Uncertainty

It is common for the terms of a contract to be uncertain in some respect.

There may be terms that contradict each other, a term may be ambiguous or it may be very difficult to decide what a particular term means.

A possible consequence of an uncertain term or terms is that the terms are severed from the contract or else the whole contract is void. Hence uncertainty may be a way of getting out of a contract.

You should seek legal advice before attempting to use an uncertain term to have a contract struck out.

The law’s approach to interpretation

To avoid this result so far as possible, the law’s approach to this common problem is, firstly, to try to give the uncertain clause or clauses a sensible meaning.

This is done by applying an objective test: what would a reasonable person consider the problem clause or clauses to mean? This should be a guide to resolving a dispute over the contract’s meaning.

The objective test is a common sense test. The courts will go a long way to finding a sensible meaning because the alternative is that the contract may be void.

The consequences of uncertainty

If a term is so uncertain that it cannot be given a sensible meaning, the term is either severed from the contract or, if that is not possible, the whole contract is declared to be void.

Legally voiding a contract means it is as if it never existed.

Severance means that the problem clause or clauses are ‘blue pencilled’ from the contract and the rest of the contract operates without the severed clauses.

Whether a term or terms can be severed from the contract depends on whether the contract can operate without the clauses. If the essential purpose and expected outcome of the contract can still be achieved without the problem clauses, then they will be severed.

If severance is not possible, then, as already stated, the contract is declared to have never existed. This does not quite leave the parties in a legal vacuum because the law of restitution provides that goods or services already provided must be paid for at a reasonable market price.