LAW5002 · Principles of Contract Law A
Certainty & Completeness
Certainty & Completeness is the Week 5 formation topic in LAW5002 Principles of Contract Law A at Monash University. Even where there is agreement, consideration and intention, a bargain still fails unless it is complete (all essential terms settled) and certain (its terms can be given meaning). This guide drills the three failure modes — incompleteness and agreements to agree, uncertainty, and illusory promises — together with the rescue devices and severance the courts use to hold parties to a deal they meant to make.
What this chapter covers
- 01Why an agreement must be both complete (essential terms settled) and certain (terms clear) to be enforceable
- 02How an "agreement to agree" on an essential term is generally void for incompleteness (ANZ v Frost Holdings)
- 03How a mechanism or formula (a valuer, an arbitrator, a market rate) rescues a "to be agreed" term (Foley v Classique Coaches)
- 04The generous uncertainty threshold: void only if no meaning can be attributed (Upper Hunter, per Barwick CJ)
- 05When a clause is void for having no standard to fix it (Whitlock v Brew), and when it can be severed
- 06What makes a promise illusory (performance left to unfettered discretion — Placer Development) and how a reasonable/good-faith standard saves it (Meehan v Jones)
- 07When an agreement to negotiate in good faith is enforceable (United Group Rail Services)
- 08How to structure a certainty answer in IRAC: label the failure mode, name the rescue, then conclude
"Price to be agreed" vs a formula: is the supply deal binding?
- +1Issue. Under each version, is the price term complete and certain, or is the agreement void for incompleteness because price (an essential term) is left "to be agreed"?
- +2Rule. An agreement to agree an essential term in the future is generally void for incompleteness (ANZ v Frost Holdings) — a court will not fix the price for the parties. But the term is saved where the contract supplies an objective mechanism or formula that fixes it without further agreement (Foley v Classique Coaches; the generous Upper Hunter approach), or, for a sale of goods with no price fixed, where the Goods Act 1958 (Vic) s 13 implies a reasonable price.
- +2Application — Version A. Each vintage's price is left to future negotiation that may fail, with no mechanism to fix it: a classic agreement to agree, void for incompleteness (ANZ v Frost Holdings). Counter-argument: could Goods Act s 13 supply a reasonable price? Likely not — by expressly leaving price "to be agreed" the parties showed they intended no contract until they agreed, so the statutory default does not apply.
- +2Application — Version B. The price is fixed by a published market figure and, on dispute, by an independent valuer — an objective mechanism that fixes the price without further agreement. The term is certain and enforceable (Foley v Classique Coaches; Upper Hunter).
- +1Conclusion. Version A is void for incompleteness (an agreement to agree with no mechanism); Version B is binding because the formula and valuer fix the price objectively. The single drafting difference — a machine to fix the term — decides the case.
Key terms
- Completeness
- The requirement that the parties have settled all the essential terms of the bargain (commonly price, parties, subject matter and time). Leaving an essential term "to be agreed" is generally no contract at all (ANZ v Frost Holdings).
- Agreement to agree
- A promise to settle an essential term by future negotiation. Generally void for incompleteness because there is no concluded bargain yet, unless a mechanism or formula fixes the term.
- Certainty
- The requirement that the terms are clear enough that a court can give them meaning. A term is void for uncertainty only where no meaning at all can be attributed to it (Upper Hunter, per Barwick CJ); mere difficulty of interpretation is not uncertainty.
- Illusory promise
- A promise whose performance is left to the unfettered discretion of the promisor, so there is no real commitment to enforce (Placer Development v Commonwealth). It may be saved if the court can imply an objective reasonable or good-faith standard (Meehan v Jones).
- Mechanism / formula
- An objective device in the contract — an independent valuer, an arbitrator, a published market rate — that fixes an otherwise open term without further agreement, turning a "to be agreed" term into a certain one (Foley v Classique Coaches).
- Severance
- Cutting a non-essential uncertain or void term out of the contract so the rest remains enforceable (Whitlock v Brew). Severance cannot save an agreement whose core term is the defective part.
- Agreement to negotiate in good faith
- A promise to negotiate genuinely (not to reach a particular outcome). Unlike a bare agreement to agree, it can be enforceable if its content and standard are sufficiently certain (United Group Rail Services v Rail Corporation NSW).
- Goods Act 1958 (Vic) s 13
- For a sale of goods where no price is fixed by the contract, a reasonable price is implied by statute. Note the limit: where the parties expressly left price "to be agreed", a court may find they intended no contract until agreement, so the default may not rescue them.
Certainty & Completeness FAQ
Is a contract void just because a term is left "to be agreed"?
Not always. A bare agreement to agree on an essential term is generally void for incompleteness (ANZ v Frost Holdings), because the court will not write the term for the parties. But if the contract supplies an objective mechanism or formula — an independent valuer, an arbitrator, or a market rate — that fixes the term without further agreement, it is certain and enforceable (Foley v Classique Coaches). Always look for a machine that fixes the open term before concluding the deal has failed.
What is the difference between an uncertain term and an illusory promise?
An uncertain term is one a court cannot give meaning to at all (Upper Hunter; contrast Whitlock v Brew, where there was no standard to fix the term). An illusory promise is different: its meaning may be clear, but performance is left to one party's unfettered discretion, so there is nothing to enforce (Placer Development). An illusory promise can sometimes be saved by implying a reasonable or good-faith standard (Meehan v Jones).
Can AI help me with Certainty & Completeness in LAW5002?
It can help you learn the topic, not do your assessment for you. An AI tutor like Sia can explain the difference between incompleteness, uncertainty and illusory promises step by step, quiz you on the leading cases (ANZ v Frost Holdings, Upper Hunter, Whitlock v Brew, Placer Development, Meehan v Jones), and walk you through practising an IRAC structure on sample "subject to" clauses. It will not write your assignment or exam answers or promise any grade — and note the LAW5002 exam is sat under conditions that do not permit generative AI, so build the skill yourself. Always confirm the current rules and format on Moodle.
Studying with AI? Sia — free AI law tutor works through LAW5002 step by step.
Exam move
Certainty rarely fills a whole exam question; it usually surfaces as a "subject to" or "to be agreed" clause buried inside a larger formation problem, so train yourself to spot the defective term fast. For each such clause, run a three-step drill: (1) name the failure mode — incompleteness, uncertainty or illusory promise; (2) ask whether a rescue applies — a mechanism or formula (Foley v Classique Coaches), an implied reasonable or good-faith standard (Meehan v Jones), or severance of a non-essential term (Whitlock v Brew); (3) conclude both ways in IRAC, naming a case at every step. Remember the court leans towards upholding a bargain, so the generous Upper Hunter threshold means you should try to save the clause before striking it down. On the most recent past paper the exam ran 2.5 hours for 60 marks (roughly 2 minutes per mark), so budget only a few minutes to a certainty clause worth a handful of marks — label the defect, name the rescue, and move on. Confirm the current duration and format on Moodle.
