Whitlock v Brew

What happened?

Land was sold on terms requiring the purchaser to grant a lease of part of it to a petroleum supplier, on such reasonable terms as commonly govern such a lease. What those terms were was never spelled out, and there was no evidence of what terms were in fact common for leases of that kind. The same clause did provide for arbitration — but of "any dispute between the parties as to the interpretation or operation of this clause".

What did the Court decide?

The clause could not be given content: there was no agreement on the duration of the term or the rent, and no evidence of what terms were in fact common. The arbitration provision did not save it, because on the majority's reading it could not have authorised an arbitrator to impose terms on the purchaser — to do that would be to alter the contract rather than to interpret it. Because the clause could not be severed, the contract as a whole failed and the purchaser recovered the deposit. McTiernan J dissented, holding the covenant sufficiently certain.

Why does this case matter?

It is the case that stops "reasonable" doing work it cannot do. A drafter who cannot agree something and writes in a reasonableness formula has often not solved the problem but hidden it, and this shows the cost: the whole bargain went, not just the clause.

That severance point is the part most often missed. Whether an uncertain provision takes the contract with it depends on how central it is to what the parties agreed, so the analysis does not end once uncertainty is established.

Exam and application relevance

Start by naming which terms are missing and whether they are essential to the bargain — an incomplete agreement is not the same as one that is merely vague, and this case is about the former. Then ask what a court would actually do if asked to enforce it tomorrow: is there a formula, a market standard, a named third party with real power over the gap? If the court would have to write the bargain, the term fails; then ask separately whether the rest survives without it.

Check your understanding

The contract did provide for an arbitrator. Why did that not make the lease covenant certain?