The Law of Contract: Study Unit 8
Private Law 372: 2021
Table of Contents
8 CERTAINTY OF PERFORMANCE........................................................................................2
8.1 GENERAL RULE.................................................................................................................................... 2
8.2 APPLICATION OF RULE........................................................................................................................... 3
8.3 CONSEQUENCES OF UNCERTAINTY......................................................................................................... 16
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,8 CERTAINTY OF PERFORMANCE
8.1 General rule
This is our 2nd last requirement for a valid contract = certainty of performance.
POD: Performance must be certain/ ascertainable
o Basis for rule:
Uncertainty about what has to be performed prevents the creation of
obligations ‘Why does it matter from a practical perspective that the
content of an obligation is uncertain if the parties can explain the meaning
afterwards? While nothing prevents the parties from supplementing or
varying their agreement to facilitate its implementation, the parties to the
negotiations may no longer be around to provide explanations, or the
rights under the contract may have been ceded to third parties. This can
make it impossible for a court to know what obligations must be enforced.
It is not the task of the courts to create obligations, although they do, of
course, have some power to interpret the contract – so that it is effective,
rather than invalid - & to read tacit terms into the agreement on the basis
of the actual or presumed intention of the parties.’
Idea is that, for obligations to be enforceable/ to have practical
effects, they must be clear/ certain or capable of being rendered
clear/ certain.
Relationship of certainty with other requirements:
o Consensus (offer & acceptance, mistake?)
In terms of offer & acceptance
There were various requirements for a valid offer & acceptance. It
was sometimes said that the offer or acceptance has to be certain.
Some textbooks deal with certainty only in the context of
consensus.
So, there is a bit of an overlap, because to say that the contract
must be certain, that the offer & acceptance must be certain, can
often mean the exact same thing.
In terms of mistake
What about a mutual mistake as opposed to a common mistake?
Parties are at cross purposes (they think different things)
Could be the result of ambiguity (use a particular word which means
something different to both of them) – could say that this is a
situation of a mutual mistake but could also be a situation of
uncertainty.
Counterpoint: Is there really a need for certainty to be treated as a
separate requirement for contractual validity?
‘…Can there be a meeting of the minds, if that which the parties are
supposed to perform is not certain? Traditionally, South African
textbooks regard certainty as a separate requirement, although
they somewhat paradoxically also simultaneously require that the
content of an offer must be certain in order to establish consensus
through acceptance… It is quite possible that the parties may
subjectively be in agreement on what has to be performed, but that
the contract would still be void due to uncertainty. For example,
even though the parties may be in full agreement that the one
should pay the other a reasonable purchase price, such a term is
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, legally invalid due to uncertainty. It must be conceded, though, that
if certainty is regarded as a requirement separate from consensus,
it can at times be difficult to determine whether the invalidity arises
because of non-compliance with the certainty requirement or
because of lack of consensus. For eg. if the parties leave blank
spaces in a standard contract, is the contract void because they
have not reached consensus on a material aspect, or is it void
because it is not certain what has to be performed?’
o Formalities
Remember, some contracts have to be in writing as required by
statute or by virtue of the fact that the parties themselves have imposed
formalities.
Link this to the above. For eg., if there are blank spaces in the contract,
you may have to introduce further evidence to explain the blank spaces.
Could say that this is a situation of uncertainty, but you may be able to
resolve this uncertainty.
Remember, Johnston v Leal (theme 6): blank spaces. Court said there
are various reasons as to why there could be blank spaces. For eg. it could
be that those blank spaces have nothing to do with the contract, they are
part of a standard wording, but that particular clause is irrelevant. Doesn’t
mean the contract is void for uncertainty. Why? Because the blank spaces
actually have nothing to do with the contract.
*If you get a test question relating to certainty don’t compartmentalise things!
Remember that sometimes there isn’t only 1 possible requirement which is applicable.
8.2 Application of rule
How much uncertainty are we willing to accept?
o Can be difficult to determine whether a contract is void due to uncertainty
because sometimes the uncertainty relates to the terms of the contract itself, &
sometimes to the application of a standard/ mechanism set out in the contract
that should be used to determine what has to be performed.
Problem cases in terms of application:
I. Agreement aimed at concluding further agreement:
Contract to enter into a further contract = pactum de contrahendo – can
be invalid due to uncertainty
Thus, if the parties’ consensus is only provisional & subject to
further variation, depending on further negotiations, or the further
advice of a party’s attorney, the content of the contract is too
uncertain to give rise to obligations.
But it is possible to enter into a valid pactum de contrahendo.
Examples of valid pacta de contrahendo:
a) Option & the contract of preference
o Remember: we don’t know whether a future contract is going
to be concluded. We just know that the parties have an
agreement that the main offer must be kept open (an
option).
But it is uncertain whether or not the agreement is
going to be concluded. What is necessary to conclude
the agreement in the end? Acceptance of the main
offer. So, the position isn’t really uncertain.
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