In this case, issues (1), (2) and (3) did not arise. You might think (3)

arose, but it did not. There was no doubt this document represented their

entire agreement, nor was there any doubt as to what the terms were. The

issue was the correct construction of one of those terms. RS

On Jul 2 2009, Jason Neyers wrote:

> For what it is worth, I think that their Lordships' conclusion on ii

> (the non-admissibility of prior negotiations) is wrong. I agree with

> Corbin and Cardozo (/Utica// City National Bank v. Gunn/) that this

> evidence should be admissible where it is tendered to answer the question

> of whether: (1) The parties made a contract and on what terms? (2) The

> contract is void or voidable because of illegality, fraud, mistake or any

> other reason? (3) The parties assented to this particular writing as the

> complete and accurate "integration" of their whole bargain.

>

>  Congrats go out to ODG list member David McLauchlan who had not one but

> two of his articles cited by the court: ("Contract Interpretation: What

> is it About?" (2009) 31 Sydney Law Review 5; "The 'Drastic' Remedy of

> Rectification for Unilateral Mistake" (2008) 124 LQR 608).

>

>  

>

> 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

>

>

>

> Robert Stevens wrote:

> > The issue concerns (i) construction, (ii) non-admissibility of prior

> > negotiations and (iii) rectication.

> >

> > On (i) although the HL overturn the majority decision of the CA, they

> > introduce no new principles but just reaffirn Investors Compensation

> > Scheme.

> >

> > What is said on (ii) the non-admissibility of pre-contractual

> > negotiations as an aid to construction will, no doubt, disappoint some

> > but seems to me to be inevitable. The rule is well established and is

> > not obviously wrong and that is that.

> >

> > I am, however, after reading it through a couple of times, rather more

> > disturbed by Lord Hoffmann's approach to (iii) rectification which, at

> > first blush, seems to abrogate the parol evidence rule.

> >

> > We are told ([59]) that for rectification the "terms of the contract to

> > which the subsequent instrument must conform must be objectively

> > determined in the same way as any other contract."

> >

> > Completely unobjectionable and correct.

> >

> > What Lord Hoffmann then does [66] is ascertain that the prior

> > consensus was based upon a letter in May (part of the prior

> > negotiations). "It is agreed that the terms of the letter were accepted

> > ... and no one gave any evidence of any subsequent discussions which

> > might have suggested an intention to depart from them. It follows that

> > (on the assumption that the [construction the HL rejected was right])

> > both parties were mistken in thinking that it reflected their prior

> > consensus and [one party] was entitled to rectification."

> >

> > If correct, that is not how I have previously understood rectification

> > to work.

> >

> > Once it has been shown that the parties have agreed to be bound to the

> > terms of a contract wholly embodied in a written instrument, each is

> > bound by its terms although one or other may not know what they are,

> > and even though the content of prior negotiation may be inconsistent

> > with the terms contained in the document. The refusal to admit such

> > extrinsic evidence as relevant, arises from the fact that it is wholly

> > pointless to admit it as it is irrelevant once the court has concluded

> > that the document was intended by the parties to contain all the terms

> > of the contract. The rule that such extrinsic evidence is irrelevant

> > follows as a matter of logic from what the parties have agreed to be

> > bound by. Such an agreement is determined by the ordinary rules of

> > objective interpretation. If, as a matter of fact, the parties had at

> > an earlier point in their negotiations reached an agreement on

> > different terms from that embodied in the subsequent written contract,

> > this earlier agreement is replaced, consideration provided by each

> > side's promise to be bound solely by the terms in the written

> > agreement. Giving effect to different terms from those contained in the

> > written agreement would be contrary to the agreement the parties have

> > reached.

> >

> > Rectificatio allows one party to escape the fact that he has agreed

> > that the document is to represent the parties' entire agreement by

> > demonstrating, for example, that both parties made a common mistake as

> > to the terms recorded (cf Bell v Lever Bros) or that he made a mistake

> > about the terms recorded and the other party knew or ought to have

> > known he was making such a mistake (cf Smith v Hughes). The former was

> > unarguable as it had been found as fact that the counterparty believed

> > the document to represent what had been agreed [55] and [56].)

> >

> > Lord Hoffmann doesn't do that, he just looks to see what had

> > previously been agreed, and if the document which embodies their

> > agreement doesn't accord with that, orders rectification. This seems to

> > me to be wrong. He isn't looking for a mistake sufficient to set aside

> > the agreement that the document, and nothing else, is to represent the

> > parties' entire bargain. The 'common mistake' seems to be assumed from

> > the fact that the agreement embodied in the document is not the same as

> > that which had previously been agreed. But if you can do that there is

> > no parol evidence rule as you can always get the document amended to

> > represent what had previously been agreed.

> >

> > I would be very intersted to learn what others think. My first

> > impression, however, is that this obiter dictum is wrong. RS

> >

> >

> >  

> >> I'm sure that most list members will already have seen Chartbrook

> >> Limited v. Persimmon Homes [2009] UKHL 38, but in case not:

> >>

> >>  

> >>  

> >> http://www.publications.parliament.uk/pa/ld200809/ldjudgmt/jd090701/char

> >> t.pdf

> >>

> >>

> >>

> >> [CC]Personal[/CC]

> >>

> >> This message and any attachment are confidential and may be

> >> privileged or otherwise protected from disclosure. If you are not the

> >> intended recipient, please telephone or email the sender and delete

> >> this message and any attachment from your system. If you are not the

> >> intended recipient you must not copy this message or attachment or

> >> disclose the contents to any other person.

> >>

> >> Clifford Chance LLP is a limited liability partnership registered in

> >> England & Wales under number OC323571. The firm's registered office

> >> and principal place of business is at 10 Upper Bank Street, London,

> >> E14 5JJ. For further details, including a list of members and their

> >> professional qualifications, see our website at

> >> www.cliffordchance.com. The firm uses the word 'partner' to refer to a

> >> member of Clifford Chance LLP or an employee or consultant with

> >> equivalent standing and qualifications. The firm is regulated by the

> >> Solicitors Regulation Authority. The Authority's rules can be accessed

> >> by clicking on the following link:

> >> http://www.sra.org.uk/code-of-conduct.page

> >>

> >> Clifford Chance as a global firm regularly shares client and/or

> >> matter-related data among its different

> >> offices and support entities in strict compliance with internal control

> >> policies and statutory requirements.

> >> Incoming and outgoing email communications may be monitored by Clifford

> >> Chance, as permitted by applicable law and regulations.

> >>

> >> For further information about Clifford Chance please see our website at

> >> http://www.cliffordchance.com or refer

> >> to any Clifford Chance office.

> >>

> >>    

> >

> >

> >  

>