Law of Contract Essay Example | Topics and Well Written Essays - 2000 words

Law of Contract - Essay Example The magnitude of the contract was such that notice of termination would be at least three years. The appeal court that decided for the defendant held that there could be no assumption of a contract for an indefinite period. The lower court had observed that in order for the contract to be enforceable, parties intention must be so certain without the court having to write a contract for them. And that in the instant case there had been no certainty as to the continuance of the contract for an indefinite period or a requirement of sufficient notice for termination of contract. It also stated that no implied contract to that effect could be inferred.2 Although the facts and circumstances of the case would appear to make it a deserving case for the plaintiff, they are denied of the relief for want of certainty which could be ascertained only by way of reducing the required terms to a written contract to that effect. This paper examines whether the requirement of certainty has to be much too rigid. Meaning of certainty The fact that the defendant had deliberately avoided making any such written commitment to the plaintiff as averred by the plaintiff themselves shows that they had been aware of uncertainty involved and that they had a forewarning that they should reduce such terms of notice period termination to writing. Their inaction proves to be fatal to the contract’s continuity. Thus, even after compliance with the rules of offer and acceptance and other elements essential for the formation of contract, a contract cannot be enforced by a court if it is marred by ‘vagueness and incompleteness’. In long-term contracts, parties may not be able to set a fixed price because of fluctuation in market conditions. A contract without a fixed price is not necessarily vague or incomplete. Therefore, The Sale of Goods Act 1979 makes a provision in section 8 for price to be agreed after the contract formation.3 As early as in 1932, the issue of vagueness a nd incompleteness was dealt with in Hillas & Co V Arcos Ltd. 4 The court in this case heavily relied on the formality so as to put the agreement strictly business-like unlike in social relationships. In this case, the seller Arcos contracted with the buyer Hillas for supply of Russian timber for one year 1930. The seller also agreed with the buyer for his option to purchase timber of ‘fair specification’ for the next year 1931 also. But the seller could not supply timber to the buyer for the next year as he had fully sold out his timber to another party. When sued by Hillas for breach of contract, it was argued that agreement for supply in 1931 was uncertain and hence void for uncertainty. House of Lords disagreed for the reason that the words ‘fair specification’ were sufficient to lend precision i.e certainty to make a binding contract. Lord Wright explains how certainty in law and flexibility in business could be aligned. He states that most of the busin ess agreements are recorded in crude and summary fashion. The words that appear to the business community as sufficient and precise may appear to others as incomplete and imprecise. As such, the court is entrusted with the responsibility of interpreting documents fairly and broadly without being fault-finding. At the same time, it is not for the court to write contract for