The fact that a selling price may vary from month to month does not affect the validity of the contract. A contract is certain which may be made certain by reference to other facts which are established or may be made certain.
Under the contract, the seller agreed to deliver newsprint rolls at a definite price for the remainder of the year. For the following year, the price would be determined by the parties and it would be no higher than the price charged another paper company to largeconsumers. The seller later informed the buyer that the contract was invalid for being too indefinite and incomplete and that it would not perform the remainder of the contract. The buyer filed a case for breach of contract as it agreed to pay the maximum price similar goods were being sold for. The trial court rendered the contract invalid, in favor of the seller. On appeal, the court found that the agreement was an enforceable option. The Supreme Court, New York Special Term, New York, however, denied the buyer’s motion for judgment on the pleadings in its breach of contract action. The case was elevated to the Appellate Division of the Supreme Court of New York.
Is a contract considered valid if the price agreed upon by the parties is indefinite but limits the maximum price that can be given?
The Court held that despite the sale price not being definite upon the signing of the contract for the upcoming year, as soon as the buyer agreed to pay the maximum price provided in the contract, he made definite the sale price of the goods. Thus, the contract was no longer indefinite as to the price to be paid. The stipulation that “the maximum price was not to be higher than that charged by another corporation for similar goods sold to large consumers” is a price that is considered easily ascertainable and it cannot be held that the contract was indefinite on the ground that the maximum price was to be determined by the selling price of another. A contract is certain when it can be made certain by reference to other facts which are established or may be made certain.