Lecture notes
Doctrine of Consideration - Promissory Estoppel
- Module
- Law of Contract
- Institution
- University Of Sussex (UoS)
Doctrine of Consideration - Promissory Estoppel
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Doctrine of Consideration – Certainty and CompletenessCertainty and Completeness
• Even where it looks like there has been valid offer and acceptance, an agreement
may fail due to lack of certainty.
• In order for the court to uphold the agreement, it must be able to identify, with
certainty, the terms of the contract.
What has Been Agreed?
• Loftus v Roberts (1902) 18 TLR 532.
➢ An actress, named Miss Kitty, sued a theatre director over the terms of a contract to
perform in his play.
➢ This play was to tour the suburbs, and then enter the west end.
➢ The terms of the agreement that had been made between the director and Miss
Kitty stated: ‘I engage you to play the part, at a west end salary, to be mutually
arranged between us’.
➢ This agreement is uncertain, what is a west end salary? The salary hadn’t been
arranged or made certain. Therefore, the contract wasn’t made.
• The court is unlikely to say that there is no contract, instead where the court can
fulfil the parties’ intentions, they will aim to do so.
• The court is not a destroyer of bargains.
• Hilas v Arcos (1932) 147 LT 503.
➢ Hillas bought some timber from the timber merchants Arcos Ltd. They purchased
22,000 units of timber, and the agreement also contained an option that they would
be able to buy up to 100,000 units the next year at a discounted rate of 5%.
➢ The next year, Arcos refused to sell them the timber at this rate and Hillas sued for
breach of contract. Arcos claimed that the agreement could not be valid because it
required further agreement in the future.
➢ There was a valid and enforceable agreement that allowed Hillas to purchase
100,000 staves of wood for at a reduced rate. This was more than a mere
‘agreement to agree’ because the only thing necessary for the agreement to be
brought into existence was for the buyers to decide to exercise their option to
purchase the wood.
➢ Whilst the price had yet to be agreed, this was only because it naturally fluctuated as
a commodity depending on market conditions.
➢ Where the issue was in the balance, as here, it was held that the court should try to
interpret the words of the agreement in such a way as to preserve the subject
matter of the agreement rather than destroying it, and contracts made between
merchants in this way should be upheld where the court can interpret the terms in
order to do so.
, • Scammell v Ousten (1941) AC 251.
➢ Ouston agreed to purchase a new motor van from Scammell but stipulated that the
purchase price should be set up on a hire-purchase basis over a period of two years,
with some of the figure being part-paid by a van that Ouston already owned.
➢ Before the hire purchase terms had been agreed, Scammell refused to proceed with
the sale and as a result of this, Ouston brought a claim for breaching the contract for
the supply of the vehicle.
➢ Scammell claimed that the hire-purchase agreement had not been implemented and
therefore neither party was bound and the agreement was void on the basis of
uncertainty.
➢ The trial judge awarded Ouston damages as it was believed that the contract had
been wrongly repudiated. Scammell appealed to the Court of Appeal who dismissed
his action. Scammell re-appealed the decision of the trial judge to the House of
Lords.
➢ 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.
➢ ‘…when the language used was so obscure and so incapable of any definite or
precise meaning that the court is unable to attribute to the parties any particular
contractual intention…the intention is to be found in the words used. If these words,
considered however broadly and untechnically and with due regard to all just
implications, fail to envince any definite meaning on which the court can safely act,
the court has no choice but to say that there is no contract. Such a position is not
often found.’ per Lord Wright.
• Schweppe v Harper (2008) EWCA Civ 442.
➢ Mr Harper was declared bankrupt, and was keen to retain possession of 3 properties
that he owned which were in the hands of the trustee in bankruptcy.
➢ Harper spoke to Mr Schweppe, who said that he could find a third party that would
be willing to pay off the creditors, and get the bankruptcy annulled.
➢ Schweppe hoped that he would be paid in return for finding the third party.
➢ Harper then announced that he didn’t want Schweppe to work on his behalf
anymore, and he then went on independently to get his own bankruptcy annulled.
➢ Schweppe sued as he said there was an oral agreement, which clearly said that he
would be paid for the services he had rendered. He alleged that £50,000 was agreed.
➢ At first instance the court held that whilst there may have been an oral agreement
between the 2, that not only would the bankruptcy be annulled, but also that
Schweppe would find and secure finance from this third party (not completed).
➢ Schweppe appealed, and the Court of Appeal dismissed his appeal. The majority of
the court agreed that there had been an oral agreement and that Schweppe had
done a great deal of work, however this wasn’t sufficiently certain to constitute a
binding, enforceable agreement.
➢ The final amount had not been agreed. The rate of interest remained unsettled, or
the length of time it would be lent for. Therefore, there was no contract.
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