Certainty of Contract

Certainty

General Rule: Terms of the contract must be certain and not vague.

Authority: S. 30 CA – agreements, the meaning of which is not certain, or capable of being made certain, are void.

Case: Guha Majumder v Donough [1974] 2 MLJ 114

Examples

#1A agrees to sell to B a “100 tons of oil”. There is nothing whatever to show what kind of oil was intended. The Agreement is void for uncertainty.

#2A who is a dealer in coconut oil only, agrees to sell to B “100 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 100 tons of coconut oil.

Guha Majumder v Donough

Held: It is a well established rule that the parties must make their own contract, and this means that they must agree to its terms with sufficient certainty. If the terms are unsettled or indefinite, there will be no contract.

Ho Ah Kim v Paya Trubong Estate Sdn Bhd [1987] 1 MLJ 143

Facts: There was a written agreement to purchase a part of defendant’s land in Penang to the maximum extent of about 15 acres or less. The agreement stated two methods of purchase price calculation. First by comparing with the government’s acquisition price and if there is no acquisition, $4000 per acre.

What do you think? Is the agreement certain?

Held: Court held that it is necessary requirement that an agreement in order to be binding must be sufficiently definite to enable the court to give it a practical meaning.

Its terms must be so definite or capable of being made definite… so that the promises and performances to be done by each party are reasonably certain.

Effect: The agreement is a valid and enforceable contract.

End of Elements of Contract

RecapElements of a valid contract.What are the elements?Why is it important?

Next topic – Free ConsentLet say an agreement fulfill all the elements thus becomes a valid contract. What if the contract was made due to threat? Or fraud?