If a transaction intent is clear, i.e. the intention to buy and sell, the conditions may be determined by the standard of reasonableness. This may be legally implied as section 46 of the Act. If the goods are sold without indication of price, the contract is considered a reasonable price to pay. If the remuneration in a special service agreement were to be fixed by the employer, the contract was enforceable and the rate had to be set on the basis of what was just and reasonable. However, in Scammell v. Ouston, it was held that if remuneration for a contractual service was to be set by the employer, the contract was enforceable and the rate was set on the basis of what was just and reasonable. Teekay proposed two alternative interpretations or implied terms based on the words in clause 4 to regulate what would happen if Teekay and STX did not agree on a delivery date: Essentially, these agreements have no legal effect and, in the eyes of the law, they never existed. Another way agreements can be void is uncertainty. If an agreement is uncertain in its meaning and cannot be resolved by judicial or commercial proceedings, the agreement is null and void.
Part of what constitutes a legally binding contract is that the obligation can be clearly and therefore fulfilled. If the language used cannot be interpreted by the parties or third parties, the contract has no legal effect. f) A agrees to sell “my white horse for five hundred rupees or a thousand rupees” to B. There is no indication as to which of the two prices should be indicated. The agreement is null and void. An agreement is void under Article 29 if its terms are vague and uncertain and therefore cannot be guaranteed. Figure: A agrees to sell one tonne of oil. The agreement is void due to uncertainty, as the type of oil expected cannot be determined. The imputation of a reasonableness standard could not save the agreement, as there were no established criteria against which the court could judge what was appropriate. Nevertheless, the Court of Appeal did not hesitate (approving the decision of the first instance) with a linear calculation, i.e.
“If the funds are withdrawn on a given day between the day after the investment and the day three years after that date, the amount of recovery is equal to the proportion of commission reflecting the time elapsed between these two dates.” In our own experience, the courts are indeed very keen to make sense of contracts that, at first glance, seem vague or contradictory. This approach applies to both “homemade” agreements and documents between legal advisors. The starting point will usually be that words must have meaning, otherwise why should they be included? The likelihood that a court will completely ignore parts or all of a contract due to uncertainty is generally quite low. The open case only reinforces this position. A contract intended to be binding may be enforceable even if certain clauses have not been precisely agreed, if the nature of the clauses can be implicitly determined. Courts interpret commercial agreements fairly and broadly and involve conditions to the extent necessary to give effect to the transaction. (i)- Conditions consistent with the court`s conception of what are reasonable conditions provided for filling any area of omission or disagreement; An example of a void agreement due to uncertainty is one that is vaguely worded: “X agrees to buy fruit from Y”. If there is no way to determine what type of fruit has been agreed upon or intended, the agreement is null and void. However, if party Y in the above agreement is a producer of grapefruit, there is a clear indication of the type of fruit for which it was intended, and X would still be obliged to make the purchase. Courts are reluctant to set aside a contract because of uncertainty about a provision intended to produce legal effects, as in Brown v. Gould . It was stressed that things should always be balanced without violating essential principles, that human action should be dealt with as effectively as possible and that the law should not be accused of destroying negotiations.
A provision of a contract is void because of uncertainty only if the court cannot draw a conclusion as to what the parties had in mind, or if it is not certain that the court prefers one possible meaning to another meaning that is equally possible, since what the parties have in mind is a legal construct and not an examination of subjective intent. As stated in Bahadur Singh vs Fuleshwar Singh , a contract is not void if its terms can become secure. The meaning of the contract must not be uncertain and it must also be demonstrated that it cannot be secured. Mere vagueness or uncertainty, which can easily be eliminated by correct interpretation, does not render a contract null and void. Oral agreements are also not considered vague if their terms can be determined precisely. It has been suggested that an agreement is too uncertain to be enforced if no limitation on the time limit for performance is expressed or cannot be inferred from the nature of the case. This does not seem acceptable as a general proposal. A document in favour of a bank promising to pay a certain amount on or before a certain date and a similar monthly amount each subsequent month could not be considered a promissory note (Carter v. Agra Savings Bank Ltd.) because it did not specify the period for which it was to exist and the amount to be paid. A party`s obligation not to execute payment of the cheque until it has received the goods is void due to uncertainty, since the time for receipt of the goods is not specified.
The High Court (Walker J) rejected both implied clauses and ruled in favour of STX that the option contract was void due to uncertainty. (ii)- The entire contract will be built on the basis of what the court deems appropriate, with the terms agreed upon by the parties serving as evidence of what is reasonable in the circumstances. Business documents are sometimes expressed in language that has no clear meaning. This was seen in Dhanrajamal Gobindram vs Shamji Kalidas And Co. . Commercial contract cases vary, as there are standards of commercial use and practice for appealing when it comes to deciding which terms are fair and appropriate. Words that are grammatically meaningless can be used in a mercantile sense and constructed accordingly.