Certainty of Terms

• Author: John D. McCamus
• Pages: 97-117

97

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 s o express themselves that

their meaning can be determined with a reasonable degree of certain-

ty.”1 Where the parties eit her fail to reach agreement on all the essentia l

terms of the agreement or expre ss themselves in such fashion that their

intentions cannot 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 t ime, the requirement of certainty of term s

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 intention-

ally 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 part icular context. Parties may as sume that reasonable

or “the usual” arrangements will apply to an undetermined matter. In

all such cases, the parties may intend to enter into binding contractual

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

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arrangements and believe that they have successfully done so. Rigid

application of the doctrine of certainty, therefore, could produce much

mischief, especi ally in cases where the part ies detrimentally rely on the

assumption that a valid and enforceable agreement has been created.

Accordingly, courts will attempt to f‌ill gaps and f‌ind meaning in agree-

ments in circumstances where it appears 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 JA 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 subtlety. Second, where parties

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

the time of contracting, they m ay stipulate in their agreement t hat 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 BCLR (2d) 152 (CA) [Griff‌in]. See also Harle v101090 442

Saskatch ewan Ltd2014 SKCA 6, quoting the precedi ng passages from this t ext.

3 Ibid at 153.

4 See, for example, Banq ue Brussels Lambert SA v Au stralian National Industries

Ltd (1989), 21 NSWLR 502 at 523 (SC), Rogers J (“uncertainty, a concept so

much loved by lawyer s, has fallen into disf avour as a tool for striking down

commercial bargains”).