Facts
Arcos agreed to supply Hillas with lumber in a contract stating the sale of "22,000 standards of softwood of fair specification". In the contract there was an option to purchase additional "100,000 standards" of lumber. The only terms of the option stated,
"whatever the conditions are, buyers shall obtain the goods on conditions and at prices which show to them a reduction of 5 per cent on the FOB value of the official price list at any time ruling during 1931."
Hillas tried to exercise the option but Arcos claimed the contract was cancelled. At trial the jury found that the contract had not been cancelled but Arcos put forward the claim that the option "was an agreement to make an agreement, the terms of which were not defined, and so was unenforceable."
Though they expressed regret for doing so, MacKinnon J of the Court of Appeal followed the rule set out in the case of May & Butcher v R which stated that if there are any essential terms of a contract of sale that are to be set by a future agreement then the contract is void.
Read more about this topic: Hillas & Co Ltd V Arcos Ltd
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