Case: Australian (sic) and New Zealand Banking Group Ltd. v Frost Holdings Pty Ltd. (1989) VR 695
Outcome: cited
The relevant principles in relation to the formation of a contract are conveniently summarised by Kaye J in his leading judgment in Australian (sic) and New Zealand Banking Group Ltd. v Frost Holdings Pty Ltd. (1989) VR 695 at 700-701 as follows: ' "It is a first principle of the law of contracts that there can be no binding and enforceable obligation unless the terms of the bargain, or at least its essential or critical terms, have been agreed upon. So, there is no concluded contract where an essential or critical term is expressly left to be settled by future agreement of the parties"; per Sugarman J. (sic) in the Full Court of the Supreme Court of New South Wales, quoted on appeal with approval by Menzies J. in Thorby v. Goldberg [1964] HCA 41 ; (1964) 112 C.L.R. 597, at p.607. See also May and Butcher Ltd v. R. (H.L.) [1934] 2 K.B. 17, at p.20, per Lord Buckmaster and, at p.22, per Lord Warrington. An agreement by a term of which a relevant or critical term will be the subject of future agreement between the parties is not enforceable. This general principle of the law of contract was stated by Viscount Dunedin in May and Butcher Ltd. v. R. , at p.21 in the following passage: "To be a good contract there must be a concluded bargain, and a concluded contract is one which settles everything that is necessary to be settled and leaves nothing to be settled by agreement between the parties. Of course it may leave something which still has to be determined, but then that determination must be a determination which does not depend upon the agreement between the parties. In the system of law in which I was brought up, that was expressed by one of those brocards of which perhaps we have been too fond, but which often express very neatly what is wanted: 'Certum est quod certum reddi potest.' Therefore, you may very well agree that a certain part of the contract of sale, such as price, may be settled by someone else. As a matter of the general law of contract all the essentials have to be settled. What are the essentials may vary according to the particular contract under consideration. We are here dealing with sale, and undoubtedly price is one of the essentials of sale, and if it is left still to be agreed between the parties, then there is no contract." Referring to the same principle of law, Lord Wright in Scammell and Nephew Ltd. v. Ouston [1941] A.C. 251, at pp. 268-9 stated: "There are many cases in the books of what are called illusory contracts, that is, where the parties may have thought they were making a contract but failed to arrive at a definite bargain. It is a necessary requirement that an agreement in order to be binding must be sufficiently definite to enable a court to give it a practical meaning. Its terms must be so definite, or capable of being made definite without further agreement of the parties, that the promises and performances to be rendered by each party are reasonably certain." No doubt the principle is founded on recognition that the parties might subsequently fail to agree upon the undecided term, and that in such event the agreement would fail for want of agreement concerning a relevant term. The situation is distinguished from a contract made by parties leaving an essential term to be agreed upon by them, and if they fail to agree the disputed term is to be determined by a third party or by arbitration. ...'