LL202 Commercial Contracts

1. LL202 Commercial Contracts Chris von Csefalvay

2. Agenda for today • Session 1: Introduction & Freedom of Contract • Introductions • Recap of lecture • Fairness in contract • Formation of contracts in English law

3. Agenda for today • Session 2: Terms & interpretation • Recap of lecture • Express terms • Implied terms • Interpretation

4. Me • Chris von Csefalvay ([CHAY-fahl-wah-yee]) • BA (Oxon), BCL (Oxon), practising lawyer • Collects old legal documents and stock certificates. • Born in Hungary, grew up all over Europe.

5. You • Your name • 1 sentence (strictly!) about your background in law • 1 interesting fact about you • 1 interesting fact about the place you come from

6. Recap of lecture #1: Tell me one thing you remember from the lecture. #2: Tell me one thing you did not understand at the lecture.

7. Fairness and freedom of contract

8. Example: Union Eagle • Union Eagle v Golden Achievement Ltd [1997] 2 All ER 215 (PC) • How would you have decided? Why? • Is fairness a beguiling heresy? • Is it a heresy? • Is it beguiling?

9. External restrictions • Competition law • Anti-competitive agreements are void. • Insolvency law • Anti-deprivation principle

10. Formation of contracts Meeting of minds (consensus ad idem) Pre-contractual phase Contractual phase

11. Classroom discussion of questions • Please discuss each question in your group for three minutes. • Please present your findings.

12. End of session 1 • 10’ break before session 2.

13. Agenda for today • Session 2: Terms & interpretation • Recap of lecture • Express terms • Implied terms • Interpretation

14. Recap of lecture #1: Tell me one thing you remember from the lecture. #2: Tell me one thing you did not understand at the lecture.

15. Terms of a contract • Terms are a description of the obligations assumed in the contract. • They are to be distinguished from • representations (more about them later); and • ‘mere puffs’.

16. Express terms • Per Blackburn J in Smith v Hughes (1871) LR 6 QB 597, the objective approach: “If, whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he was assenting … and that other party upon that belief enters into the contract with him”, he is bound.

17. Standard forms

18. Forgetting the form… • At least in commercial contracts, where the seller fails to use their standard form, the terms thereof may nonetheless be incorporated, by… • course of dealing: The Hardwicke Game Farm Case, Kendall v Lillico[1969] 2 AC 31; • standard terms of trade: British Crane Hire v Ipswich Plant Hire Ltd [1974] 1 All ER 1059

19. Implied terms

20. Statutory implication • Significantly more numerous source than common law implication. • Example: s14(2) Sale of Goods Act 1979 Where the seller sells goods in the course of a business, there is an implied term that the goods supplied under the contract are of satisfactory quality.

21. Primacy of express terms • In general, implied terms cannot override express terms. • Exception: ‘mandatory terms’ – e.g. competition law, terms that cannot be excluded due to UCTA 1977,…

22. Contractual interpretation • Three approaches: • Looking for intention • Looking to give effect to literal meaning • Looking to give effect to the agreement as the reasonable person would have seen it.

23. Lord Hoffmann’s 5 principles (from Investors compensation Scheme v W Bromwich BS [1998] 1 All ER 98 (HL)): • Interpretation is ascertaining what the document would mean to the reasonable person having all the information the parties had at the time of the contract. • The background/matrix of fact includes anything that would affect the way the document would be understood by the reasonable person. • Previous negotiations of the parties and subjective declarations are excluded. • The meaning of the document to the reasonable man is not necessarily its literal meaning. • Judges should only conclude that parties have made a linguistic mistake if the meaning of their words flouts common sense or suggests an intent to the parties they plainly could not have had.

24. Classroom discussion of questions • Please discuss each question in your group for three minutes. • Please present your findings.

25. End of session 2 See you tomorrow morning in the same place. – Please do the recommended readings and think about the questions.