An Output Contract Is Too Vague To Be A Legally-Enforceable Agreement

April 8, 2021

It is ironic that, if an essential clause is totally omitted, the contract may well be enforceable, if it appears that the parties intend to enter into a contract. However, if the same authentic clause is agreed, the contract fails. The reason is simply that if a material term is omitted, a court might be able to fulfill the missing term by deriding what the parties intended to do. However, an agreement cannot be reached by the Tribunal on which the parties have agreed. For example, at Scammell v Ouston (1941), the parties had agreed to deliver a truck under “rental-sale” conditions. The House of Lords found that, in the absence of further evidence regarding the details of the tenancy agreement, this was too vague to be enforceable and therefore there was no contract. An oral contract that can be enforceable is a contract in which social agreements would imply the binding nature of the parties and in which the details of the exchange are concrete. An example of a binding verbal agreement could therefore include a telephone order for pizza delivery at a specified price. Non-limitation issues also arise when the parties enter into a verbal agreement with the intention that the agreement will be written, but it is never.

According to U.C.C 2-305, a price agreement does not invalidate a contract as long as the court has determined that the parties intend to enter into the contract. If the court decides to do so, the court, at the time of delivery, will determine a reasonable price such as the price the parties would have set. See Drees Farming Association v. Thompson, 246 N.W.2d 883 (N.D. 1976). The two most common terms that are excluded from the contracts are the price and timing of the service. In some cases, the parties do not negotiate specific contractual terms, but they do define a method for fulfilling the omitted conditions. If the method used to determine the omitted conditions is an objective standard, the contract is applicable. For example, if the color could be implied (for example, if Michelangelo lives in an area where zonalment laws require all houses to be painted blue), then the contract will be applicable.

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