that there is an operative mistake. For example, in Raffles v Wichelhaus, the parties contracted for the sale of goods to be shipped on board a vessel called Peerless which was due to sail from Bombay. In fact, there were two ships by the name of Peerless, one of which was due to sail in December and the other in October. The parties each had a different ship in mind. On these facts, it was held that there was no contract. It might not, however, take much to alter the facts of the case to reveal a situation in which the court would almost certainly find evidence of agreement on an objective basis. Suppose, for example, the contract had been one for the sale of oil, one of the ships was an oil tanker and the other was a general cargo vessel. In these circumstances, an objective understanding of the agreement would lead the reasonable man to believe that the parties had in mind the use of the oil tanker in performance of the contract. Although as a general rule, the courts will strive to keep the contract alive by seeking to resolve the ambiguity, it may not be possible to choose between the rival interpretations. In this case, the contract is likely to fail on the ground that there is no finalised agreement. In such a case, the court may be forced to apply restitutionary principles in order to determine how a particular risk of loss is to be allocated. For example, in Lind (Peter) & Co Ltd v Mersey Docks & Harbour Board, construction work had commenced under the terms of a : Where a term in a contract is meaningless or unintelligible or where the court is unable to select between a number of reasonably possible interpretations of it or where the terms of the contract require further agreement between the parties so as to allow implementation of the term, it is said that the term is uncertain. The consequence of uncertainty or vagueness is that either the

doi:10.4324/9781843141518-105

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that there is an operative mistake. For example, in Raffles v Wichelhaus, the parties contracted for the sale of goods to be shipped on board a vessel called Peerless which was due to sail from Bombay. In fact, there were two ships by the name of Peerless, one of which was due to sail in December and the other in October. The parties each had a different ship in mind. On these facts, it was held that there was no contract. It might not, however, take much to alter the facts of the case to reveal a situation in which the court would almost certainly find evidence of agreement on an objective basis. Suppose, for example, the contract had been one for the sale of oil, one of the ships was an oil tanker and the other was a general cargo vessel. In these circumstances, an objective understanding of the agreement would lead the reasonable man to believe that the parties had in mind the use of the oil tanker in performance of the contract. Although as a general rule, the courts will strive to keep the contract alive by seeking to resolve the ambiguity, it may not be possible to choose between the rival interpretations. In this case, the contract is likely to fail on the ground that there is no finalised agreement. In such a case, the court may be forced to apply restitutionary principles in order to determine how a particular risk of loss is to be allocated. For example, in Lind (Peter) & Co Ltd v Mersey Docks & Harbour Board, construction work had commenced under the terms of a

ABSTRACT

Although as a general rule, the courts will strive to keep the contract alive by seeking to resolve the ambiguity, it may not be possible to choose between the rival interpretations. In this case, the contract is likely to fail on the ground that there is no finalised agreement. In such a case, the court may be forced to apply restitutionary principles in order to determine how a particular risk of loss is to be allocated. For example, in Lind (Peter) & Co Ltd v Mersey Docks & Harbour Board,20 construction work had commenced under the terms of a letter of intent and was completed before the parties had reached any agreement on a price fixing mechanism. The main difficulty was that Lind & Co Ltd were adamant that any agreement as to price should allow for alterations in raw material costs whereas the Harbour Board insisted upon a fixed price contract. Lind & Co had submitted two tenders, one of which stipulated a fixed price and the other of which allowed for price variation. The Board had accepted ‘your tender’, but it was not clear which tender had been accepted. In the event, since neither party could agree, the court held that there was no contract on the terms of either tender, but since the construction work was complete, it was necessary to determine Lind’s entitlement to payment on the basis of a quantum meruit, taking account of the reasonable value of the work completed and the value of that work to the Board.