Certainty Stelios Tofaris, Girton College st277@cam.ac.uk I. Introduction An agreement is not a binding contract if it lacks certainty. It may lack certainty either because it is too vague or incomplete. 1. Importance Certainty is important: (i) to decide whether a contract has been performed or not; (ii) if not, to know the position that the parties expected to be in so that we can work out the normal contractual damages for breach. 2. Certainty and intention to create legal relations Certainty and intention to be legal bound often relate to one another. (i) Certainty > intention to create legal relations Certainty may influence intention to be legally bound. The nature and extent of the agreement's uncertainty may indicate that the parties did not objectively intend to be legally bound. (ii) Intention to create legal relations > certainty Intention to be legally bound may influence certainty. If the court concludes that the parties did not intend to be legally bound, it will not seek to fill in the gaps of their agreement. But if the court concludes that the parties did intend to be legally bound, it will try to save the agreement if that is possible. 3. Competing policy considerations Key question: when will an agreement be sufficiently certain to be a contract? In answering this question, the courts are faced with two competing policy considerations. 1
(a) Courts should not impose a contract on the parties It is for the parties, not the court, to make the contract. The role of the court is to enforce the contract that the parties have made. Scammell and Nephew Ltd v Ouston [1941] AC 251, 255 (Viscount Maugham): 'In order to constitute a valid contract the parties must so express themselves that their meaning can be determined with a reasonable degree of certainty. It is plain that unless this can be done ... consensus ad idem would be a matter of mere conjecture.' (b) Courts should try, as far as possible, to uphold agreements The courts try, as far as possible, to give effect to what they believe to be the intention of the parties. Where the parties have acted on the assumption that there is a contract, the courts are generally reluctant to find that there is no contract. In this way the courts are being pragmatic. In real life, parties do not always set out all the parts of their agreement clearly. Businesspeople often wish to avoid rigid agreements which leave no room for manoeuvre in a fluctuating market. It is therefore desirable for the courts to provide commercial parties with a degree of flexibility. 4. Current position (a) General approach (i) Dominant judicial philosophy? Scammell v Dicker [2005] EWCA Civ 405, [30] (Rix LJ): 'Parties are always disagreeing about the contracts which they make .... None of that makes a contract uncertain. For that to occur - and it very rarely occurs - it has to be legally or practically impossible to give to the parties' agreement any