts will still allow their dealings to have on their decisions in most cases.-(i) Research StrategyTo begin with it is necessary to decide what the question set is asking i.e. in this case, determining the need for something different to rectify a problem that apparently exists. This effectively means that any investigate carried out is required to seek to facilitate a discussion involving the specific terms identified within the question so as to effectively determine and incorporate the academic and legal opinions of authorities to support the pertinent issues that have been derived from the research that has been carried out here for th e purposes of answering the question.(ii) MaterialsTherefore, on this basis, it is particularly important to look to include case law in particular, in view of the stated requirement in the scope of the question, throughout the writing of this essay before listing them all in the bibliography for ease of further reference. As a result, both Lexis Nexis Professional and Halsburys Laws of England are websites that serve as significant research aids for writing this kind of work in view of the fact that they offer the most contemporary accounts of all legal subjects.(iii) Search Terms statutory professor David Stotts work on legal research43 has recognised the best approach to researching an essay is to look to take the title/question that you have been given and then highlight what you think are the key words and phrases so that, in this case, the following search terms are recognised BusinessContractBuyingSellingLegislationDispute ResolutionCertainty.Then, having identified search te rms for the purposes of research, combinations of these terms must be uses, whilst also looking to appreciate the fact that certain terms (i.e. legislation) will offer very little in view of the specifics elsewhere within the question without looking at more specific aspects. As a result, in view of the fact that the focal point of this essays discussion is the issue of certainty within, a particular context (i.e. business agreements), then it is clear that this must be recognised so as to be able to effectively achieve the required results to lead to further research into judicial decisions and other paper based sources outlined in the bibliography by looking at combinations of the aforementioned search terms (e.g. contract, certainty, business and agreement).(iv) Review of ResultsIn looking to effectively be able to evaluate the academic value of the research that has been carried out here, it is abundantly clear that, whilst the initial materials uncovered were excellent in view of their relevance, a true understanding of as to how successful the research actually was is only possible where we look to consider the content of what has been written in the essay itself. But then it is also necessary to look to consider as to how the answer to the question set looks to show an effective appreciation of how the materials that have been identified in the bibliography have been used. Therefore, it would seem that the results of this research have served to effectively facilitate a broad discussion of various areas in relation to the recognition of certainty within the context of business agreements and as to how the courts have dealt with the resolution of disputes, whilst also recognising the influence that the parties themselves can have in relation to the courts resolution, that have put been together in this paper so as to present an effective answer to the question that has been posed here.-Beatson. J Ansons Law of Contract 27th Edition, Oxford University Pre ss (1998)Fridman. D. F Construing, without constructing, a contract (1960) 76 LQR 521Halsburys Laws of England Lexis Nexis, Butterworths (2007)Lexis Nexis Professional (2007)(www.lexisnexis.com)Stott. D ratified Research Cavendish Publishing Ltd (1998)Adams v. Lindsell (1818) 1 B Ald. 681Bishop Baxter v. Anglo-Eastern Trading Co Industrial Ltd 1944 KB 12British Steel Corporation v. Cleveland Bridge Engineering Co 1984 1 All ER 504Brown v. Gould 1972 Ch 53Butler Machine Tool Co v. Ex-Cell-O Corp 1979 1 WLR 401Carlill v. Carbolic Smoke thud Company 1893 1 QB 256Chillingworth v. Esche 1924 1 Ch 97Courtney Fairbairn Ltd v. Tolaini Brothers (Hotel) Ltd 1975 1 WLR 297Currie v. Misa (1875) LR 10 Ex 153Davies v. Sweet 1962 2 QB 300Didymi Corporation v. Atlantic Lines Navigation Company Ltd 1988 2 Lloyds rep 108Foley v. Classique Coaches Ltd 1934 2 KB 1G. Percy Trentham Ltd v. Arhital Luxfer Ltd 1993 1 Lloyds repp 25G. Scammell Nephews Ltd v. Ouston 1941 AC 251Hillas Co v. Arcos Lt d (1932) 147 LT 503Hussey v. Horne Payne (1879) 4 App Cas 311Hyde v. Wrench (1840) 3 Beav 334Kennedy v. Lee (1817) 3 Mer 441Kleinwort Benson Ltd v. Malaysia archeological site Corporation Bdh 1989 1 WLR 379 atLipkin Gorman v. Karpnale 1991 3 WLR 10May Butcher v. The King 1934 2 KB 17nMitsui Babcock Energy Ltd v. John Brown Engineering Ltd (1996) 51 Con LR 129Montreal Gas Company v. Vasey 1900 AC 595Nicolene Ltd v. Simmonds 1953 1 QB 543Pitt v. PHH Asset Management Ltd 1994 1 WLR 327Queensland Electricity Generating Board v. New forecast Collieries Property Ltd 1989 1 Lloyds Rep 205Regalian Properties Plc v. London Dockland Development Corporation 1995 1 WLR 212Trollope Colls Ltd v. Atomic Power Construction Ltd 1963 1 WLR 333Von Hatzfeldt-Wildenburg v. Alexander 1912 1 Ch 284Vosper Thornycroft Ltd v. Ministry of Defence 1976 1 Lloyds Rep 58Walford v. Miles 1992 2 AC 128Sale of Goods Act 19791Footnotes1 Fridman. D. F Construing, without constructing, a contract (1960) 76 LQR 521. 2 1900 AC 595.3 reckon also the decisions in G. Scammell Nephews Ltd v. Ouston 1941 AC 251 (hire purchase terms) Bishop Baxter v. Anglo-Eastern Trading Co Industrial Ltd 1944 KB 12 (war clause) for further examples of indefinite contract terms.4 (1818) 1 B Ald. 681 see also Carlill v. Carbolic Smoke Ball Company 1893 1 QB 256.5 (1875) LR 10 Ex 153.6 See, for example, the decision in Lipkin Gorman v. Karpnale 1991 3 WLR 10.7 (1840) 3 Beav 334.8 1924 1 Ch 97.9 See, for example, the decision in Butler Machine Tool Co v. Ex-Cell-O Corp 1979 1 WLR 401.10 1972 Ch 53.11 1988 2 Lloyds Rep 108.12 Although see also the Supply of Goods Services Act 1982 at section 15(1).13 See, for example, British Bank for inappropriate Trade Ltd v. Novinex 1949 1 KB 623.14 Sale of Goods Act 1979 at section 8(2).15 1934 2 KB 17n.16 (1932) 147 LT 503.17 Ibid at p.514.18 (1932) 147 LT 503.19 See G. Percy Trentham Ltd v. Arhital Luxfer Ltd 1993 1 Lloyds Rep 25 at p.27 per Steyn LJ.20 1934 2 KB 1 see al so Vosper Thornycroft Ltd v. Ministry of Defence 1976 1 Lloyds Rep 58 Queensland Electricity Generating Board v. New Hope Collieries Property Ltd 1989 1 Lloyds Rep 205.21 See, for example, Regalian Properties Plc v. London Dockland Development Corporation 1995 1 WLR 212.22 See, for example, Trollope Colls Ltd v. Atomic Power Construction Ltd 1963 1 WLR 333.23 See, for example, British Steel Corporation v. Cleveland Bridge Engineering Co 1984 1 All ER 504.24 1984 1 All ER 504.25 1995 1 WLR 212.26 1984 1 All ER 504.27 1995 1 WLR 212.28 See Kleinwort Benson Ltd v. Malaysia Mining Corporation Bdh 1989 1 WLR 379 at pp.388, 391 393.29 See, for example, Hussey v. Horne Payne (1879) 4 App Cas 311.30 See, for example, Mitsui Babcock Energy Ltd v. John Brown Engineering Ltd (1996) 51 Con LR 129 at pp.167, 175 179.31 1912 1 Ch 284.32 Ibid at p.288.33 (1817) 3 Mer 441.34 1962 2 QB 300.35 Beatson. J Ansons Law of Contract 27th Edition, Oxford University Press (1998) at pp.62-6836 See, for ex ample, Walford v