Agreement to Agree in Contract Law: What You Need to Know
In contract law, an agreement to agree refers to a situation in which parties to a contract attempt to create an enforceable agreement but leave some terms or conditions to be negotiated or finalized at a later time. While it may seem like a convenient way to close a deal, there are potential risks and legal implications that need to be considered.
Why an Agreement to Agree is not Enforceable
An agreement to agree lacks the essential elements of a contract, which are certainty and completeness. Without these elements, it is difficult to determine the parties’ intentions and obligations. This makes it challenging to enforce the agreement in a court of law.
In addition, an agreement to agree may be deemed too vague or uncertain, which makes it difficult to ascertain what the parties intended to agree upon. For example, if the parties agree to “discuss the price later,” there is no clear indication of what factors should be taken into consideration when determining the price. This may result in a dispute later on.
How to Avoid an Agreement to Agree
To avoid an agreement to agree, parties to a contract should strive to make the agreement as complete as possible. This means being clear about the terms and conditions of the agreement, including the price, payment terms, delivery schedules, and other relevant details. It is also important to avoid using vague or ambiguous language, which could lead to disagreements later on.
If it is not possible to finalize all the details of the agreement at the time of signing, the parties should consider including a clause that outlines the process for finalizing the outstanding terms. This could include appointing a mediator or arbitrator to help resolve any disputes that may arise, or setting a deadline for finalizing the remaining terms.
Final Thoughts
An agreement to agree may seem like an easy way to close a deal, but it can lead to legal problems down the line. It is essential for parties to a contract to strive for certainty and completeness in their agreements and avoid using vague or ambiguous language. By being clear about the terms and conditions of the agreement, parties can prevent disputes and ensure that the contract is enforceable.