Certainty f may argue that any agreement reached

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Certainty. F may argue that any agreement reached between the parties is too uncertain to enforce. F may argue that the concept of an agreement being subject to ‘approval’ is meaningless and illusory. In making payment depend on ‘approval’, F is left with a discretion whether or not to perform her side of the bargain by paying. B may respond by arguing that it is possible to give some meaning to the condition of approval and thus the term imposes some obligation on F. B will point to the case of Meehan v Jones. (Note that the case of Masters v Cameron concerned a preliminary agreement not a conditional agreement as in this case.) In Meehan the court upheld a contract making purchase conditional on the purchaser obtaining ‘satisfactory finance’. The court held the condition of ‘satisfactory finance’ was not uncertain or illusory. The purchaser was obliged to act honestly and perhaps reasonably in deciding whether or not the finance was satisfactory. These obligations gave the condition content. B will argue that a condition of ‘approval’ is similar to one of ,satisfaction’. Thus the reasoning applied in Meehan should also be applied to this case. B will argue that, by analogy with Meehan, F must at least honestly and perhaps
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reasonably disapprove of the work before she can reject it. Even if this argument is accepted, F may nonetheless claim she is not obliged to pay B for the work. F will argue that she is honestly dissatisfied with the work; she did not like the colour. B will argue that F should be required to act reasonably as well as honestly. B will argue that F’ s decision not to approve the work may have been honest but it was not reasonable. She has disapproved of the very colour that she herself requested. No reasonable person would do this. It is unclear which level of obligation a court would accept: honesty or also reasonableness. The High Court left the issue open in Meehan. It may be that in making its decision a court would be influenced by issues of fairness. A court may not consider it fair to allow F to recant from the deal just because she was unreasonable. This will deprive B of payment. On the other hand the court may consider that B took on a risk when he made the deal subject to approval and must live with that risk. Estoppel? Note there is an estoppel issue here as well. We will come back to it!!!!
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  • Fall '09
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