Certainty of term

The requirements of certainty of term had to be considered in Ashburn-Anstalt v Arnold ([1989] Ch 1.

This concerned an agreement under which Arnold was to have the right to use some land for a fixed term. When the term ended Arnold could remain in occupation until the owner of the land served one quarter’s notice requiring Arnold to give up possession. The question was whether this arrangement satified the certainty of term requirement. One objection was that it did not since Arnold did not know in advance when the owner would serve the notice. The English Court of Appeal decided that although Arnold had no express right to determine the agreement, it did in fact have an ability to do so simply by moving out.

The Court of Appeal thought that there was no certainty problem:

‘The result, in our opinion, is that the arrangement could be brought to an end by both parties in circumstances which are free from uncertainty in the sense that there would be no doubt whether the determining event had occurred. The vice of uncertainty in relation to the duration of a term is that the parties do not know where they stand. Put another way, the court does not know what to enforce. That is not the problem here.’

Later, however, Lord Templeman in PrudentialAssurance Co Ltd v London Residuary Body ([1992] 2 AC 386 at 395 – 6declared that, in this respect, Ashburn-Anstalt had been wrongly decided.

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