Can Missing Terms Void A Contract?

Let’s say that you are selling goods or your product to another company. You agree in writing, but there are some important terms missing. Do you still have an enforceable agreement? How are those missing terms “filled in?”

Missing Terms Can Void a Contract – Sometimes

As a general rule, in contracts, if material terms are missing from an agreement, the contract may be unenforceable. That’s because there is no meeting of the minds. Minor details that are not material to the contract can be “filled in” by customs, prior dealings of the parties, or if necessary, the court. But not major, material terms. If they’re missing, the contract may be unenforceable.

Merchant Sales

But that rule is a little different when there is a contract between merchants, which is the legal term for business people, or people selling things to each other. When a term in a contract is missing – even an important term that should be in a contract, like a price or cost-the law (specifically, the Uniform Commercial Code, or UCC) allows courts to fill in the missing pieces.

A contract can be missing things like delivery dates, specifications for products, or where a product will be delivered.

There still must be an intent to be bound by a contract. Letters of intent, or expressions of interest by themselves, won’t create a binding contract. And thus, the court won’t be able to fill in missing pieces.

How Missing Provisions are Filled In

But assuming there is a valid and enforceable contract that just has some missing provisions, the UCC dictates how missing terms will be filled in.

If a contract is missing a price, or is vague about a price, or says that cost or price will be discussed later, the UCC says that a “reasonable price” will be paid for the goods. The price is dictated by what a reasonable price is at the time of the delivery. That can be important for goods where the price may be unstable, or fluctuating.

The place for delivery is usually the seller’s place of business—that is, it is on the buyer to get the goods from the seller. Additionally, payment by the buyer must be made to the seller, before the buyer gets the goods.

If there is no time for delivery or production of the goods, the law will assume a reasonable time. While this is undefined, it will largely depend on the type of goods. Obviously, delivering a shipment of vaccines would need to be immediate. The same can be said for seasonal items (say, pine trees during holiday season).

Remember, these are all assumptions the law makes, if these terms have not been included in the contract. You can obviously contract for these items (and good practice says that you should).

Call the West Palm Beach business litigation lawyers at Pike & Lustig for help today on drafting or enforcing your business agreements.