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McMeel on The Construction of Contracts, 3rd Edition by McMeel, Gerard (12th October 2017)


From: McMeel on The Construction of Contracts (3rd Edition)

Gerard McMeel

The purpose of a preface is to justify a new edition in the light of developments in the law surveyed. Curiously there has been disagreement in 2017 between two members of the Supreme Court as to whether the law has changed in the principal topic addressed by this work, namely the interpretation of express contractual words. Since the previous edition, the Supreme Court in Rainy Sky v Kookmin Bank (2011) embraced what would appear to be an uncontroversial proposition that where there are two tenable readings of a contract, the one which accorded with commercial common sense should prevail. More timorous judges then appeared to doubt their ability to weigh commercial common sense. The inevitable tension between text and context saw a swing of the pendulum towards literalism in Arnold v Britton (2015), which must now be accorded the status of a leading case, despite its paucity of ideas and indefensible result. Far more consistent with the contextual movement of the last five decades was the Lloyds Bank Bonds case (2016), although the Supreme Court attempted to sneak that one under the radar, somewhat embarrassed at having reverted to the tools of context and common sense. In Wood v Capita Insurance Services (2017) the Supreme Court went as far as to refuse to hear argument that there was any inconsistency in the principles applied in Rainy Sky and Arnold v Britton. Lord Hodge’s valiant attempt to persuade us that there had not even been a change of emphasis was scuppered only weeks later when Lord Sumption extra-judicially endorsed the proposition that there had been ‘muffled’ retreat to textualism, and addressing critically the long shadow still cast by Lord Hoffmann. In the view of this author, the principles have not changed, but the willingness of certain judges to lend too much credence to more literalist arguments reflects a lack of balance, and does a disservice to commercial parties who expect an informed reading of their bargains, coupled with a good dose of common sense.

The neighbouring topics of implication and rectification have also seen judges wrestling in the same shadow. Lord Hoffmann’s swansong judgment in Belize Telecom (2009), which had breathed life into the topic of implied terms, received a frosty rebuke from Lord Neuberger in the Marks & Spencer case (2015). However the important insight that implication in fact is part of the overall process of construction was accepted, and continues to yield valuable guidance to practitioners at the coalface. In contrast, the attempt by Lord Hoffmann in Chartbrook v Persimmon (2009) to put an objective spin on rectification has sown confusion in that corner of the law. The unbelievably complicated judgments of the Court of Appeal in Daventry District Council (2011) demonstrate the wrong turning in the law here. This work suggests the way out of the cul de sac. The most intellectually arresting development has been the bold synthesis by Leggatt J in Yam Seng (2013) which dramatically launched a debate about the role of good faith and fair dealing in English contract law. In stark contrast, the mythical beast, contractual estoppel, continues to be sighted, although its unreality was demonstrated in Crestsign (2014), and unsurprisingly that case settled before the appeal was heard. Beyond case law the most significant development is the more pronounced separation of commercial contract law and consumer contract law effected by the Consumer Rights Act 2015, and that is reflected throughout the text.

(p. viii) I would like to thank Professor Andrew Burrows for inviting me to join his Restatement of the English Law of Contract Advisory Group, and Sir George Leggatt for generously chairing my January 2017 Current Legal Problems lecture, which explored many of the topics relevant to this new edition. I have been able to take into account developments up to Wood v Capita in the Supreme Court in March 2017.

This work remains dedicated to my son Fergus, now aged nine: ‘Take, if you must, this little bag of dreams; Unloose the cord, and they will wrap you round.’ I sign off this preface once again at the desk of Frederic Weatherly, of Danny Boy fame.

Gerard McMeel

Guildhall Chambers

June 2017