Tuesday, June 18, 2024

𝗝𝘂𝗱𝗶𝗰𝗶𝗮𝗹𝗗𝗿𝗲𝗮𝗺™

𝙰𝙵𝙵𝙾𝚁𝙳𝙰𝙱𝙻𝙴 & 𝙰𝙲𝙲𝙴𝚂𝚂𝙸𝙱𝙻𝙴

CONTRACTMODEL ANSWER

AGREEMENT VOID FOR UNCERTAINTY

“Agreements, the meaning of which is not certain, or capable of being made certain, are void”. Explain the given statement in light of the provisions of the Indian Contract Act 1872.

According to Section 29 of the Indian Contract Act, Agreements, the meaning of which is not certain, or capable of being made certain, are void.

Example-
a) A agrees to sell to B “a hundred tons of oil”. There is nothing to show what kind of oil was intended. The agreement is void for uncertainty.
b) A agrees to sell to B one hundred tons of oil of a specified description, known as an article of commerce. There is no uncertainty here to make the agreement void.
c) A, who is a dealer in coconut-oil only, agrees to sell to B “one hundred 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 one hundred tons of coconut-oil.
d) A agrees to sell to B “all the grain in my granary at Ramnagar”. There is no uncertainty here to make the agreement void.
e) A agrees to sell B “one thousand maunds of rice at a price to be fixed by C”. As the price is capable of being made certain, there is no uncertainty here to make the agreement void.
f) A agrees to sell to B “my white horse for rupees five hundred or rupees one thousand”. There is nothing to show which of the two prices was to be given. The agreement is void.

The conditions of uncertain agreements are as follows-

  1. Requirement for Certainty/ Clarity- If the terms of an agreement are vague/ ambiguous or indefinite which cannot be ascertained with reasonable certainty of the intention of the parties, then there is no contract enforceable by law.
    In the case of Kovuru Kalappa Devara vs Kumar Krishna Mitter And Anr. (1944), Section 29 provides the meaning of an agreement that should be clear on the face of it, 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.
  2. Concluded Contracts– Both parties have agreed to execute on specific terms. The court must first be satisfied that the parties have a concluded contract, before seeking to make certain terms.
  3. Capable of Being Made Certain– If an uncertain agreement has the potential to be made certain, or if it can be made certain via appropriate interpretation and some changes, it cannot be considered void. For example-
    • Multiple interpretations: If an agreement has multiple interpretations, it will not be considered void unless and until the fundamental part of the contract is missing.
    Example- Mr. A and Mr. B agree to sell his motorcycle for Rs. 3 lakhs by the second week of October. The date is not given here, but it is very close and may be changed by making minor changes. As a result, the contract cannot be regarded as null and invalid.
    • Future concern: If there is a chance that an agreement may be made definite by resolving some issues in the future, it is not a void agreement.
    Example- Mr. A approaches Mr. B about selling him markers from the XYZ firm, the price of which has not yet been determined but will be shortly. In this case, pricing uncertainty will not result in an uncertain and worthless agreement.

• Commercial Agreements: Commercial contracts differ in that there are norms of commercial conventions and trade usage that may use a distinct language, but difficulties in interpreting the wording do not render it void.
Example- Every sector of labour has its own jargon, such as penalties in legal terminology, which imply something different than in everyday English.

  1. Resolving Uncertainty– If an ambiguity in an agreement can be addressed without changing the primary principle of the agreement, it is not considered void.
    In the case of G Scammell and Nephew vs. HC&JG Ouston [1941], the court found that the clause regarding the hire-purchase terms was so vague that there could not be a precise meaning derived from it. As a result of this finding, there was no enforceable contract between the parties and the appeal was dismissed.
  2. Implied Terms– If some terms are not explicitly stated (because they are inferred and not expressed) but have the potential to be binding, they are nevertheless legally enforceable.
    Example- Mr. A used the bus to go to point X. As a result, he is obligated to pay for the ticket.
  3. Customs and Trade Usage– If the contract is vague and may refer to custom and trade usage in that particular sector, it would not be considered void.
  4. Previous Course of Dealing– Previous conduct between the parties becomes an acceptable starting point for establishing future behavior between the same parties under the same terms and conditions.
    In the case of Lani Mia vs. Muhammad Easin Mia (1915), The lease renewal was challenged since the existing covenant did not define the lease terms (e.g., time duration, rent, etc.). In the absence of such stipulations, the time period and rent are assumed to be the same as in the original lease and are not deemed void.
  5. Reasonability Agreement- If both parties intend to trade, whether to purchase or sell, but the price is not established, then a reasonable amount must be paid.
    Example- Mr. A went to buy a pen, but the shopkeeper refused to tell him how much it cost. As a result, Mr. A can afford to pay up to Rs. 5 for a pen.
  6. Execution of Performance– Whether one of the parties has completed the agreement totally or partially, i.e., whether any party to the contract has complied with the conditions of the contract, The fact that it is being carried out concludes that the agreement is binding and therefore neither void nor uncertain.
    Example-Mr. A has agreed to bring rice to Mr. B once a month for the next 10 months. So, even if Mr. A just delivers it once to Mr. B, the entire contract will be binding on Mr. B because it has been partially completed.
  7. Ascertainment Machinery– A contract is not considered vague if it includes machinery for determining a term.
    In the case of Talbot vs. Talbot, the provision in a will giving an option to the beneficiaries under the will to purchase the farms in which they live at a reasonable valuation was enforceable.
  8. The Severity of Uncertainty– If the main section of the agreement is not vague but the subsidiary component is, the court will disregard the subsidiary term’s vagueness and uphold the agreement.
    Example- Mr. A requests that Mr. B give him a bag of rice by Tuesday using XYZ courier service; however, Mr. B sends it via ABC courier service, and it arrives on time. Even if Mr. B did not follow Mr. A’s requirements, the purpose has been met, and the court will not examine the subsidiary term.
    In the case of Nicolene ltd vs. Simmonds, Where there is agreement on all substantial terms, the court may disregard a subsidiary term on the grounds that it is meaningless.
  9. When Agreements are Held Certain– If there is only an absence of minute information in an agreement, it is not considered void.
    In the case of Mithu Khan versus Pipariyawali and Ors (1984), an agreement for the sale of land with the name of the land but without its survey number was not void for uncertainty.

Leave a Reply

Your email address will not be published. Required fields are marked *

error: Content is protected !!