A contract the terms of which the court cannot find with reasonable

certainty is not enforceable. In other word, certainty of terms is really

essential to create a contract and without it, the contract becomes void. It
is said that an agreement must be capable of being given an exact
meaning and that all the performances to be rendered must be certain.
Such certainty of terms is needed in determining whether the contract is
valid or not because both parties will look to the agreement which they
agreed upon.
Even though the parties may have appeared to make an agreement
by the exchange of offer and acceptance, the courts may refuse to
enforce it if it appears to be uncertainty about what has been agreed or if
the clause used is meaningless. In Nicolene v Simmonds, for example,
where the contractual documentation contained the statement we are in
agreement that the usual conditions of acceptance apply. Since there
were no usual conditions, it was held that that this was simply a
meaningless phrase, which could be ignored. There was nothing left open
which needed to be determined and therefore, there was no contract
between parties.
Besides, in the case of Scammell and Nephew Ltd v Ouston, a clause
stipulating the price of buying a new van as "on hire-purchase terms" for
two years was held unenforceable because there was no objective
standard by which the court could know what price was intended or what
a reasonable price might be. The phrase on hire-purchase terms could be
used to describe many different arrangements. It left open such questions
as whether payments would be made on a weekly, monthly or yearly basis
or whether there would be an initial deposit and what the interest rate
would be. The House of Lords also held that in the absence of any other
evidence of the details of the hire purchase agreement, this was too
vague to be enforceable and there was therefore no contract.
Similarly, in Baird Textile Holdings Ltd v Mark & Spencer plc, the
plaintiff had been one of the principal suppliers for the defendant retailer
for 30 years. In October 1999, the defendant cancelled the arrangement

from the end of that season. The plaintiff sought damages on the basis of
that the arrangement could only be terminated on reasonable notice of
three years. This was in part based on an allegation that there was an
implied contractual obligation to that effect, there being no express
contract between parties. The Court of Appeal held that because the price
and quantity to buy would be uncertain, hence, no term could be implied
for Mark & Spencer to give reasonable notice before terminating its
purchasing agreement. Therefore, the argument based on the implied
contract failed because there was no intention to create legal relations
since the contract was insufficiently certain in its terms.
Furthermore, if an agreement leaves undecided, and
undeterminable, some important aspect of the contract, then the courts
will not enforce it. In May and Butcher v R, the agreement provided that
the price, and the date of payment, under a contract of sale, was to be
agreed upon from time to time. The House of Lords held that there was
no contract in this case. The parties had not left the price open, they had
specifically stated that they would agree in the future. The contract
contained an arbitration clause, but the House of Lords considered that
this was only meant to be used in the event of disputes, and could not be
the means of determining basic obligations.
In Foley v Classique Cooachess case, a contract is enforceable for

certainty. Foley owned a gas station. He sold a piece of land attached to

the filling station to Classique Coaches to use for their business on the
condition that they purchase all of their gas from Foley for as long as he
can supply it. There was no indication of price in the contract, however,
there was a clause stating that any arguments should be settled by
arbitration. After three years, Classique Coaches began purchasing gas
from other suppliers. Then, Foley sued for breach. A lawyer for Classique
Coaches argued that because there was no stated price, so, the contract
is not valid. The Court of Appeal interpreted this as meaning that there
was an implied term that the petrol should be sold at a reasonable price,
with the arbitration clause being intended to sort out any dispute as to

whether a price was reasonable. This meant that the contract was more
certain than it seems because there was nothing left discussed. The court
decided that there was a contract. Under Section 8(2) of the Sale of Goods
Act 1979 also provides that where the price is not determined by any of
these methods, the buyer must pay a reasonable price.
However, in some cases where two parties have had dealings in the
past, their previous agreements may be used to clarify uncertain terms in
a contract. In Hillas v Arcos, Hillas had contracted to buy timber of fair
specification from Arcos in 1930. The agreement also included an option
to purchase the following year, which did not detail the type or size of the
wood to be bought. When Hillas tried to exercise the option, they
discovered that Arcos had in fact already sold all the wood they had that
year, and so Hillas sued for breach of contract. The House of Lords held
that although the terms used were apparently unspecific, the parties were
both very familiar with the way business was done in the timber industry,
and had done a large amount of business with each other in the past.
Consequently, the terms could be interpreted in the light of what they
would usually mean in that industry and between those parties. They were
therefore sufficiently certain to create a contract.
Other than that, the term memorandum of understanding (MOU)
by itself connotes that it is only a memorandum witnessing the mutual
understanding of the parties to do a certain act. It is only a preparatory
agreement for preliminary arrangements and therefore, it is not valid to
create a contract. In the case of Abdul Rahim bin Syed Mohd v
Ramakrishnan Kandasamy, this was an action brought by the plaintiff who
is a purchaser against the defendant who is a vendor for specific
performance of a contract of sale and purchase of a house based on a
memorandum of understanding (MOU). In accordance with the MOU, the
purchaser paid a deposit of 1% of the purchase price and further agreed
to pay another 9% upon signing of a formal sale and purchase agreement
on or before 8 October 1993. The purchaser did not sign the formal sale
and purchase agreement on 8 October 1993 as stated in the MOU, but on

11 October 1993. The vendor then sold the property to another party, who
were the interveners in these proceedings. The purchaser argued that
upon signing the MOU, a binding contract came into existence. The vendor
argued that there was no binding contract between the parties the MOU
by itself was not a legally binding contract for the sale and purchase of the
property and the purchaser's failure to sign the formal sale and purchase agreement on or
before 8 October 1993, as required by the MOU.
Section 56 of the Contracts Act 1950 states that when a party to a contract promises
to do something at or before the specified time, and fails to do any such thing at or before the
specified time, the contract becomes voidable at the option of the promisee if the intention of
the parties was that time should be of the essence of the contract. In this case, time is of the
essence where the intention of the parties was such that time was of the essence of the
contract for the fulfilment of their respective obligations. When the purchaser failed to sign
agreement at or before specified time, the contract becomes voidable at the option of the
vendor. Thus, vendor has the right to sell the property to anyone whom he wants. The court
held that there was no contract between parties because it was under the term of
memorandum of understanding (MOU) and MOU is not a legally binding contract.

http://www.lexinter.net/LOTWVers4/certainty.htm
http://en.wikipedia.org/wiki/Certainty_in_English_law
http://www.scribd.com/doc/87422438/2001-Construction-of-Terms-of-Contract
http://casebrief.wikia.com/wiki/Foley_v_Classique_Coaches_Ltd.
http://www.inbrief.co.uk/contract-law/offer-and-acceptance-in-contracts.htm
http://catalogue.pearsoned.co.uk/assets/hip/gb/hip_gb_pearsonhighered/samplec
hapter/1408282917.pdf