Certainty of Terms

• Author: John D. McCamus
• Pages: 92-111

92

CHAPTER 3

CERTAINTY OF TERMS

A. INTRODUCTION

In order for an agreement to be enforceable, the parties must have

reached agreement on all the essential terms of their agreement. As is

often said, the parties must make the agreement, the courts will not

make it for them. Further, the parties “must so express themselves

that their meaning can be determined with a reasonable degree of

certainty.”1 Where the parties either fail to reach agreement on all the

essential ter ms of the agreement or express themselves in such fashion

that their intentions can not be divined by the court, the agreement will

fail for lack of certainty of terms. In such circumstances, the parties

have not reached a suff‌icient consensus ad idemto enable the courts

to enforce their agreement. At the same time, the requirement of cer-

tainty of terms and its underlying rationale must be balanced against

the practicalities of transactional negotiations. Parties may be unable

to anticipate and articulate agreements with respect to future events

and may intentionally leave gaps in their agreements to provide for

future and mutually satisfactory accommodations. Parties, especially

those not advised by lawyers, may be unaware of the nature of all the

essential terms to be stipulated in the particular context. Parties may

assume that reasonable or “the usual” arrangements will apply to an

undetermined matter. In all such cases, the parties may intend to en-

1Scammell and Nephe w Ltd. v. Ouston, [1941] A.C. 251 [Scammell and Nephew].

Certaint y of Terms93

ter into binding contractual arrangements and believe that they have

successfully done so. Rigid application of the doctrine of certainty,

therefore, could produce much mischief, especially in cases where the

parties detrimentally rely on the assumption that a valid and enforce-

able agreement has been created. Accordingly, courts will attempt to

f‌ill gaps and f‌ind meaning in agreements in circumstances where it ap-

pears that a binding agreement was intended by the parties.

The law of certainty of terms, then, ref‌lects this tension between

a requirement that the parties reach a complete and intelligible agree-

ment and a reluctance to defeat the expectations of the parties that an

enforceable agreement has been created. As Lambert J.A. observed in

Griff‌in v. Martens,2 “As long as an agreement is not being constructed

by the court, to the surprise of the parties, or at least one of them, the

courts should try to retain and give effect to the agreement that the

parties have created for themselves.”3 As we shall see, the leading and

modern authorities tend to place particular emphasis on the need to

give effect, where possible, to the expectations of the parties that they

have entered into a valid and enforceable agreement.4

Three different aspects of t he doctrine must be considered. First, an

agreement may suffer from incompleteness in the sense that an essen-

tial term is simply not present. The determination of whether a particu-

lar term is essential is a matter of some subt lety. Second, where parties

are aware that they cannot agree with respect to a particular matter at

the time of contracting, they may stipulate in their agreement that they

will reach agreement on the particular matter in the future. It must be

considered whether such “agreements to agree” constitute an enforce-

able means of f‌illing gaps in the agreement. Third, an important term

of an agreement may suffer from vagueness or, as is sometimes said,

incurable uncertainty. In such circumstances, it must be determined

whether, as a result of the vagueness of a particular term, the entire

agreement fails for uncertainty.

2(1988), 27 B.C.L.R. (2d) 152 (C.A.).

3Ibid. at 153.

4See, for example, Banq ue Brussels Lambert SA v. Australian Nation al Industries

Ltd. (1989), 21 N.S.W.L.R. 502 at 523 (S.C.), Rogers J. (“ . . . uncertaint y, a con-

cept so much loved by law yers, has fallen into di sfavour as a tool for striking

down commercial bargain s”).