When it comes to business agreements and contracts, it is essential to ensure that both parties are clear on their obligations and responsibilities. The certainty of contract is an essential aspect of any agreement in New Zealand, as it ensures that the agreement`s terms are easily understood and enforceable. In this article, we will discuss certainty of contract in New Zealand and why it is crucial for businesses.

What is Certainty of Contract?

Certainty of contract is the requirement that the terms and conditions of a contract are clear, complete, and unambiguous. The courts in New Zealand have long recognized the importance of certainty, stating that it is "a fundamental principle of contractual interpretation." In essence, it is essential to ensure that both parties understand what they are agreeing to before entering into a contract.

Why is Certainty of Contract Important?

Certainty of contract is essential in providing stability and predictability for businesses. It ensures that both parties are aware of their obligations and responsibilities, and there is little room for confusion or misunderstandings. Clear contractual terms also make it easier to resolve any disputes that may arise during the course of the agreement.

In addition to providing stability and predictability, certainty of contract also protects both parties from the risks and uncertainties associated with vague or ambiguous contractual terms. If the terms of a contract are unclear, one party may be at risk of being taken advantage of or being subject to unfair terms. Certainty ensures that the parties are on equal footing and that neither party is disadvantaged by the contract`s terms.

How to Ensure Certainty of Contract

There are several steps that businesses can take to ensure the certainty of their contracts. First and foremost, it is essential to involve legal counsel in the contract drafting process. An experienced lawyer can help ensure that the terms of the contract are clear, complete, and unambiguous. They can also help identify any potential areas of ambiguity or uncertainty and provide guidance on how to address these issues.

In addition to involving legal counsel, businesses should also be clear and concise in their contractual terms. Using plain language and avoiding legal jargon can help ensure that the terms of the agreement are easily understood by both parties. It is also essential to avoid using vague or ambiguous terms that could be misinterpreted or cause confusion.

Finally, it is crucial to ensure that both parties have a clear understanding of the contract`s terms before signing. This can be accomplished through careful review and negotiation of the contract`s terms, as well as providing opportunities for questions and clarification.

Conclusion

Certainty of contract is a fundamental principle of contractual interpretation in New Zealand. It provides stability and predictability for businesses and protects both parties from the risks and uncertainties associated with vague or ambiguous contractual terms. By involving legal counsel, using clear and concise language, and ensuring both parties have a clear understanding of the contract`s terms, businesses can ensure the certainty of their contracts and avoid potential disputes down the line.