Certainty in practice

If a clause cannot be interpreted objectively then it may be impossible to enforce it. Generally, the court considers what a reasonable person would have understood a term to mean, by considering the words used, and – if that fails – then based on commercial common sense.

The courts are reluctant to decide that a contract is void for uncertainty if the parties have already performed their obligations under it.

In Mitsui Babcock v John Brown Engineering (1996), the contract failed to specify the performance tests required – the contract said ‘to be discussed and agreed’. The court held that whilst there was a binding contract, there were no agreed performance tests and no term could be implied for reasonable performance tests.

In Hillas v Arcos (1932), the contract for the provision of timber based on ‘standards of fair specification’.  The House of Lords held that the contract was not void for uncertainty and interpreted the quality provision objectively to cover various kinds of timber.

In Trebor v ADT (2011) the supplier of a bespoke fire system attempted, in its supply contract, to limit their liability to twenty times the amount of an annual service charge. The court held that this provision was meaningless because it could only be calculated by reference to the value of a non-existent contract and was too uncertain to be enforceable.

In Buckingham v Peel (2022) the contract included a schedule of completion dates, for the purposing of setting delay damages for each section, which contradicted the date for completion of the works in the contract particulars. The contractor argued that this rendered the dates void or unenforceable for uncertainty. The court interpreted the contract as a consistent document, where the date in the contract particulars did not trigger any delay damages. There was no uncertainty!