| From: | Stephen Smith, Prof. <stephen.smith@mcgill.ca> |
| To: | obligations@uwo.ca |
| Date: | 24/03/2009 14:05:57 UTC |
| Subject: | RE: [ODG] Implied terms |
Although I am sympathetic to Jason' view that mutual mistake
cases can be explained (usually) on the basis of an implied (but genuinely
intended) condition precedent, I don't see that the Privy Council's statement (which
basically restates the law) proves that this is how they should be explained.. Whatever
interpretative approach is used, we can't conclude that a particular decision
to set aside a contract for mistake is based on an implied-in-fact term without
looking at the facts of the case and determining, on the basis of the words used,
the context, etc.., that the contract in fact included the relevant implied
term. At most, the adoption of this or that test can make it more or less
likely that such a conclusion is possible. The PC's statement is consistent
with concluding that all mistake cases can be so explained, but it is also
consistent with the opposite.
But against Kevin (and in support of Jason), I don't see how the
PC's statement, or any reasonable description of what is involved in
interpretation, could possibly require that the meaning of a statement is
equivalent to what was actually before the minds of the parties. If I
order some furniture to be delivered 'next friday', it goes without saying that
delivery should occur during working hours (unless there is something special
about the industry or this particular arrangement). I could, and would, refuse delivery
at 3:00 am. Yet it is quite likely that neither I nor the store were
thinking, when we made the delivery, that 'friday' meant 'friday between 9 and
5': we simply did not give any thought to this matter.. Wittgenstein is the
classic reference for the idea that many things go without saying (or even
thinking) (he gives the example of instructing the babysitter to play a game
with the children - can 'game' mean poker?), but the point has also been
extensively developed in legal literature; e.g. Langille and Ripstein 'Strictly
Speaking it Went Without Saying' (1996) 2 Legal Theory 63.
The PC's test is perfectly consistent, as it must be, with the view
that contracts that are ostensibly set aside for mistake (or 'frustration') are
in reality set aside because they contain an implied term to this effect, even
if that term was not only not expressed by the parties but not before their
minds when they made the contract. (But, to repeat, the pc's test does not
prove that in fact the cases can be so explained.)
Steve Smith
From: Kelvin F.K. Low
[mailto:kelvin.low@gmail.com]
Sent: March-24-09 8:38 AM
To: obligations@uwo.ca
Subject: Re: [ODG] Implied terms
There are indeed many cases of mutual mistake whereby an
implied condition precedent analysis would apply. Cases of res sua would
certainly fall within this category. Provided there is no contrary intention,
cases of res extincta probably would too. However, since Solle v Butcher at the
earliest and Associated Japanese Bank at the latest, mutual mistake cases are
cases falling beyond this analysis.
If frustration and mutual mistake are related doctrines,
differentiated only on the basis of when the common assumption is falsified,
then it seems sensible that mutual mistake cannot be explained on the basis of
the parties' intentions. After all, it is a requirement for frustration to
apply that the frustrating event be unforeseeable. This, of course, raises the
question of what we mean by the parties' intentions. If, by the parties
intention, we mean what they actually thought but failed to express, then it is
difficult to understand how they can intend a particular result to follow an
unforeseeable event. If that is true for frustration, that must equally be true
of mutual mistake.
It is, of course, plausible that by the parties' intention,
we do not mean their actual intention (given that the event was unforeseeable),
but what they would have intended had their attention been drawn to that
unforeseeable event at the time of contracting. The two types of implied
intention are quite different. Until Stack v Dowden, the courts seemed to
consider the latter type of implied intentio irrelevant. This seems to have
been the case in contract, trusts, and statutory interpretation.
Such "implied" intention is regarded as fictitious
because the parties never actually had the intention. It is, I suppose,
unfortunate that the descriptions "fictitious" and
"artificial" are regarded as carrying a perjorative overtone. I am
hesitant to dismiss such fictitious "implied" intentions as
inherently without value. There must be cases, perhaps many cases even, where
it is not difficult to determine what the parties would have agreed at the time
of contracting if they had indeed been forewarned of the unforeseen event.
However, it is equally true that occasionally, the conclusion reached by the
courts on the basis of such fictitious reasoning is conclusive and circular -
where the assertion that, if the parties had been forewarned, they would have
agreed on such and such a result, is nothing more than an assertion.
Certainly, if such fictitious implied intentions were a
plausible device in divining the parties intentions, I don't see why the courts
should limit themselves to implied conditions precedent (for mutual mistake) or
implied conditions subsequent (for frustration). The parties could
(theoretically) agree to an implied price escalation clause or any number
of potential variations to the contract. But perhaps it would be unworkable to
introduce an infinite variety of possible agreements?
But I digress. I think that the Privy Council's decision
remains well within the orthodox and conservative view of real implied intentions
and does not justify fictional implied intentions. This is not to say the
device of real implied intentions may not be manipulated by the courts. It is
easy enough to conclude that, on the evidence, this is what the parties really
intended but did not express when the reason why the court really reaches its
conclusion is because it feels that this ought to be the bargain between the
parties.
Cheers,
Kelvin Low
2009/3/24 Jason Neyers <jneyers@uwo.ca>
If this is right, I can't see why so many people think that
the implied condition precedent view of mutual mistake is artificial and
fictitious and is better explained by the rule of law route.
Cheers,
---- Original Message -----
From: David Lascelles <dlascelles@yahoo.com>
Date: Tuesday, March 24, 2009 3:50 am
Subject: [ODG] Implied terms
To: obligations@uwo.ca
|
> Dear All, > > In the recent Privy Council decision in Attorney
General of Belize & Oths v Belize Telecom Limited (available from
http://www.privy-council.org.uk/output/Page540.asp),
the Judicial Committee (Lords Hoffmann, Rodger, Carswell and Brown and
Baroness Hale) reviewed the various ways of expressing the test for an
implication of a term into an instrument (in this case Articles of
Association). > > The Board held that there is only one
question that needs to be answered to determine whether a term should be
implied: > > “21.
It follows that in every case in which it is said that some provision ought
to be implied in an instrument, the question for the court is whether such a
provision would spell out in express words what the instrument, read against
the relevant background, would reasonably be understood to mean. It
will be noticed from Lord Pearson’s speech [in Trollope & Colls Ltd
v North West Metropolitan Regional Hospital Board [1973] 1 WLR 601] that
this question can be reformulated in various ways which a court may find
helpful in providing an answer – the implied term must “go
without saying”, it must be “necessary to give business efficacy
to the contract” and so on – but these are not in the
Board’s opinion to be treated as different or additional tests.
There is only one question: is that what the instrument, read as a whole
against the relevant background, would reasonably be understood to mean?” > > The Board referred to the oft-cited speech
of Lord Simon of Glaisdale giving the advice of the majority of the Board in BP
Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180
CLR 266 at 282-283 where he stated that it was “not …
necessary to review exhaustively the authorities on the implication of a term
in a contract” but that the following conditions (“which
may overlap”) must be satisfied:
“(1) it must be reasonable
and equitable; (2) it must be necessary to give business efficacy to the
contract, so that no term will be implied if the contract is effective
without it; (3) it must be so obvious that ‘it goes without
saying’ (4) it must be capable of clear expression; (5) it must not
contradict any express term of the contract”. > > The Board outlined what it saw as the
“dangers in treating these alternative formulations of the question
as if they had a life of their own” (at [22] – [27]) and
stated [27] that the list in Lord Simon’s speech “is best regarded,
not as series of independent tests which must each be surmounted, but rather
as a collection of different ways in which judges have tried to express the
central idea that the proposed implied term must spell out what the contract
actually means, or in which they have explained why they did not think that
it did so.” > > There is also a brief discussion about
extent of the background which is admissible in construing articles of
association– see [35] – [37]. > > Best wishes, > > David > > David
Lascelles > Barrister > > Littleton Chambers > > > |
--
Jason Neyers
Associate Professor of Law &
Cassels Brock LLP Faculty Fellow in Contract Law
Faculty of Law
University of Western Ontario
N6A 3K7
(519) 661-2111 x. 88435