Two businesses, a supplier of raw materials and a manufacturer of consumer products, conduct negotiations over email regarding a potential supply agreement. Their emails state that the manufacturer will 'purchase materials from the supplier every quarter as needed' and that the price for these materials 'will be negotiated later based on market conditions.' No formal written contract is signed, but the manufacturer later refuses to purchase any materials. The supplier sues for breach of contract. Which fact most affects whether there is an enforceable contract in this scenario?
The parties agreed to negotiate the price later based on market conditions.
The emails specify that the manufacturer will purchase materials every quarter as needed.
The supplier relied on the emails by increasing its inventory of raw materials.
The parties’ prior dealings show they have conducted similar transactions in the past with clear terms.
For a contract to be enforceable, its terms must be sufficiently definite to allow courts to ascertain the parties' obligations. In this context, the parties' failure to specify the quantity and the price may render the agreement indefinite and unenforceable. However, in some cases, courts can supply missing terms if the parties' intent to contract is clear, for example, by referencing industry standards or previous dealings. An agreement that acts as an agreement to agree, without delineating clear obligations, is generally not enforceable. Potential buyer reliance on the agreement to the supplier’s knowledge could suggest intent and clarify obligations, which courts sometimes consider when interpreting ambiguous agreements. Agreements deliberately stating they are not binding eliminate ambiguity, while informal industry norms may help interpret missing terms but cannot add intent where none exists between the parties.
Ask Bash
Bash is our AI bot, trained to help you pass your exam. AI Generated Content may display inaccurate information, always double-check anything important.
What does it mean for contract terms to be sufficiently definite?
Open an interactive chat with Bash
How do prior dealings between parties affect contract enforcement?
Open an interactive chat with Bash
What is meant by an 'agreement to agree' in contract law?