Central University of South Bihar

School of Law and Governance

Assignment - Law of Contract-I

TOPIC- “UNCERTAIN AGREEMENT”

SUBMITTED TO:- SUBMITTED BY:-

DR. P.K. DAS DHRUV KUMAR TEJASVI

ASSOCIATE PROFESSOR CUSB2213125035 SEC-A

SLG, CUSB, GAYA. CUSB,SLG,GAYA.

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 ACKNOWLEDGEMENT

It is a great pleasure to express my deep sense of thanks and gratitude to my course instructor
and guide Dr.P.K. DAS. His dedication and keen interest above all and his overwhelming
attitude to help his students had been solely and mainly responsible for completing my work.
His scholarly and timely advice, meticulous scrutiny, and his logical approach has helped me
to a very great extent to accomplish my project in an excellent manner.

His prompt inspirations, timely suggestions with kindness, enthusiasm and dynamism has also
enabled me to complete my project on time. It is my great privilege to thank my parent for their
constant encouragement throughout my research period.

Thanking you

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 TABLE OF CONTENT

TOPIC PAGE NO.

1. Introduction 04
2. Background 04
3. Resolving Uncertanity 04
4. Severance of uncertain part- 05
5. Agreement held Uncertain and 05
Vague
6. Implying Term 06
7. Custum and trade usage 06
8. Reasonableness 07
9. Illustration 07
10. conclusion 10
11. Bibliography and conclusion 10

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 UNCERTAIN AGREEMENT

Introduction –An agreement is void under Section 29 when its terms are vague
and uncertain and thus cannot be made certain1. Illustration: A agrees to sell a ton
of oil. The agreement is void for uncertainty as the kind of oil intended cannot be
ascertained.

Background -Under uncertain clauses-

Principles

1.Contractual terms may be void if they are too uncertain to be enforceable.

2.The court’s role is to give legal effect to what the parties have agreed. It
recognises that parties will not necessarily record their agreements with “lawyerly
precision” and, therefore, is reluctant to find that a contract or term is
unenforceable for want of certainty.2
3.The court will only find that a contractual term is too uncertain to be enforceable
if it is legally or practically impossible for it to be so.

Resolving Uncertainty - The courts are reluctant to hold a contract void for
uncertainty of any provision that is intended to have legal effect as given in Brown
v Gould 3. It has been emphasized that it must always be in such a way as to
balance matters that, without violating essential principles, man’s dealings are
treated as effectively as possible and that the law cannot be accused of destroying
bargaining.

1
Indian contract act,1872
2
legalserviceindia.com/legal/article-6041-doctrine-of-impossibility.html
3 89-4105 - Brown, et al v. Gould, et al

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But the courts will not undertake to supply defects or remove ambiguities
according to its own notions of what is reasonable as it would not be to enforce a
contract by parties but to make a new contract for them.

Severance of uncertain part-Where there is agreement on all substantial terms,

the court may disregard a subsidiary term on the grounds that it is meaningless as
in Nicolene ltd v Simmonds. But this rule cannot be applied to a major term,
which was seen in Kingsley & Keith, Ltd. v. Glynn Brothers (Chemicals), Ltd.4,or
subject to a war clause or to force majeure conditions, or an option on terms to be
agreed.

Agreement held Uncertain and Vague-In Deojit v Pitambar 5 , where the

defendants themselves as residents of a certain place, executed a bond and
hypothecated as security for the amount “ our property, with all the rights and
interest”, the hypothecation was held too indefinite to be acted upon. The mere
fact that the defendants described themselves in the bond as residents of a certain
place was not enough to indicate their property in that place as the property that
was hypothecated. If they had described themselves as the owners of certain
property, it would have been reasonably to refer the indefinite expression to the
description.

It has been suggested that an agreement is too uncertain to be enforced if no limit

to the time for performance is expressed or can be inferred from the nature of the
case. This does not appear acceptable as a general proposition. A document in
favor of a bank promising to pay a specified amount on or before a certain date
and a similar sum monthly every succeeding month could not be regarded as a
promissory note (Carter v Agra Savings Bank Ltd.), 6as it did not specify the
period for which it was to subsist and the amount to be paid. An undertaking given
by a party not to enforce payment of cheque till the goods are received by it is

4
[1953] Lyods 1 Rep vol 2
5 (1875) ILR 1 All 275
6
[1928] ilr rep 4520

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void on the ground of uncertainty as the period when the goods are to be received
is not determined. the parties as7

In case of an agreement to sell immovable property, if the property cannot be

identified with the certainty and there is no consensus between regards the price
payable, there could not be no concluded contract between the prospective
purchasers of flats and the builders.

Resolving Uncertainty -
The courts are reluctant to hold a contract void for uncertainty of any provision
that is intended to have legal effect as given in Brown v Gould 8. It has been
emphasized that it must always be in such a way as to balance matters that,
without violating essential principles, man’s dealings are treated as effectively as
possible and that the law cannot be accused of destroying bargaining.

But the courts will not undertake to supply defects or remove ambiguities
according to its own notions of what is reasonable as it would not be to enforce a
contract by parties but to make a new contract for them.

As Lord Wright said in Scammell v Ouston 9, the object of the court is to do

justice between the parties and if it is satisfied that there was an ascertainable and
determinate intention to contract then the effect would be given to intention
looking at the form and not the mere form.

Implying Terms-
A contract that is intended to be binding may be enforceable even though certain
terms have not been precisely agreed if the nature of the terms can be ascertained
by implication. The courts construe business agreements fairly and broadly and
imply terms to the extent that is necessary to give business efficacy to the
transaction.

7
Lawyersindia.com
8
1972 ch 53 Report
9
[1941] 1 AC 251

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Commercial Agreement -
Commercial documents are sometimes expressed in language which does not
have a clear meaning. This was seen in Dhanrajamal Gobindram vs Shamji
Kalidas And Co. 10 . Cases of commercial contracts are different as there are
standards of commercial custom and usage to appeal in deciding what terms are
just and reasonable. Words that are grammatically meaningless may be found
used in a mercantile sense and constructed accordingly. The mere fact that it is
difficult to interpret a commercial contract is not fatal, nor is difficulty
synonymous with ambiguity so long as to any definite meaning can be extracted.
A contract is not necessarily ineffective because it is open to more than one
meaning if the meaning intended can be ascertained.11

Custom and Trade usage-

vagueness apparent on the face of the contract may be resolved by reference to
the custom or trade usage. A commercial contract for the sale and purchase of
American cotton was not void for vagueness or uncertainty by reasons of a clause
‘subject to the usual force majeure clause’.

Reasonableness-Where an intention to transact is clear, which is the intention to

buy and sell, the terms can be determined by the standard of reasonable. This may
be implied by law as Section 46 of the Act. When goods are sold without naming
a price, the agreement is understood to be for payable of a reasonable price.
Where the remuneration in a contract of service was to be fixed by the employer,
the contract was enforceable and the rate fixed on basis of what is fair and
reasonable. But a condition for the purchase of a motor van to be partly paid on
hire purchase terms over a period of two years was held to be indefinably too
vague to constitute a binding contract in Scammell v Ouston 12, it was held that
where remuneration in a contract service was to be fixed by the employer, the
contract was enforceable , and the rate fixed on the basis of what was fair and
reasonable.

10
AIR 1961 SC 1285, (1962) 64 BOMLR 169, 1961 3 SCR 1029
11
https://indiankanoon.org/
12
[1941] 1 AC 251

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Severance of uncertain part-Where there is agreement on all substantial terms,
the court may disregard a subsidiary term on the grounds that it is meaningless as
in Nicolene ltd v Simmonds. But this rule cannot be applied to a major term,
which was seen in Kingsley & Keith, Ltd. v. Glynn Brothers (Chemicals), Ltd.,
13
or subject to a war clause or to force majeure conditions, or an option on terms
to be agreed.

Illustration -
(a) A agrees to sell B “a hundred tons of oil”. There is nothing whatever to
show what kind of oil was intended. The agreement is void for uncertainty.

(b) A agrees to sell B one hundred tons of oil of a specified description, known
as an article of commerce. There is no uncertainty here to make the agreement
void.

(c) A, who is a dealer in coconut-oil only, agrees to sell to B “one hundred tons
of oil”. The nature of A’s trade affords an indication of the meaning of the words,
and A has entered into a contract for the sale of one hundred tons of coconut-oil.

(d) A agrees to sell B “all the grain in my granary at Ramnagar”. There is no

uncertainty here to make the agreement void.

(e) A agrees to sell to B “one thousand maunds of rice at a price to be fixed by

C”. As the price is capable of being made certain, there is no uncertainty here to
make the agreement void.

(f) A agrees to sell to B “my white horse for rupees five hundred or rupees one
thousand”. There is nothing to show which of the two prices was to be given. The
agreement is void.

Bushwall Properties limited Vs Vortex Properties limited14:

The facts are set out fully and accurately by Mr Justice Oliver in his Judgment,
and I will summarise them fairly briefly but I hope sufficiently for the purpose of

13
[1953] Lyods 1 Rep vol 2
14
[1976] 1 WLR 591

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this appeal. In June, 1968, Vortex was the freehold owner of some 51½ acres of
land at Fareham, in Hampshire. This land was ripe for building development.
Vortex was then a subsidiary of a company known as Three Mile Developments
Limited. Bushwall was anxious to acquire and develop the land. An interview
took place on the 20th June, 1968, between one Duggan, a partner in the firm of
Duggan, Turk & Co., as agent for Vortex, and one Crompton, the Managing
Director of Bushwall. Mr Duggan and Mr Crompton came to terms there and
then, and a letter was typed and signed by Mr Crompton. I will read that letter in
full: "Dear Sirs, re Land West of Peak Lane, Fareham: Approximately 51½ acres.
We herebyconfirm our agreement to purchase the whole of the above mentioned
land in your ownership at the price of £500,000 upon the following conditions:-
The purchase price to be phased as to £250,000 upon first completion, as to
£125,000 twelve months thereafter and as to the balance 15of £125,000 a further
twelve months thereafter. 2. On the occasion of each completion a proportionate
part of the land shall be released forthwith to us. 3. Upon your making a good and
marketable title to the property. 4. Upon outline planning permission being
granted for the whole of the property. 5. That a Section 37 agreement affecting
the land shall be made at a density of not less than twelve units per acre and with
a period of not more than seven years. 6. That detailed planning permission for
the first approximate fifty units shall be granted. 7. That upon formal exchange
of contracts we shall be let into possession of the land to enable us to commence
such operations as we may think fit. 8. The fulfilment of Conditions 2-7 above
shall be carried out in conjunction with the purchasers' architects who shall
henceforth join in all negotiations and arrangements in connection therewith for
the purpose of agreeing and approving the same on our behalf. 9. That the date of
first completion shall be eight weeks from the fulfilment 16of the Conditions 1-7
above. Will you please let us have an identical letter to this signed by your
Solicitor, Mr David A.J. Duggan, as your authorised agent". Mr Duggan indeed
did sign a letter accepting those terms on the 20th June, 1968.

15
https://blog.ipleaders.in/law-of-contracts-notes/
16
Indiankanon.com

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Conclusion -
Agreements whose meaning is not certain or is incapable of being made certain
are void in nature. An agreement can be unsure either because it contains
ambiguous or vague terms or because it is incomplete. The general rule is that if
the terms of an agreement are vague or indefinite, which can not be ascertained
with reasonable certainty of the parties ‘ intention, then the law does not enforce
a contract.

Bibliography
1.Legalbook.com

2.IPLeaders.com, https://blog.ipleaders.in/law-of-contracts-notes/

References

3.Rk Bangia book

4.Mulla's Indian contract

5. Bare Act , Indian contract act, 1872

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