Scammell and Nephew Ltd v Ouston [1941] AC 251

• Plaintiffs wished to hire a van and agreed with Defendant to acquire one on a “hire-purchase basis”. Their agreement stated that “the balance of purchase price can be had on hire-purchase terms over a period of two years”.

• Defendant later refused to proceed with agreeing precise terms and Plaintiffs sued them for non-performance.

• HL held that this term was too vague to constitute a valid contract. 

Viscount Maugham

In order to constitute a valid contract the parties must so express themselves that their meaning can be determined with a reasonable degree of certainty.

• His concern is evidentiary: if the agreement is unclear then how can the courts find that there was agreement as to the terms? I.e. legal certainty- a countervailing consideration to the need for business flexibility as stated in Hillas.

• He distinguishes this from Hillas since in that case it was clear that both parties knew what was being referred to and that they both intended to create legally binding agreements. Another point would be that there it was easy to impute the meaning, unlike here.

• In the circumstances of this case it was unclear how the hire-purchase (hire with the option to purchase) would work, especially given the confusion around Plaintiff’s selling his vehicle to Defendant as part of the arrangement. 

RELATED CASES

• Hillas v Arcos