Nunatsiaq Online
COMMENTARY: Around the Arctic September 07, 2017 - 1:10 pm

Legal Ease, Sept. 7

Certainty in Contract

JAMES MORTON

Let’s suppose you and I want to make a deal for me to rent your cottage down South for a few months. We talk about it for a few weeks and then make some sort of a deal. We agree I’ll rent the cottage for a while and I’ll pay you what seems reasonable later this year.

Is the deal enforceable? 

No.

For an agreement to be enforceable it must be clear and certain.  So if I say to a friend, “I’ll sell you my car for a fair price sometime,” a court would not consider that an agreement which had the force of law.

It may well be that between friends, that type of loose arrangement will be sufficient. But for a court, more is needed.

For an agreement to be binding it must be specific who is agreeing–there can be no doubt who is agreeing to do what.

What the subject matter of the agreement is must also be certain.

If I say I will sell you my snow machine and I have two snow machines, unless we say exactly what one is being sold, we do not have sufficient certainty.

There is a famous old English case where two business people agreed to buy the contents of a ship called the Peerless. As it turned out the Peerless had a peer!

Specifically there were two ships by that name and the parties were not sure which one was the subject of their agreement. As a result the agreement was not enforceable.

The rest of the terms of the agreement also have to be clear. So the price has to be fixed or at least something that can be unequivocally determined. The date of the steps to be taken for the agreement must be definite. 

Basically everything must be agreed to and there cannot be any uncertainty as to who agreed to do what and when.

This rule makes good sense. If a court is going to award damages against a party or order someone to do something on pain of going to jail, then the agreement itself has to be very clear. Only if everyone has agreed on everything should there be an enforceable agreement.

What does all this mean practically? 

If you have agreed to do something with someone, make sure all the terms of the agreement–what is agreed, when it’s going to happen, how much will it cost and who will do what–are clearly determined.

It would help to have the agreement set down in a simple written form, dated and signed by all parties.

James Morton is a lawyer practicing in Nunavut with offices in Iqaluit. The comments here are intended as general legal information and not as specific legal advice.

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