| From: | Robert Stevens <robert.stevens@ucl.ac.uk> |
| To: | 'Stephen Smith, Prof.' <stephen.smith@mcgill.ca> |
| obligations@uwo.ca | |
| Date: | 24/03/2009 15:25:42 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