Certainty of terms

An agreement can be too vague to create a legally binding contract. For example, a man walks into a car dealership and says he wants to buy a particular car priced at £10,500. He agrees to buy it on ‘hire purchase terms’. But in the absence of any details regarding these terms, such as the number and rate of payments, the agreement was too vague to be a contract. As the judge explained:

‘The object of the court is to do justice between the parties, and the court will do its best, if satisfied that there was an ascertainable and determinate intention to contract, to give effect to that intention… It will not be deterred by mere difficulties of interpretation. Difficulty is not synonymous with ambiguity so long as any definite meaning can be extracted. But the test of intention is to be found in the words used. If these words … fail to evince any definite meaning on which the court can safely act, the court has no choice but to say that there is no contract.’ (1)

But, as the above case notes, the court will always do its best to give effect to the parties’ intention to create legal relations. Accordingly, the court can sometimes give vague words a meaning by drawing on factors such as the: parties’ experience, or custom and practice in a particular industry or field.

(1) Scammell v Ouston [1941] AC 251, HL, Lord Wright.