Thank You For Submiting Feedback!
An agreement, in order to be binding, must be sufficiently definite to enable a court to determine its exact meaning and fix exactly the legal liability of the parties. Indefiniteness may relate to the time of performance, the price to be paid, work to be done, property to be transferred or other miscellaneous stipulations of the agreement. If the contract makes no statement as to the price to be paid, the law invokes the standard of reasonableness, and the fair value of the services or property is recoverable. If the terms of the agreement are uncertain as to price, but exclude the supposition that a reasonable price was intended, no contract can arise. And a reservation to either party of an unlimited right to determine the nature and extent of his performance renders his obligation too indefinite for legal enforcement, making it, as it is termed, merely illusory.
Plaintiff former employee entered into a contract with the defendant thread company whereby he agreed to sell two inventions to the latter and to turn over to the company any other inventions he might produce. No specific price for future inventions was set. The contract merely provided that "reasonable recognition" would be made to the employee and that the amount of recognition was up to the thread company. The former employee turned over four more inventions to the thread company but was never paid for them and was ultimately fired. The former employee brought an action for breach of contract. The thread company argued that the contract was too vague to be enforceable.
Was the contract in question too vague to be enforceable?
The court rendered judgment in favor of the former employee and found that the phrase "reasonable recognition" was not so vague as to make the contract unenforceable because it was apparent that the phrase meant reasonable compensation. Furthermore, the company was not free to pay no compensation because the contract expressly required that the provisions be interpreted in good faith. The thread company was bound in good faith to determine and pay the former employee the reasonable value of what it accepted from him.