Uncertain Agreement: Section 29 of the Indian Contract Act, 1872

An agreement is void under Section 29 of the Indian Contract Act of 1872 when its contents are ambiguous and uncertain and hence cannot be clarified. For example, suppose X agrees to exchange a tonne of oil. This agreement is unenforceable due to uncertainty since the intended categorization cannot be ascertained.

Section 29 describes the meaning of an agreement that, as explained in the case Kovuru Kalappa Devara vs. Kumar Krishna Mitter, should be apparent on the surface, but the impact can be offered to the contract if its application is established with acceptable clarity. If this is not practicable, the contract will be unenforceable. A little misunderstanding will not be considered vague.

Uncertain Agreement (Section 29)

"Agreements whose meaning is not certain or capable of being determined are invalid" (Sec. 29). Section 29 of Indian Contract Act strives to ensure that contract parties are informed of the precise nature and scope of their natural rights and responsibilities under the contract. As a result, if the parties' terms are imprecise or indeterminate, the law cannot enforce the agreement.

Conditions of Uncertain Agreements

Following are the major conditions for uncertain agreements −

Requirement for Certainty

To be regarded as not void and uncertain, an agreement's terms and conditions must be explicit; otherwise, it is a void agreement.

For example, Mr. A makes an offer to Mr. B to buy his watch but does not specify how much or when he should respond. As a result of the terms' ambiguity, the contract would be ruled doubtful and invalid.

Concluded Contracts

Contracts that have been concluded are those that both parties have agreed to execute on specific terms. As a result, these are valid and are not void by default.

Taking the preceding example further, if the unclear conditions, such as the quantity of watch and time of acceptance, are mentioned, even if not in the customary manner, the contract is concluded and not invalid.

Capable of Being Made Certain

If an uncertain agreement has the potential to be made certain, or if it can be made certain via appropriate interpretation and some changes, it cannot be considered void.

• This criterion applies to oral agreements between the parties.

• Multiple interpretations: If an agreement has multiple interpretations, it will not be considered void unless and until the fundamental part of the contract is missing. For example, Mr. A and Mr. B agree to sell his motorcycle for Rs. 3 lakhs by the second week of October. The date is not given here, but it is very close and may be changed by making minor changes. As a result, the contract cannot be regarded as null and invalid.

• Future concern: If there is a chance that an agreement may be made definite by resolving some issues in the future, it is not a void agreement. For example, Mr. A approaches Mr. B about selling him markers from the XYZ firm, the price of which has not yet been determined but will be shortly. In this case, pricing uncertainty will not result in an uncertain and worthless agreement.

• Commercial Agreements: Commercial contracts differ in that there are norms of commercial conventions and trade usage that may use a distinct language, but difficulties in interpreting the wording do not render it void. For example, every sector of labour has its own jargon, such as penalties in legal terminology, which imply something different than in everyday English.

Resolving Uncertainty

If an ambiguity in an agreement can be addressed without changing the primary principle of the agreement, it is not considered void.

For example, the parcel delivery was scheduled for four o'clock. However, it is not specified whether the time is 4 a.m. or 4 p.m. The agreement can still be respected because this is a minor ambiguity that can be rectified.

Implied Terms

If some terms are not explicitly stated (because they are inferred and not expressed) but have the potential to be binding, they are nevertheless legally enforceable.

Implying terms are very important for the smooth functioning of business transactions, and for their efficiency, Indian courts interpret and consider implying terms.

For example, Mr. A used the bus to go to point X. As a result, he is obligated to pay for the ticket.

Customs and Trade Usage

According to the Indian Evidence Act, if the contract is vague and may refer to custom and trade usage in that particular sector, it would not be considered void.

In the case of Ashburn Anstalt versus Arnold, there existed an agreement to lease a shop in a prime position, but because the word "prime location" is highly ambiguous and imprecise yet may be judged by an expert in that field, the agreement was not unlawful.

Previous Course of Dealing

Previous conduct between the parties becomes an acceptable starting point for establishing future behavior between the same parties under the same terms and conditions.

In the case of Lani Mia against Muhammad Easin Mia (1915), the lease renewal was challenged since the existing covenant did not define the lease terms (e.g., time duration, rent, etc.). In the absence of such stipulations, the time period and rent are assumed to be the same as in the original lease and are not deemed void.

Reasonability Agreement

If both parties intend to trade, whether to purchase or sell, but the price is not established, then a reasonable amount must be paid.

For example, Mr. A went to buy a pen, but the shopkeeper refused to tell him how much it cost. As a result, Mr. A can afford to pay up to Rs. 5 for a pen.

Execution of Performance

Whether one of the parties has completed the agreement totally or partially, i.e., whether any party to the contract has complied with the conditions of the contract, The fact that it is being carried out concludes that the agreement is binding and therefore neither void nor uncertain.

For example, Mr. A has agreed to bring rice to Mr. B once a month for the next 10 months. So, even if Mr. A just delivers it once to Mr. B, the entire contract will be binding on Mr. B because it has been partially completed.

Ascertainment Machinery

A contract is not considered vague if it includes machinery for determining a term.

The option offered to the beneficiaries of the will to acquire the farm on which they were dwelling at a reasonable valuation was enforceable by law in the case of Talbot versus Talbot.

The Severity of Uncertainty

If the main section of the agreement is not vague but the subsidiary component is, the court will disregard the subsidiary term's vagueness and uphold the agreement.

For example, Mr. A requests that Mr. B give him a bag of rice by Tuesday using XYZ courier service; however, Mr. B sends it via ABC courier service, and it arrives on time. Even if Mr. B did not follow Mr. A's requirements, the purpose has been met, and the court will not examine the subsidiary term.

When Agreements are Held Certain

If there is only an absence of minute (small, tiny) information in an agreement, it is not considered void.

In the case of Mithu Khan versus Pipariyawali and Ors (1984), there existed a land sale agreement containing the name of the land but no survey number. It was not regarded as a void agreement due to doubt because it was a minor piece of information that was lacking and was not an important part.

When Agreements are Uncertain and Vague

In contrast to what we have seen in agreements held certain, the simple mention of information without any proof or precise facts would be ruled void in agreements regarded as uncertain and vague.

In Carter versus Agra Savings Bank Ltd., a document was issued in the bank's favor, stating that the bank would be paid a particular amount on or before a certain date, and that the same amount would be paid for some future months as well. This paper is not a promissory note because the time period for which the payment will be made and the total amount are not specified.

Conclusion

Agreements whose meaning is uncertain or incapable of being determined are null and void. An agreement might be ambiguous because it contains vague or imprecise language, or it can be incomplete. The general rule is that if the terms of an agreement are ambiguous or indeterminate, and cannot be identified with reasonable confidence as to the parties' purpose, the law will not enforce the contract.

FAQs

Q1. What is uncertain agreement in the law of contract?

Ans. Agreements whose meaning is not certain or capable of being determined are null and void.

Q2. What are ambiguous and uncertain agreements?

Ans. An agreement might be ambiguous because it contains unclear or imprecise language, or it can be incomplete. The general rule is that if the terms of an agreement are ambiguous or indefinite, and cannot be determined with reasonable confidence as to the parties' purpose, the law will not enforce the contract.

Q3. Which contract is based on uncertain events?

Ans. This is a contingent contract. 32. Contracts to do or not do anything if an unpredictable future event occurs cannot be enforced by law until and unless such an event occurs. Such contracts become null and invalid if the occurrence becomes impossible.