Masters v Cameron - certainty and completeness, important aspect of contract law PDF

Preview

Summary

certainty and completeness, important aspect of contract law...

Description

Masters v Cameron Requirement of Certainty and Completeness Enforcement of Informal Agreements Objective Test to find true intention of parties Name of Case

Masters v Cameron

Citation and Court

Masters v Cameron (1954) 91 CLR 353 High Court of Australia

Material Facts

Parties signed memorandum for dale of Cameron’s farm to Masters. Memorandum stated that ‘this agreement is made subject to the preparation of a formal contract of sale which shall be acceptable to [Cameron’s] solicitors on the above terms and conditions. On the same day, Masters paid a deposit to Cameron’s real estate agent. Later Masters refused to complete the transaction and claimed he was entitled to a refund of the deposit paid to the agent. Cameron claimed that the memorandum created a binding and enforceable contract, even though no formal written contract was ever entered into between the parties.

Legal Issue

Whether the memorandum created a binding and enforceable contract.

Relevant Law

3 instances – first 2 there is a binding contract 1. Parties immediately intend to be bound 2. Parties have completely agreed on the terms and intend no departure from or addition to their agreed terms (express or implied) but have made performance of the one or more of the terms conditional upon the execution of a formal document 3. Intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract. This case is the 3rd instance – where the terms of agreement are not intended to have and therefore, do not have, any binding effect on their own – Governor etc of the Poor of Kingston-upon-Hull v Petch

Application of Law to the Facts

As the memorandum stipulated that the agreement is made ‘subject to the preparation of a formal contract’, this indicates that the parties did not intend to be bound to their terms unless and until they execute a formal contract. The natural meaning for ‘subject to contract’ or what was stated in the memorandum prima facie creates and overriding condition for the agreement to be on the intended basis for a future contract.

Conclusion

The memorandum did not create a binding and enforceable contract because the parties never executed the formal contract that the memorandum mentioned. Held in favour of Masters....