BUSL6222 LU5
BUSL6222 LU5 – Certainty and
Possibility of Performance
Chapter 7 – Formalities, certainty, possibility, and lawfulness of
contracts
7.4 Certainty of performance in contracts
In contract law, performance means what each party has to do under the
contract -their duties or obligations. For a contract to be valid, it must be clear
what performance is required from each party. If it’s unclear or vague, the
contract is void because there is uncertainty.
For performance to be valid and possible, the contract must either:
Clearly state what performance is required -this is called certain
performance, or
Make it possible to work out what performance is required from the
contract itself -this is called ascertainable performance.
If performance isn’t certain at first but can later be made certain (using more
details, context, or evidence), it’s still valid.
“That is certain which can be made certain.”
This means that even if something isn’t clear at first glance, as long as it
can be determined, it’s treated as certain in law.
Courts generally avoid declaring a contract void for uncertainty. Instead, they try
to interpret the contract in a way that gives it legal effect. The test courts use is
whether the contract is “reasonably certain.” It doesn’t have to be perfectly clear
in every clause, only clear enough for the duties to be understood.
When the wording is unclear, courts will:
Look at the contract as a whole to understand the parties’ true intentions,
and
Allow evidence to clarify what the parties meant.
Examples of Ascertainable (Not Void) Contracts
a clause that allows a third party to determine or change performance
a clause that allows a contractual party to determine or change
performance, in some cases
a generic obligation
an alternative obligation
a facultative obligation
1
, BUSL6222 LU5
7.4.1 A clause that allows a 3rd party to determine or change
performance
The parties can agree that a third person will decide what the performance must
be. The contract is valid as long as performance can be determined by a third
party.
7.4.2 Clause That Allows One Party to Determine or Change
Performance
Sometimes, instead of a third party, one of the contracting parties is allowed to
decide performance -for example, choosing the quantity, delivery time, or price
adjustment.
This is only valid if the person making the decision does so honestly and
reasonably.
7.4.3 Generic Obligation
A generic obligation happens when performance must come from a group or
class of things (called a genus), rather than a specific item.
Example:
Lester agrees to buy one of Gary’s horses for R5 000, but they don’t say which
one. Gary can choose any horse from his stable. The performance is
determinable because it can be made certain later when Gary chooses the horse.
So, the contract is valid.
7.4.4 Alternative Obligation
An alternative obligation gives a choice between two or more specific
performances.
Once one option is chosen, the obligation becomes fixed.
Example:
Lester agrees to buy either Horse A or Horse B from Gary for R5 000, and Gary
may choose which one to sell. This is valid because the performance (which
horse) is determinable.
The difference from a generic obligation is that the options are specific individual
items, not just any from a group.
7.4.5 Facultative Obligation
A facultative obligation is when the contract sets one main (primary)
performance but allows the debtor to substitute it with another if they wish.
Example:
Gary agrees to sell Horse A to Lester for R5 000 but keeps the right to substitute
Horse B instead.
This looks like an alternative obligation, but there’s a key difference:
In a facultative obligation, there’s one main duty (Horse A).
The substitute (Horse B) is optional.
2
BUSL6222 LU5 – Certainty and
Possibility of Performance
Chapter 7 – Formalities, certainty, possibility, and lawfulness of
contracts
7.4 Certainty of performance in contracts
In contract law, performance means what each party has to do under the
contract -their duties or obligations. For a contract to be valid, it must be clear
what performance is required from each party. If it’s unclear or vague, the
contract is void because there is uncertainty.
For performance to be valid and possible, the contract must either:
Clearly state what performance is required -this is called certain
performance, or
Make it possible to work out what performance is required from the
contract itself -this is called ascertainable performance.
If performance isn’t certain at first but can later be made certain (using more
details, context, or evidence), it’s still valid.
“That is certain which can be made certain.”
This means that even if something isn’t clear at first glance, as long as it
can be determined, it’s treated as certain in law.
Courts generally avoid declaring a contract void for uncertainty. Instead, they try
to interpret the contract in a way that gives it legal effect. The test courts use is
whether the contract is “reasonably certain.” It doesn’t have to be perfectly clear
in every clause, only clear enough for the duties to be understood.
When the wording is unclear, courts will:
Look at the contract as a whole to understand the parties’ true intentions,
and
Allow evidence to clarify what the parties meant.
Examples of Ascertainable (Not Void) Contracts
a clause that allows a third party to determine or change performance
a clause that allows a contractual party to determine or change
performance, in some cases
a generic obligation
an alternative obligation
a facultative obligation
1
, BUSL6222 LU5
7.4.1 A clause that allows a 3rd party to determine or change
performance
The parties can agree that a third person will decide what the performance must
be. The contract is valid as long as performance can be determined by a third
party.
7.4.2 Clause That Allows One Party to Determine or Change
Performance
Sometimes, instead of a third party, one of the contracting parties is allowed to
decide performance -for example, choosing the quantity, delivery time, or price
adjustment.
This is only valid if the person making the decision does so honestly and
reasonably.
7.4.3 Generic Obligation
A generic obligation happens when performance must come from a group or
class of things (called a genus), rather than a specific item.
Example:
Lester agrees to buy one of Gary’s horses for R5 000, but they don’t say which
one. Gary can choose any horse from his stable. The performance is
determinable because it can be made certain later when Gary chooses the horse.
So, the contract is valid.
7.4.4 Alternative Obligation
An alternative obligation gives a choice between two or more specific
performances.
Once one option is chosen, the obligation becomes fixed.
Example:
Lester agrees to buy either Horse A or Horse B from Gary for R5 000, and Gary
may choose which one to sell. This is valid because the performance (which
horse) is determinable.
The difference from a generic obligation is that the options are specific individual
items, not just any from a group.
7.4.5 Facultative Obligation
A facultative obligation is when the contract sets one main (primary)
performance but allows the debtor to substitute it with another if they wish.
Example:
Gary agrees to sell Horse A to Lester for R5 000 but keeps the right to substitute
Horse B instead.
This looks like an alternative obligation, but there’s a key difference:
In a facultative obligation, there’s one main duty (Horse A).
The substitute (Horse B) is optional.
2
