JAMIA MILLIA ISLAMIA

Faculty of Law

Project
(CONTRACT LAWS)

TOPIC NAME

(UNCERTAIN AGREEMENTS)

Submitted to –
BHAVNA MAM

Submitted By:

PRASHANT ALOK

B.A. LLB (1st year)

Batch : 2019-2024
ABSTRACT

Under this project I am going to discuss mainly UNCERTAIN AGREEMENT and

related topics which are as mentioned in below :-

1. What is Contract ?

2. What is essential of Agreement?

3. What is Valid Agreement?

4. What is Uncertain or Ambiguous agreement ?

5. Landmark Cases related to uncertain agreement

6. Conclusion
 INTRODUCTION
CONTRACT :

A contract is an agreement between two or more persons creating rights & duties and
which is enforceable by law.

The Indian Contract Act, 1872 defines the term “Contract” under its section 2 (h) as “An
agreement enforceable by law”. In other words, we can say that a contract is anything
that is an agreement and enforceable by the law of the land.

Definition of Contract according to different personals

According to Pollack

“Every agreement and promise enforceable at law is a contract”

According to Salmond

“A contract is an agreement creating and defining obligation between two or more persons by
which rights are acquired by one or more to acts or forbearance on the part of others”

According to Sir William Anson

“A legally binding agreement between two or more persons by which rights are acquired by one
or more to acts or forbearance on the parts of others”

Valid Contract
UNCERTAIN AGREEMENT: DEFINATION & SECTION IN INDIAN CONTRACT ACT,1872

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

Requirement for Certainty

An agreement may be uncertain either because the terms in it are ambiguous or

vague or because it is incomplete. The general rule is that if the terms of anent
are vague or indefinite which cannot be ascertained with reasonable certainty of
the intention of the parties, then there is no contract enforceable by law.

Section 29 provides the meaning of an agreement that should be clear on the face
of it, as shown in Kovuru Kalappa Devara vs Kumar Krishna Mitter, but the effect
can be provided to the contract if its meaning is found with reasonable clearness.
If this is not possible then the contract would not be enforceable. Merely difficulty
in interpretation will not be considered as vague. The principle can be formulated
as a party who seeks remedy from court for breach of a contract, the obligation
must be able to identify the obligation with sufficient precision to justify the
remedy. The law thus stated is more flexible, and recognizes that different levels
of certainty may be needed for the remedies.

Concluded Contract

As stated in the parties should make their own contract and the court will not
construct a contract for parties when the terms are indefinite or unsettled. The
court must first be satisfied that the parties have a concluded contract, before
seeking to make certain terms.

Capable of Being Made Certain

As given in Bahadur Singh vs Fuleshwar Singh , a contract is not void if its terms
are capable of being made certain. The meaning of the contract should not be
uncertain and further, it needs to be shown that it is not capable of being made
certain. Mere vagueness or uncertainty which can be easily removed by proper
interpretation does not make a contract void. Even oral agreements will not be
considered vague if its terms are ascertainable with precision.

A contract out of which more than one meaning, when constructed, can produce
in its application more than one result will not be void for uncertainty. A contract
will be void for uncertainty only if its essential terms are uncertain or incomplete
unless the uncertain part being not essential is severed, leaving the balance of the
agreement intact. To ascertain what is essential and what is not, one must look
itto the intention of the parties. There is no concluded contract when an essential
or critical terin is expressly left to be settled by future agreement of the parties.
Also, there will not be a binding contract where the language is obscure and
incapable of any definite meaning.

An agreement that provides for the future fixation of price by the parties or by a
third party is capable of being certain and is valid under Section 29. Such a
contract will not be void for uncertainty.

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 . 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 , 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.

Commercial Agreements

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. 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.

Custom and Trade Usage

As given in the Indian Evidence Act 1872, 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’.

In Ashburn Anstalt v Arnold, an agreement to lease a shop in a prime location was

not uncertain as it could be determined by expert evidence since the phrase is a
commonly used in the particular property trade.

Previous Course of Dealings

In Lani Mia vs Muhammad Easin Mia, a covenant for renewal of lease which did
not specify the period or rent must be presumed to be for the same period and
the rent as the original lease and is not void for uncertainty.
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 , 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.

Performance Executed

The degree of certainty required for creating obligations varies according to the
whether the transaction remains wholly executory or has been party formed or
acted upon. Whether the alleged agreement has been wholly or partially
executed that is performed by any party the very fact of the performance being
executed may itself lead to the conclusion that agreement is binding as in Hart v
Hart.

For example as in the case of many commercial contracts two parties continue to
send each other counter offers after they comment performance. A Court may
decide that there is a contract one of the following places-

(i) The terms agreed with the court’s idea of of what are reasonable terms being
supplied to fill all areas of omission or disagreement;
(ii)- The entire contract being constructed on what the court thinks is reasonable,
the terms which the parties have agreed being evidence of what is reasonable in
the circumstances.

Machinery for Ascertainment

A contract would not be vague if it provides machinery for ascertaining a term. In

Damodhar Tukaram Mangalmurtiand v The State Of Bombay , the renewal clause
contained a provision which said “subject to such fair and equitable enforcement
as the lessor shall determine”. The clause was not held vague or uncertain. In
Talbot v Talbot [10], the provision in a will giving option to the beneficiaries under
the will to purchase the farms in which they live at a reasonable valuation was
enforceable.

However the High court of Australia in Hall v Busst , held by majority that the
words reasonable sum to cover depreciation as uncertain and therefore
unenforceable. In Milnes v. Gery, an agreement to sell at a fair valuation was also
held to be uncertain.

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, or subject to a war clause
or to force majeure conditions, or an option on terms to be agreed.

Agreements Held Certain

In S.R. Varadaraja Reddiar vs Francis Xavier Joseph Periari, it was held that where
both the parties were fully aware of the identity of the property to be conveyed
under the agreement, the agreement would not be uncertain merely because the
exact boundaries, survey number or location were not mentioned in the
agreement, if the identity of the property could be reasonably ascertained there
form. In Mithu Khan vs Pipariya wali, an agreement for sale of land with the name
of the land but without its survey number or are was not void for uncertainty.

In Daulat Ram Rala Ram vs State Of Punjab , a clause in the arbitration agreement
referring the dispute to the superintending engineer is not vague merely because
the reference is to the officer holding the office for the time being. Use of the
term approximate does not make a contract vague as it means rounding off in the
case of money, few pounds to a round figure (Edwards v Skyways . Nor did the
words other necessary and indispensable expenses to be paid besides the
purchase price for reconveyance and the cost of execution. A contract is not
uncertain merely because the time for performance or the terms for delivery, r
the maximum quantity of goods to be purchased is not specified.

Agreements Held Uncertain and Vague

In Deojit v Pitambar, 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.), as 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 void on the ground of uncertainty as the period when the goods
are to be received is not determined.

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

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

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 cannot be ascertained
with reasonable certainty of the parties ‘ intention, then the law does not enforce
a contract

REFERENCE

Books

Dr R.K. Bangia

Avatar SINGH

OTHER SOURCES

Wikipedia

www.slideshare.com