Certainty in Contract Law: Issues and Implications

The video discusses the repercussions associated with problems of completeness, certainty, or illusoriness in contractual agreements.
It is critical to consider the consequences if an agreement is deemed incomplete or contains uncertain or illusory terms.

If an agreement is found to be incomplete, the entire agreement may fail.
- Example: The case of ANZ and Frost illustrates that the concept of incompleteness leads to the failure of the agreement.

The consequences of an uncertain or illusory term may manifest in various ways:
- Entire Contract Failure: The whole agreement fails, similar to Whitlock and Brew.
- Severability: The ineffective term may be severed from the rest of the agreement, allowing the contract to remain valid.
- Waiver of Rights: The party, for whose benefit an ineffective term was stipulated, can choose to waive their rights under that term.
- Example: A finance clause benefiting a purchaser may be thought of as uncertain or illusory; they can opt to waive the rights under it.

In instances of uncertain or illusory clauses, determining whether the clause can be severed or if the entire contract fails becomes crucial.
The High Court authority from Whitlock and Brew provides a framework for assessing severability:
- Case Reference: The contract for sale of land was subject to an uncertain lease to Shell.
- Court Decision: The court ruled that the lease provision was integral to the contract and could not be severed.
- Key Legal Test: The court examined whether the parties intended for the contract to function without the problematic clause, concluding they would not have wished for the land to be sold without the leaseback provision.

A significant aspect related to certainty is the parole evidence rule:
- Defined as a principle stating that if a contract is entirely written, interpretation must adhere strictly to the text.
- It emphasizes that external communications between parties cannot influence the interpretation of terms.
However, when assessing whether a clause is certain, or deciding on severability or contract failure, the parole evidence rule does not apply:
- Surrounding Circumstances: Evidence and contexts both prior and subsequent to contract formation can be considered in determining the clarity of terms.

The topic of certainty is vital in contract law, with various potential outcomes based on agreement conditions and clause effectiveness.
Additional insights are provided in a slide summarizing essential learning points, which students should review independently for further understanding.

The video offers guidance on certain signs that indicate a need for deliberation on certainty issues in hypothetical scenarios:
- These situations should prompt a discussion regarding the ascertainability of terms and consideration of the relevant case law associated with them.

Students are encouraged to familiarize themselves with these potential issues and attempt to correlate specific examples with relevant case law previously studied.