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Summary 8 Certainty or Ascertainability
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Summary of 1 pages for the course Mercantile Law 193 at SUN (Merc Law summaries)
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Certainty or AscertainabilityGeneral
- Terms of contract must be certain/ascertainable for parties to know what is
expected of them & courts to enforce the performance.
- Must be concluded so that certain/ascertainable obligation can be discerned.
- Language used is of such nature that is impossible to establish intention
- Don’t want to find void on basis of uncertainty & will attempt to give meaning
- Try to interpret & for this purpose extrinsic evidence is allowed.
- Interpreted w/reference to normal understanding & surrounding circumstances
- Parol Evidence rule would not prohibit because only applies to variations
when agreed to integrate agreement into one document.
Special Situations
Determination by Third Party or Other Method
- Obligation come into being even if content is uncertain at conclusion if content
is capable of determination by third party/ascertainable through another
objective method.
Discretion of One of the Parties
- Principle being watered down in cases where discretion to decide content of
an obligation is given to one of contractual parties.
- It has long been accepted that lessee/buyer may not determine rent/price.
- Essential term can’t be determined by means of discretion
- Discretion is valid on the following grounds:
Rules regarding limitations of discretions w/regard to rent & purchase
prices should not be extended.
Determination of interest is not essential term.
Problem w/discretions really only exists where debtor is able to perform
if he so pleases.
Implied term in all contracts that discretions should be exercised
reasonably.
Effect
- If not certain/ascertainable, obligation & counter-performance void
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