I also wonder how easy this is to square with RTS Flexible Systems, a decision of the UKSC from 2010, which goes uncited.
TT Arvind writes:
==QUOTE==
You'll typically find them in contracts involving companies, and they're usually there in order to limit the power of the employee dealing with a particular transaction to alter standard terms willy-nilly in a chat over the phone. The rules on authority very
rightly let counterparties assume that the employee they're dealing with has the power to alter terms, and if a company wants to restrict that, inserting a NOM clause is a good way to achieve that. The other party has had notice that renegotiations will need
to follow a particular process, and can't complain if they're held to that.
==UNQUOTE==
To me this is a big part of the problem. In real life, contractual parties (including "sophisticated" ones) *actually* depend upon and rely upon things people say bearing on concrete issues far more than they do on the "contract". If the person who is actually
handling your deal on a day-to-day basis agrees X, Y, and Z, without anyone ever mentioning the boilerplate in the contract, it seems to me to be a species of sharp practice to turn around later an point to the "small print" as a way of weasling out of that.
Very convenient, of course, for organisations which would rather not bother to make sure their representatives behave properly, and put the risk of deliberate or careless contractual maladministration on the shoulders of the customer for no more than the price
of a standard clause. (Indeed, sometimes incentivise it.)
I think there is a conceptual problem, but not the one Lord Sumption thinks there is. Where do we strike the balance between contract as a set of rules which, among other things, impose some measure of commercial morality on business, and contract as a device
which enables the well-advised to construct a legal regime--as red in tooth and claw as they care or dare to make it--which happens to suit their commercial purposes? Is it better to reach swift, decisive, easy, but unjust decisions than to risk getting one's
hands dirty in the mire that is actually finding out what happened?
There are (or were) a bunch or rules which gave priority to reliance interests which are, in human and social terms, strong (what a flesh and blood individual has told me is going to happen) over those which are, in human and social terms, weak (what clause
25.2.3.2 of the terms and conditions that I clicked to say I agreed with happens to say, probably next to something about the singular including the plural, male including female, and notices being deemed valid if delivered by first class post: i.e. stuff
that *literally nobody reads*). The pendulum has now swung. First the highly questionable idea that you can contract out of the right to rescind for misrepresentation simply by "agreeing", contrary to fact, that the counterparty is not relying on any representations.
Now this.
So for me, yes it is conceptual--but not in the sense Lord Sumption has in mind, as if "concepts" were somehow unwelcome guests at the jurisprudential feast. It's conceptual in the sense that there's a fight between treating contract as a luxurious and largely
uncontrolled form of ad hoc legislation in the hands (usually) of the stronger party, or treating it as grounded in some sense in the idea that people should do what they have said they will.
I wonder whether the Facebook etc scandals--where in essence it has become apparent that unregulated contractual terms have miserably failed to deliver to consumers what they believed they were getting--may set the pendulum swinging the other way? It's almost
an iron rule that the Supreme Court reflects the prejudices of the generation that is about to retire, so the current SC falls under the heavy shadow of the "Tom Denning is a mad old dinosaur" school of thought, with a profound complacency about the essential
decency of "major firms", which the next generation may find ... naive?
Paul
PS: An (apocryphal) story about Christopher Staughton.
When I first came to the bar, the commercial court had a steady diet of cases in which (usually Greek) shipowning magnates were sued on personal guarantees given to banks to support heavy borrowing by one-ship companies. The defence was always the same: no
intention to create legal relations. "I did sign the guarantee, but it was not intended to be legally binding: my dear old friend the Bank Manager told me that it was just a tedious administrative necessity but would never be sued upon." The outcome was also
always the same: the defence was rejected at the summary judgment stage on the basis that it was inconceivable that Bank Manager X would have said such a thing--why bother taking a guarantee unless it was to be enforced? A lie, then, so obvious, that it could
be dismissed without a trial.
One day, Sir Christopher had to go to the bank to open an account for an unincorporated association. The Bank asked for a personal guarantee from the committee members. "I'm sorry to have to ask for it, Sir Christopher," said the obsequious agent, "but it is
standard procedure. It is a mere formality for the files, and of course we would never enforce it."
I'm not sure it made (or should have made) any difference to his subsequent judgments. But how much simpler nowadays. No need even to descend to whether such a thing was said: just add an entire agreement clause, a no-reliance clause, and a no oral variation
clause. Job done, whatever was said. P.
--
Paul Stanley QC
Essex Court Chambers
24 Lincoln's Inn Fields
London WC2A 3EG
T +44 20 7813 8000
D +44 20 7147 7340
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