LAWS6991 Chap.5 Certainty, Completeness and Illusory Promises
Certainty, Completeness and Illusory Promises
Certainty asks whether a court can enforce what the parties agreed. A contract must be sufficiently certain, complete and non-illusory. Upper Hunter shows a term capable of a meaning will be construed, while Whitlock v Brew and Hall v Busst show missing essential terms are fatal unless a mechanism exists, as in Godecke v Kirwan.
Coal Cliff tests agreements to negotiate, Placer and Biotechnology v Pace illusory promises, and Meehan v Jones subject to finance clauses. Severance can rescue a contract when the uncertain clause is only an appendage.
What this chapter covers
- 01
Certainty in the broad sense
- 02
Uncertain terms and construction
- 03
Essential terms and incompleteness
- 04
Third party mechanisms
- 05
Agreements to negotiate in good faith
- 06
Illusory promises
- 07
Subject to finance clauses
- 08
Severance and waiver
Worked example · free
A supply contract with a price left open
- 1Price is an essential term; a bare agreement to agree on it would leave the contract incomplete.
- 1Here the parties supplied a mechanism: an independent expert fixes the price if they cannot agree.
- 1Godecke v Kirwan accepts that essential terms may be left to a third party, as long as they are not left to one party alone; Upper Hunter also relied on an external decision-maker.
- 1Because the mechanism is objective and external, the contract is sufficiently complete and the mill's argument should fail.
Key terms
- Uncertainty
- The state of a term that has no ascertainable meaning, as opposed to one that merely needs construction.
- Essential term
- A term without which the bargain cannot operate, such as parties, subject matter and price in a land sale.
- Illusory promise
- A promise that leaves the promisor an unfettered discretion whether to perform, so nothing is really promised.
- Severance
- Removing a meaningless or uncertain clause so the rest of the contract can operate as the parties intended.
- Subject to finance clause
- A condition making a purchase depend on the buyer obtaining finance, which the buyer must pursue honestly.
Certainty, Completeness and Illusory Promises FAQ
Does a term that could mean two things make the contract void?
No. Barwick CJ in Upper Hunter said a term capable of more than one meaning is not void; it bears whatever meaning a court or arbitrator decides is its proper construction. Only absence of meaning is fatal.
Why did the contract fail in Whitlock v Brew?
A lease was to be granted on reasonable terms commonly governing such leases, but no evidence showed any standard set of such terms. With rent and duration unknown, there was no agreement on essential terms, and severing the clause would have changed the bargain.
Can parties leave a term to be settled later?
They can leave it to a third party or an agreed mechanism, as Godecke v Kirwan allowed. An essential term cannot be left for one party alone to decide, or simply left for later agreement.
Is a promise to negotiate in good faith enforceable?
The majority in Coal Cliff Collieries accepted it can be, where a court has an objective way to judge good faith. The heads of agreement there failed because no arbitrator or other mechanism existed, and Handley JA thought such promises are necessarily illusory.
Why was the subject to finance clause valid in Meehan v Jones?
The High Court held the clause did not give the purchaser unfettered discretion. Judges differed on why, with some requiring only honesty from the purchaser and Mason J suggesting honesty, possibly with reasonableness, in the search for finance.
When can a court sever an uncertain clause?
When the clause is a mere appendage and the contract can operate without it, as in Fitzgerald v Masters. Severance is not possible where the parties intended to be bound only if that clause worked.
Exam move
Memorise the three-part certainty question and the order of rescue: construction first, then a mechanism, then severance or waiver. For each category, keep one case where the agreement survived and one where it failed, and practise explaining the difference in a single sentence. Read finance and approval clauses closely for who decides and by what standard.
When revising, take a real-world contract clause and test it against each limb. Ask Sia to give you short clauses to classify as uncertain, incomplete or illusory, and check your reasoning.
Working through Certainty, Completeness and Illusory Promises in LAWS6991? Sia is AskSia’s AI Law tutor — ask any LAWS6991 Certainty, Completeness and Illusory Promises question and get a clear, step-by-step explanation grounded in how LAWS6991 is taught and assessed. Read this chapter free, then take your hardest questions to Sia.
