Certainty of Terms

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

92

CHAP TER 3

CERTAINTY OF TERMS

A. I NTRODUC TION

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

reached agreement on all the essential terms of their agreement. A s is

often said, the parties must make the agreement, the court s will not

make it for them. Further, the parties “must so e xpress themselve s

that their meani ng 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 idem to enable the courts

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

tainty of term s and its underlying rationale must be balanced against

the practicalities of transactional negotiations. Parties may be unable

to anticipate and articulate agreement s with respect to future events

and may intentionally leave gaps in their agreements to provide for

future and mutually sat isfactory accommodations. Parties, espec ially

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

essential ter ms to be stipulated in t he 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 Terms 93

ter into binding contractual arrangements and believe that they h ave

successfully done so. Rigid application of the doct rine of certaint y,

therefore, could produce much mischief, especially in ca ses where the

parties detrimentally rely on the assumption th at a valid and enforce-

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

f‌ill gaps and f‌ind meani ng in agreements in circumstances where it ap-

pears that a binding agreement was intended by the part ies.

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

a requirement that the part ies reach a complete and intelligible agree-

ment and a reluctance to defeat the expectations of the parties th at an

enforceable agreement has been created. As Lamber t J.A. observed in

Griff‌in v. Mar tens,2 “As long as an agreement is not being constr ucted

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

courts should try to retai n 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 part icular 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 t hat 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 par ties

are aware that they can not 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 t he 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 sa id,

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.

4 See, 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”).