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Sources and General Principles of English Contract Law

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Arbitration and Contract Law

Part of the book series: Ius Gentium: Comparative Perspectives on Law and Justice ((IUSGENT,volume 54))

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Abstract

After explaining the sources of English contract law, predominantly the case law system of precedent, this chapter sets out four established principles of English contract law and suggests that there is a fifth principle, waiting in the wings, which is the principle of good faith and fair dealing.

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Notes

  1. 1.

    Neil Andrews, Contract Law (2nd edn, Cambridge University Press, 2015), respectively, chapters 22, 21, 23.

  2. 2.

    Section 3, Sale of Goods Act 1979; Nash v. Inman [1908] 2 KB 1, CA; ‘necessaries’ can include certain services.

  3. 3.

    Proform Sports Management Ltd v. Proactive Sports Management Ltd [2006] EWHC 2903 (Ch); [2007] 1 All ER 542 (the ‘Wayne Rooney’ case).

  4. 4.

    On the problematic grant of a lease to a minor, see Hammersmith and Fulham London Borough Council v. Alexander-David [2009] EWCA Civ 259; [2009] 3 All ER 1098.

  5. 5.

    Hart v. O’Connor [1985] 2 All ER 880, PC (the ‘rule in Imperial Loan Co v. Stone [1892] 1 QB 599’, see Blankley v. Central Manchester and Manchester Children’s University Hospitals NHS Trust [2014] EWHC 168; [2014] 1 WLR 2683, at [30], per Phillips J); however, where the incapax’s property is subject to the control of the court under sections 15 ff of the Mental Capacity Act 2005, transactions which would be inconsistent with the court’s control of those assets will be void as against that party.

  6. 6.

    Hazell v. Hammersmith & Fulham LBC [1992] 2 AC 1, HL, and the flood of ‘swaps’ litigation resulting from this decision (on which Haugesund Kommune v. Depfa ACS Bank (No 1) [2010] EWCA Civ 579; [2011] 1 All ER 190; [2010] 1 CLC 770).

  7. 7.

    Haugesund case, preceding note, decided in the context of restitution of a void loan, and with discussion of the difference between English and foreign notions of corporate incapacity.

  8. 8.

    J Cartwright, Formation and Variation of Contracts (London, 2014), 3–01 ff; J Cartwright, Misrepresentation, Mistake and Non-Disclosure (3rd edn, London, 2012), 13–04 ff; G McMeel, The Construction of Contracts: Interpretation, Implication and Rectification (2nd edn, Oxford University Press, 2011), chapter 3, containing trenchant examination of the case law concerning detached objectivity, Proposition (i), and ‘promisee objectivity’, Proposition (ii).

  9. 9.

    The passage, too long to quote here, merits close attention: D McLauchlan, ‘Refining Rectification’ (2014) 130 LQR 83, at 88–90. See also: D Friedmann, (2003) 119 LQR 68; J R Spencer, [1974] CLJ 104; W Howarth, (1984) 100 LQR 265; J Vorster, (1987) 103 LQR 274; M Chen-Wishart, in JW Neyers, R Bronaugh and SGA Pitel (eds), Exploring Contract Law (Hart, Oxford, 2009), 341; T Endicott, ‘Objectivity, Subjectivity and Incomplete Agreements’ in J Horder (ed), Oxford Essays in Jurisprudence (Fourth Series, Oxford University Press, 2000), 159; see also, from an American perspective, L DiMatteo, Q Zhou, S Saintier, K Rowley (eds), Commercial Contract Law: Transatlantic Perspectives (Cambridge University Press, 2014), chapter 3 (by T Joo). And for other references, G McMeel, The Construction of Contracts: Interpretation, Implication and Rectification (2nd edn, Oxford University Press, 2011), chapter 3, n 1.

  10. 10.

    (1871) LR 6 QBD 597.

  11. 11.

    [1939] 3 All ER 566, Singleton J.

  12. 12.

    [1996] 1 Lloyd’s Rep 700, 703.

  13. 13.

    [1932] AC 161, 224, HL.

  14. 14.

    [2002] 1 AC 251, HL at [70].

  15. 15.

    K Lewison, Interpretation of Contracts (6th edn, London, 2015), 14.04, 14.05.

  16. 16.

    [2015] UKSC 36; [2015] 2 WLR 1593, at [20].

  17. 17.

    [1997] AC 313, 388, HL.

  18. 18.

    ibid.

  19. 19.

    [1962] AC 600, 626, HL.

  20. 20.

    [2012] EWCA Civ 1413, at [22]

  21. 21.

    Schedule 2, Part 1, paragraphs 3, 7, 8, 11 to 17.

  22. 22.

    Paragon Finance plc v. Nash [2001] EWCA Civ 1466; [2002] 1 WLR 685, at [32] and [36] (implied term that the lender must exercise an express power to vary the rate of interest payable by its customer without dishonesty, capriciousness or for an improper purpose); R Hooley, ‘Controlling Contractual Discretion’ [2013] CLJ 65–90; K Lewison, Interpretation of Contracts (6th edn, London, 2015), 14.04, 14.05; Neil Andrews, Contract Law (2nd edn, Cambridge, 2015), 13.14.

  23. 23.

    Habibsons Bank Ltd v. Standard Chartered Bank (Hong Kong) Ltd [2010] EWCA Civ 1335; [2011] QB 943, at [34], per Moore-Bick LJ; G McMeel, The Construction of Contracts: Interpretation, Implication and Rectification (2nd edn, Oxford University Press, 2011), 27.14 ff.

  24. 24.

    Neil Andrews, Contract Law (2nd edn, Cambridge University Press, 2015), chapter 21.

  25. 25.

    J Cartwright, Formation and Variation of Contracts (London, 2014), Part IV; G Spencer Bower and AK Turner, Estoppel by Representation (4th edn, London, 2003); KR Handley, Estoppel by Conduct and Election (2nd edn, London, 2014); E Cooke, The Modern Law of Estoppel (Oxford University Press, 2000); S Wilken and K Ghalys, The Law of Waiver, Variation and Estoppel (3rd edn, Oxford University Press, 2012).

  26. 26.

    For illuminating discussion (too long to cite here) of the fertile and versatile concept of estoppel, see Lord Denning MR in McIlkenny v. Chief Constable of the West Midlands [1980] QB 283, 316–7, CA (the case proceeded to the HL as ‘Hunter v. Chief Constable of the West Midlands [1982] AC 529). For the separate status of estoppel by deed, see Prime Sight Ltd v. Lavarello [2013] UKPC 22; [2014] AC 436, at [30], per Lord Toulson.

  27. 27.

    (1854) 5 HL Cas 185; 10 ER 868; including representations of law, Re Gleeds, Briggs v. Gleeds [2014] EWHC 1178 (Ch); [2015] Ch 212, at [26] to [35], per Newey J.

  28. 28.

    [2001] EWCA Civ 527; [2002] QB 35, at [30] to [33].

  29. 29.

    B McFarlane, ‘Understanding Equitable Estoppel: From Metaphors to Better Laws’ (2013) 66 CLP 267–305.

  30. 30.

    Lord Steyn, ‘Contract Law: Fulfilling the Reasonable Expectations of Honest Men’ (1997) 113 LQR 433, 440; T Dawson, (1989) 9 LS 16; KR Handley, Estoppel by Conduct and Election (2nd edn, London, 2014), chapter 8; S Wilken and K Ghalys, The Law of Waiver, Variation and Estoppel (3rd edn, Oxford University Press, 2012), chapter 10; G McMeel, The Construction of Contracts: Interpretation, Implication and Rectification (2nd edn, Oxford University Press, 2011), chapter 18.

  31. 31.

    Republic of India v. India Steamship Co Ltd (‘The Indian Endurance’) (No 2) [1998] AC 878, 914–15, HL, per Lord Steyn, clarifying the Court of Appeal’s formulation of the doctrine.

  32. 32.

    ibid, at 914–15; Bridgewater v. Griffiths [2000] 1 WLR 524, 530, per Burton J.

  33. 33.

    [2011] EWCA Civ 353; [2012] 1 WLR 472, at [55] to [73] (Stanley Burnton LJ agreed at [75]); the third judge, Rix LJ, at [85] and [86], preferred to reach the same result by use of promissory estoppel/representation by estoppel.

  34. 34.

    ‘The Vistafjord’ [1988] 2 Lloyd’s Law Rep 343, 352, CA.

  35. 35.

    [2008] EWHC 2692 (QB); [2009] 4 All ER 26, at [267] and [268], per Burton J.

  36. 36.

    Keen v. Holland [1984] 1 WLR 251 (protection under the agricultural holdings legislation).

  37. 37.

    Amalgamated Investment & Property case, [1982] 1 QB 84, 132, CA, per Brandon LJ.

  38. 38.

    [1982] 1 QB 84, CA.

  39. 39.

    Springwell Navigation Corporation v. JP Morgan Chase [2010] EWCA Civ 1221; [2010] 2 CLC 705, at [144], per Aikens LJ; see also Prime Sight Ltd v. Lavarello [2013] UKPC 22; [2014] AC 436, at [47], per Lord Toulson (noted A Trukhtanov, (2014) 130 LQR 3–8).

  40. 40.

    Springwell case, ibid (following Peekay Intermark Ltd v. Australia and New Zealand Banking Group Ltd [2006] EWCA Civ 386; [2006] 2 Lloyd’s Rep 511, at [56], [57]); G McMeel, ‘Documentary fundamentalism in the Senior Courts: the myth of contractual estoppel’ [2011] LMCLQ 185–207; and D McLaughlan, ‘The Entire Agreement Clause…’ (2012) 128 LQR 521, 536–539.

  41. 41.

    Prime Sight Ltd v. Lavarello [2013] UKPC 22; [2014] AC 436, at [30], [46] and [47], per Lord Toulson.

  42. 42.

    [1976] Ch 179, CA (Lord Denning MR, Lawton and Scarman LJJ).

  43. 43.

    [2009] UKHL 18; [2009] 1 WLR 776 (noted by B McFarlane and A Robertson, (2009) 125 LQR 535–42).

  44. 44.

    [2011] EWCA Civ 353; [2012] 1 WLR 472, at [93], referring to the possibility (citing Bingham J’s examination in Tradax Export SA v. Dorada Cia Naviera SA (‘The Lutetian’) [1982] 2 Lloyd’s Rep 140, 157, of Lord Wilberforce’s analysis of estoppel by silence in Moorgate Mercantile Co Ltd v. Twitchings [1977] AC 890, 903, HL).

  45. 45.

    This terminology, current in the USA and in Canada, has been adopted in ALI/UNIDROIT’s Principles of Transnational Civil Procedure (Cambridge, 2006), Principles 28.2 and 28.3.

  46. 46.

    The leading decision is Virgin Atlantic Airways Ltd v. Zodiac Seats UK Ltd [2013] UKSC 46; [2014] AC 160, per Lord Sumption, at [17], [20], [22], [26], considering Arnold v. National Westminster Bank plc [1991] 2 AC 93; for general background (ante-dating this decision), G Spencer Bower, A K Turner and KR Handley, The Doctrine of Res Judicata (4th edn, London, 2009); Andrews on Civil Processes (Intersentia, Cambridge, Antwerp, Portland, 2013), vol 1, Court Proceedings, chapter 16; generally on this topic, N Andrews, ‘Res Judicata and Finality: Estoppel in the Context of Judicial Decisions and Arbitral Awards’, in K Makridou and G Diamantopoulos (eds), Issues of Estoppel and Res Judicata in Anglo-American and Greek Law (Nomine Bibliothiki, Athens, 2013), 17–39.

  47. 47.

    McIlkenny v. Chief Constable of the West Midlands [1980] 1 QB 283, CA; House of Spring Gardens Ltd v. Waite [1991] 1 QB 241, CA; Black v. Yates [1992] 1 QB 526, 545–9.

  48. 48.

    e.g., Green v. Vickers Defence Systems Ltd [2002] EWCA Civ 904; The Times, 1 July 2002.

  49. 49.

    Including a final decision of an interim application: R v. Governor of Brixton Prison, ex parte Osman [1991] 1 WLR 281; Possfund v. Diamond [1996] 2 All ER 774, 779; for an example of a non-final decision, see Buehler AG v. Chronos Richardson Ltd [1998] 2 All ER 960, CA.

  50. 50.

    e.g., Palmer v. Durnford Ford [1992] 1 QB 483, Simon Tuckey QC sitting as a Deputy High Court Judge; Green v. Vickers Defence Systems Ltd [2002] EWCA Civ 904; The Times, 1 July 2002; Gairy v. Attorney-General of Grenada [2001] UKPC 30; [2002] 1 AC 167, at [27].

  51. 51.

    Green v. Hampshire County Council [1979] ICR 861; Crown Estate Commissioners v. Dorset County Council [1990] Ch 297, Millett J.

  52. 52.

    PR Barnett, Res Judicata, Estoppel and Foreign Judgments: The Preclusive Effects of Foreign Judgments in Private International Law (Oxford University Press, 2001); P Rogerson, (1998) Civil Justice Quarterly 91.

  53. 53.

    Andrews on Civil Processes (Intersentia, Cambridge, Antwerp, Portland, 2013), vol 2, Arbitration and Mediation, chapter 17; notably, Associated Electric & Gas Insurance Services Ltd v. European Reinsurance Co of Zurich [2003] UKPC 11; [2003] 1 WLR 1041, PC; R (Coke-Wallis) v. Institute of Chartered Accountants in England and Wales [2011] UKCS 1; [2011] 2 AC 146, at [31], per Lord Clarke, citing G Spencer Bower, A K Turner and KR Handley, The Doctrine of Res Judicata (4th edn, London, 2009), 2.05, and noting Fidelitas Shipping Co Ltd v. V/O Exportchleb [1966] 1 QB 630, 643 C, CA, per Diplock LJ; generally on this topic, N Andrews, ‘Res Judicata and Finality: Estoppel in the Context of Judicial Decisions and Arbitral Awards’, in K Makridou and G Diamantopoulos (eds), Issues of Estoppel and Res Judicata in Anglo-American and Greek Law (Nomine Bibliothiki, Athens, 2013), 17–39.

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    Neil Andrews

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Andrews, N. (2016). Sources and General Principles of English Contract Law. In: Arbitration and Contract Law. Ius Gentium: Comparative Perspectives on Law and Justice, vol 54. Springer, Cham. https://doi.org/10.1007/978-3-319-27144-6_10

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