As per section 29 of the Indian Contract Act, 1872, “agreements, the meaning of which is not certain, or capable of being made certain, are void”.
In simpler words, agreements whose meaning or terms are unclear and vague are void.
For example, Mr A approaches Mr B to buy a car from XYZ company, but he does not disclose what features he wants in his car. So, due to the uncertainty of terms, the agreement would be considered uncertain and hence void.
In this Contract Act law note, you will read about some conditions related to uncertain agreements. Such conditions are used as a factor to decide whether the agreement is uncertain or not.
Conditions of Uncertain Agreements
Some conditions which decide whether the agreement is uncertain and void or not are as follows:
- Requirement for Certainty
- Concluded Contracts
- Capable of Being Made Certain
- Resolving Uncertainty
- Implied Terms
- Custom and Trade Usage
- Previous Course of Dealing
- Reasonableness of Agreement
- Execution of Performance
- Machinery for Ascertainment
- The Severity of Uncertainty
- When Agreements Are Held Certain
- When Agreements Are Held Uncertain and Vague
Let us learn about these terms in detail with simple examples or case laws.
1. Requirement for Certainty
For an agreement to be considered as not void and uncertain, its terms and conditions should be clear; if not, it would amount to a void agreement.
For example, Mr A makes an offer to Mr B to buy his watch but does not specify the amount and by when he should revert to his proposal. So, here due to the uncertainty of the terms, the contract would be declared uncertain and void.
2. Concluded Contracts
The concluded contracts are contracts that are agreed upon to execute with specific terms by both parties. So, by default, these are valid and not void agreements.
For example, taking the above example into furtherance, if the uncertain terms like the amount of watch and time of acceptance would be specified, though it may not be in any usual manner, the contract would be concluded and not void.
3. Capable of Being Made Certain
If an uncertain agreement has the potential to be made certain or by proper interpretation and by making some changes, it can be made certain, then it cannot be considered void.
- Oral agreements between the parties come under the ambit of this condition.
- Numerous meanings: If an agreement has multiple meanings coming out of it, it will not amount to an agreement to be considered void unless and until the essential ingredient of the contract is missing. For example, Mr A enters into contract with Mr B to sell his bike for Rs. 3 lakhs before the second week of October. Here the date is not certain, but it is minute and can be specified by making minor changes. Hence, the contract cannot be considered void and uncertain.
- Future concern: If there is a possibility of an agreement being made certain by fixing some concerns in the future, it will not amount to a void agreement. For example, Mr A approaches Mr B to sell him markers from XYZ company, whose price is not fixed yet, but it will be done soon. Here, the price uncertainty will not amount to an uncertain and void agreement.
- Commercial Agreements: Cases of commercial contracts are different as there are standards of commercial customs and trade usage which might have a different language, but difficulty in interpretation of language does not hold it void. For example, all fields of work have their jargons, like sanctions in legal language means different from normal English.
4. Resolving Uncertainty
If an ambiguity present in an agreement could be resolved without modifying the main principle of an agreement, then it will not be considered void.
For example, the delivery of the parcel was fixed to be done at four o’clock. But whether 4 AM or PM is not defined. Since this is a minute ambiguity and can be resolved, the agreement can still be upheld.
5. Implied Terms
If certain terms are not specifically laid down (because they are implied and not expressed) but have the potential to be binding, they will still be enforceable by law.
Implying terms is especially applicable for the smooth functioning of business transactions and for their efficiency, the Indian courts also interpret and take implying terms into consideration.
For example, Mr A has taken a bus to reach a point X. So, here, it is impliedly binding on him to pay for the ticket.
6. Custom and Trade Usage
According to the Indian Evidence Act, if there is a vagueness in the contract and if it can refer to custom and trade usage of that particular field, then it will not be considered void.
In the case of Ashburn Anstalt vs Arnold, there was an agreement to lease a shop in a prime location, but since the phrase “prime location” is itself very vague and uncertain but can be determined by an expert in that field, it will not be a void agreement.
7. Previous Course of Dealing
Previous conduct between the parties becomes a valid point for the establishment of future conduct between the same parties with the same terms and conditions.
In the case of Lani Mia vs Muhammad Easin Mia (1915), the renewal of the lease, where the established covenant did not specify the terms of the lease (e.g., time duration, rent, etc.). In the absence of such specifications, time duration and rent are presumed to be the same as the original lease and are not considered void.
8. Reasonableness of Agreement
If there is the intention of both parties to transact, whether to buy or sell, but the price is not fixed, then a reasonable amount is to be paid.
For example, Mr A went to buy a pen, but the shopkeeper did not tell its price. So, Mr A can pay a reasonable amount of up to Rs. 5 for a pen.
9. Execution of Performance
Whether the agreement is entirely or partially performed by one of the parties, i.e. if any party of the contract has complied as per the terms of the contract. The fact of its performance being executed itself concludes that the agreement is binding and hence neither void nor uncertain.
For example, Mr A has an agreement to deliver rice every month to Mr B for ten consecutive months. So, if Mr A delivers it even for once to Mr B, the whole contract would be binding on Mr B, as it has been executed partially.
10. Machinery for Ascertainment
A contract is not held vague if it provides machinery for ascertaining a term.
In the case of Talbot vs Talbot, the option was given to the beneficiaries of the will to purchase the farm in which they were residing at a reasonable valuation, was enforceable by law.
11. The Severity of Uncertainty
If the main part of the agreement is not vague, but the subsidiary part is, then the court will not consider the vagueness of the subsidiary term and will uphold the agreement.
For example, Mr A asks Mr B to send him a bag of rice by Tuesday via XYZ courier service, but Mr B sends it via ABC courier service, and it reaches Mr A on time. Even though Mr B did not adhere to the terms of Mr A, the purpose is fulfilled, and the court will not take the subsidiary term into consideration.
12. When Agreements Are Held Certain
If, in an agreement, there is a mere absence of the minute (small, tiny) information, then it would not be held as void.
In the case of Mithu Khan vs Pipariyawali And Ors (1984), there was an agreement for the sale of land with the name of the land but without a survey number. Since it is a small piece of information that was missing and not an essential ingredient, it was not considered a void agreement due to uncertainty.
13. When Agreements Are Held Uncertain and Vague
In contrast to what we have seen in agreement held certain, in agreement held uncertain and vague, the mere mentioning of information without any proof or specific data would be considered void.
In the case of Carter vs Agra Saving Bank Ltd., a document was issued in favour of the bank, mentioning that the bank would be paid a specified amount on or before a certain date, and the same amount would be paid for some upcoming months as well in the future. This document cannot be considered a promissory note as the time duration for how long the amount will be paid and the total amount is not determined.
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