UNIT 2

Vagueness
3.2.1 Objectives

At the end of this unit you should be able to:

Identify and give examples of vague contractual terms;

Explain methods by which the courts may make vague contractual terms
certain; and

Understand when the courts will find that a vague contractual term does not
effect the validity of the contract.

3.2.2 Reading

Prescribed Reading:

Corrin Care pp 51-53

Poole pp64-77

Prescribed Cases:

Scammell & Nephew Ltd v Ouston [1941] AC 251 (HL), Poole 64

Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503 (HL) Poole 65

Nicolene Ltd v Simmonds [1953] 1 All ER 822 (CA) Poole 67

Further Reading:

Furmston pp44 - 47

3.2.3 What is Vagueness?

An agreement may be so vague that no definite meaning can be given to it without

adding new terms. For example, in Scammell & Nephew Ltd v Ouston [1941] AC 251
(HL), Poole 64 the House of Lords held that an agreement to buy goods on hire
purchase was too vague to be enforced. This was because there were many kinds of
hire-purchase agreements in widely different terms, so that it was impossible to say on
which terms the parties intended to contract.
However, the courts do not expect agreements to be strictly precise, and will always try
to avoid striking the agreement down on the ground that it is too vague. The following
material in this unit examines methods by which the courts may render vague
contractual terms certain.

3.2.4 Custom and Trade Usage

Apparent vagueness may be resolved if the courts construe that the parties intended to
enter into a final agreement and resolve the vague term by trade custom.

Example

Two parties entered into a contract to load coal at a coal mine called Grimsby. The
contract stated that the terms of the contract were to be the same as a usual coal
loading contract. The court upheld the contract on proof of the terms usually contained
in such contracts at Grimsby.i[i]

Example

It has also been held that an undertaking to grant a lease of a shop in prime position
was not too uncertain. This was because the phrase was commonly used by persons
dealing with shop property, so that its meaning could be determined by expert
evidence.ii[ii]

Thus, in these examples the courts have decided that the parties intentions were to
form a final binding agreement and to have the remaining terms determined by way of
trade practice.

3.2.5 Reasonableness

Furthermore, apparent vagueness will be resolved if the courts decide that the parties
intended to enter into a final agreement and intended the vague term to be resolved by
a reasonable standard.

For example, in Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503 (HL) Poole 65 an
agreement for the sale of timber of fair specification was made between persons well
acquainted with the timber trade. The agreement was upheld as the court held that a
standard of reasonableness could be applied to make the otherwise vague phrase
certain.
 ?Why was the term in Hillas v Arcos Ltd able to be made clear by using a
reasonable standard while this could not be done in Scammell v Ouston?

ANSWER

3.2.6 Meaningless Phrases

The courts may also resolve problems of vagueness if it is determined that the parties
intended to enter into a final agreement and that the vague term is meaningless. A term
will be meaningless if it can be deleted and still leave a perfectly workable agreement.

This occurred in Nicolene Ltd v Simmonds [1953] 1 All ER 822 (CA) Poole 67, where
the contract contained the statement we are in agreement that the usual conditions of
acceptance apply. Since there were no usual conditions it was held that this was
simply a meaningless phrase, which could be ignored.
i

ii