Bates V Post Office Claimants' Appendix of Authorities

THE POST OFFICE GROUP LITIGATION
Claim No. HQ16X01238, HQ17X02637 & HQ17X04248
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION

Before The Hon. Mr Justice Fraser
B E T W E E N:-
ALAN BATES & OTHERS

Claimants
– and –
POST OFFICE LIMITED

Defendant
APPENDIX (AUTHORITIES)
TO CLAIMANTS’ CLOSING SUBMISSIONS
PATRICK GREEN QC
KATHLEEN DONNELLY
HENRY WARWICK
OGNJEN MILETIC
REANNE MACKENZIE
Henderson Chambers
2 Harcourt Buildings
Temple
London EC4Y 9DB
Freeths LLP
Floor 3, 100 Wellington Street
Leeds LS1 4LT
DX: 310016, Leeds Park Square
Telephone: 0845 077 9570
Solicitors for the Claimants

APPENDIX (AUTHORITIES)
TO CLAIMANTS’ CLOSING SUBMISSIONS
OVERVIEW: CONTRACTUAL CONSTRUCTION (ANNEX I) ................................. 1

Investors Compensation Scheme {A1.1/78} ............................................................ 1
Rainy Sky {A1.1/37} ............................................................ 3
Wood v Capita {A1.1/67} ............................................................ 5
(1) RELATIONAL CONTRACT (ANNEX II) ................................ 7

Yam Seng {A1.1/43} ............................................................ 7
Bristol Groundschool {A1.1/52} ............................................................ 9
Carewatch {A1.1/53} .......................................................... 11
D&G Cars {A1.1/56} .......................................................... 13
Globe Motors {A1.1/62} .......................................................... 15
Al Nehayan {A1.1/72} .......................................................... 17
(2) & (3) IMPLIED TERMS (ANNEX III) ............................ 19

Marks & Spencer {A1.1/61} .......................................................... 19
Law Debenture Trust {A1.1/74} .......................................................... 21
Telefonica {A1.1/51} .......................................................... 23
Braganza {A1.1/59} .......................................................... 25
Geys v Soc Gen {A1.1/42} .......................................................... 27
Mid Essex Hospital Services {A1.1/44} .......................................................... 29
Paragon Finance {A1.1/19} .......................................................... 31
Gogay {A1.1/16} .......................................................... 33
(4) SUPPLY OF GOODS & SERVICES (ANNEX IV) ............................ 35

Euroption {A1.1/41} .......................................................... 35
Marex {A1.1/45} .......................................................... 37
Finch {A2/55} ............................................................. 39
(5) & (6) ONEROUS & UNUSUAL TERMS (ANNEX V).............................. 41

Interfoto {A1.1/7} ............................................................ 41
OCT v Exnor {A2/28} ............................................................. 43
Amiri Flight Authority {A1.1/24} .......................................................... 45
One World {A2/47} ............................................................. 47
Nu Skin {A1.1/40} .......................................................... 49
(7) UNFAIR CONTRACT TERMS (ANNEX VI) ............................ 51
British Fermentation {A1.1/14} .......................................................... 51
African Export-Import {A1.1/71} .......................................................... 53
AXA Sun Life {A1.1/38} .......................................................... 55
Timeload {A1.1/9} ............................................................ 57
(10) & (11) POST OFFICE AS AGENT (Annex VII) .............................. 59

Bowstead, Agency {A1.3/1} ............................................................ 59
Garnac {A2/14} ............................................................. 61
Branwhite {A1.1/5} ............................................................ 63
Marine Blast {A2/32} ............................................................. 65
Yasuda Fire {A1.1/10} .......................................................... 67
Lewes v Morgan {A1.1/1} ............................................................ 69
(12) & (13) SUBPOSTMASTERS AS AGENTS (ANNEX VIII).......................... 71

Bristol and West Building Society {A2/26} ............................................................. 71
John Youngs {A1.1/35} .......................................................... 73
Coleman v Mellersh {A1.1/2} ............................................................ 75
Watson v Rodwell {A1.1/3} ............................................................ 77
(17) & (18) TRUE AGREEMENT (ANNEX IX) ............................ 79

Autoclenz {A1.1/39} .......................................................... 79
Dynasystems {A2/60} ............................................................. 81
(21) SUBSEQUENT APPOINTMENTS (ANNEX I) ............................... 83

Watchfinder {A1.1/65} .......................................................... 83
(22) & (23) ASSISTANTS (ANNEX X) .............................. 85

Prudential Assurance {A2/41} ............................................................. 85
Dolphin Maritime {A1.1/34} .......................................................... 87
Nisshin Shipping {A1.1/23} .......................................................... 89
OVERVIEW: CONTRACTUAL CONSTRUCTION (ANNEX I)
Investors Compensation Scheme {A1.1/78}

Full citation: Investors Compensation Scheme v West Bromwich Building Society [1997]
UKHL 28, [1998] 1 W.L.R. 896
Headline: Leading authority on construction of contracts in context; but see

Rainy Sky (p.3) and Wood v Capita (p.5)
Court: Lord Hoffmann (with whom Lords Goff, Hope and Clyde agreed;
Lord Lloyd dissenting), HL
Facts: Investors received negligent advice from the respondent. The

investors had claims in tort and breach of statutory duty. They
assigned these claims to the claimant, who compensated them for
their losses and then sought to recoup this from the respondent. The
case turned on the construction of the deed of assignment and
whether the investors had retained a claim for rescission against the
respondent.
Legal propositions:
Interpretation: Interpretation is the ascertainment of the meaning which the

document would convey to a reasonable person having all the
background knowledge which would reasonably have been available
to the parties in the situation in which they were at the time of the
contract: p.912H.
Background: Subject to the requirement that it should have been reasonably

available to the parties and to the exception to be mentioned next, that
background includes absolutely anything which would have affected
the way in which the language of the document would have been
understood by a reasonable person: p.912H-913A.
Common issue: All – general principles of contractual construction
1
Investors Compensation Scheme {A1.1/78}
References
Written Opening Annexes: Annex I– Contractual Construction (p.A1-A3)
2
Rainy Sky {A1.1/37}
Rainy Sky {A1.1/37}

Full citation: Rainy Sky SA v Kookmin Bank [2011] 1 W.L.R. 2900
Headline: Construction of contracts is an iterative process and should accord

with business common sense (cf Arnold v Briton)
Court: Lord Clarke (with whom Lords Mance, Phillips, Kerr and Wilson
agreed), SC
Facts: The claimant ordered a vessel from a South Korean ship yard.
Payment was to be made in 5 instalments. The claimant was entitled
to rescind the contract in various circumstances and have any money
it had already paid returned. The claimant was also entitled to the
return of payment if the ship yard became insolvent. The ship yard
was required to provide a performance bond guaranteeing
repayment. A bond was provided by Kookmin Bank. After the
claimant had paid two instalments the ship yard entered an
insolvency process. The claimant called on the defendant to honour
the guarantee. The defendant alleged that the guarantee did not cover
insolvency of the ship yard. The case concerned the correct
construction of the refund guarantee.
Legal propositions:
Common sense: The court must have regard to all the relevant surrounding
circumstances and if there are two possible constructions,
the court is entitled to prefer the construction which is
consistent with business common sense and to reject the
other: §21.
Iterative: The resolution of an issue of interpretation is iterative,

involving checking each of the rival meanings against other
provisions of the document and investigating its commercial
consequences: §28 (citing with approval Re Golden Key Ltd
[2009] EWCA Civ 636, per Lord Mance at §12).
3
Rainy Sky {A1.1/37}
Commercial intention: The exercise of identifying the parties' commercial intention

is not simply a tool to be deployed once it has first been
concluded that the natural meaning of the words produces a
result that appears to have been unintended: §20.
Common issue: All –principles of contractual construction
References
Written Opening Annexes: Annex I– Contractual Construction (p.A1-A3)
4
Wood v Capita {A1.1/67}

Full citation: Wood v Capita Insurance Services Ltd [2017] UKSC 24
Headline: Textualism and contextualism are not conflicting paradigms but

complementary tools to be used to ascertain the objective meaning of
the language which the parties have chosen to express their
agreement
Court: Lord Hodge (with whom Lords Neuberger, Mance, Clarke and
Sumption agreed), SC
Facts: The parties entered a written agreement for the sale of an insurance
broking company, under which the defendant seller agreed to
indemnify the claimant including for loss caused by mis-selling where
such loss followed or arose from a claim or complaint by a customer
to the FSA or other regulator. Shortly after buying the company,
employees told the claimant that the company has mis-sold products
to customers. The claimant informed the FSA whom informed it to
pay compensation to customers. The claimant then sought to rely on
the indemnity. The case concerned whether self-referral by the
company to the FSA was covered by the indemnity.
Legal propositions:
Not a literalist exercise: The task of ascertaining the objective meaning of the
language of a contract is not a literalist exercise focused
solely on a parsing of the wording of the particular clause;
rather, the court must consider the contract as a whole and,
depending on the nature, formality and quality of drafting
of the contract, give more or less weight to elements of the
wider context in reaching its view as to that objective
meaning: §10.
Unitary exercise: Interpretation is a unitary exercise: §11
Business common sense: Where there are rival meanings, the court can give
weight to the implications of rival constructions by reaching
5
a view as to which construction is more consistent with

business common sense: §11.
Quality of drafting: In striking a balance between the indications given by the

language and the implications of the competing
constructions the court must consider the quality of drafting
of the clause: §11.
Common issue: All –principles of contractual construction
References
Written Opening Annexes: Annex I – Contractual Construction (p.A4-A5)
6
(1) RELATIONAL CONTRACT (ANNEX II)
Yam Seng {A1.1/43}

Full citation: Yam Seng v International Trade Corp [2013] EWHC 111 (QB) [2013] 1 All
ER (Comm) 1321
Headline: Leading authority on relational contracts
Court: Leggatt J, HC
Facts: An exclusive distribution agreement between two entities for the

marketing of Manchester United branded products in duty free
outlets overseas. The defendant was alleged to have misled the
claimant about the relevant legal, commercial and logistical position,
and to have repeatedly missed deadlines for supplying products to
the claimant.
Legal propositions:
Intention: Following established methodology of English law for the implication

of terms in fact, there is no difficulty in implying a duty of good faith
in any ordinary commercial contract based on the presumed intention
of the parties: §131.
Background: The relevant background against which contracts are made includes
matters of fact known to the parties and also shared values and norms
of behaviour. Some of these are norms that command general social
acceptance; others may be specific to a particular trade or commercial
activity; others may be more specific still, arising from features of the
particular contractual relationship: §134.
Context: What good faith requires is sensitive to context; it includes the core
value of honesty: §141.
Fair dealing: The court saw no objection in describing the duty as one of good
faith “and fair dealing”. What constitutes fair dealing is defined by
the contract and by those standards of conduct to which, objectively,
the parties must reasonably have assumed compliance without the
7
Yam Seng {A1.1/43}
need to state them. The advantage of including reference to fair

dealing is that it draws attention to the fact that the standard is
objective and distinguishes the relevant concept of good faith from
other senses in which the expression “good faith” is used: §150.
Relational: Typically, such implication will be where the contract is ‘relational.’

Relational contracts are those that require a high degree of
communication, cooperation and predictable performance based on
mutual trust and confidence and involve expectations of loyalty
which are not legislated for in the express terms of the contract but
are implicit in the parties' understanding and necessary to give
business efficacy to the arrangements (Cf. “where the contract
involves a simple exchange”): §142.
Good faith: The test of good faith is objective in the sense that it depends not on
either party's perception of whether particular conduct is improper
but on whether in the particular context the conduct would be
regarded as commercially unacceptable by reasonable and honest
people: §144.
Common issues: (1) Relational Contract; (2) and (3) Implied Terms
References
Written Opening: Section A: Introduction, Relational Contract & Implied Terms

(p.2)
Section B: Issue (1) Relational Contract (p.38, 41-42); Issues (2)

and (3) Implied Terms (p.54, 62); Issue (21) Subsequent
Appointments (p.157)
Annexes: Annex II –Relational Contract (p.A7-A21)
8
Bristol Groundschool {A1.1/52}
Bristol Groundschool {A1.1/52}

Full citation: Bristol Groundschool Ltd v Intelligent Data Capture Ltd [2014] EWHC
2145 (Ch)
Headline: Application of Yam Seng-finding that there was a relational contract
Court: Richard Spearman QC (sitting as a Deputy Judge of the Chancery

Division)
Facts: The parties agreed a joint venture to produce, publish and market
training materials for pilots. The claimant provided the content for
the manuals and the defendant converted the content into an
electronic application. The parties fell out. Anticipating the end of the
joint venture, the defendant secretly accessed the claimant’s database
and downloaded material and after termination, used the
downloaded material to continue selling the electronic manuals.
Legal propositions:
Relational: This was a relational contract with an implied duty of good faith:
§196.
Honesty: Good faith extends beyond, but at the very least includes, the
requirement of honesty: §196.
Breach: The relevant test for breach is that of conduct that would be regarded
as “commercially unacceptable” by reasonable and honest people in the
particular context involved: §196.
Termination: Contract was terminable on reasonable notice (9 months, §156).
Common issue: (1) Relational Contract
References
Written Opening Annexes: Annex II –Relational Contract (p.A10)
9
10
Carewatch {A1.1/53}
Carewatch {A1.1/53}
Full citation: Carewatch Care Services Ltd v Focus Caring Services Ltd [2014] EWHC
2313 (Ch)
Headline: Application of Yam Seng-finding that there was no relational contract

as the implied terms would be inconsistent with the express terms of
the contract.
Court: Henderson J, HC
Facts: The claimant provided home care services, operating through its own
branches and through franchisees, such as the defendant. The
claimant began setting up its own branches in direct competition with
the franchisees. The defendant purported to terminate the contract
alleging that by setting up its own branches in competition with
franchises and ceasing to support or develop its franchise network,
the claimant was in repudiatory breach of various implied terms of
the contracts, including a far-reaching version of the duty of good
faith and fair dealing. The relevant agreement was for an initial term
of 7 years, thereafter renewable, but terminable immediately by
Carewatch in the case of breach by the franchisee (§71). The franchise
agreements contained restrictive covenants for 12 months following
termination. The defendant set up its own care service in the area, and
the claimant sought to enforce the restrictive covenants. (N.B. This
was as much a decision on the particular terms as on the principles –
the implied terms contended for went beyond the classic terms in a
relational contract, including within the closest term alleged at the
end of §101.)
Legal propositions:
No analogy: How close the relationship was to employment relationship, on the

one hand, or to “an ordinary commercial relationship”, on the other,
was relevant to whether a term as to trust and confidence would be
implied – the judge held there was no analogy with employment in
that case: §107.
11
Carewatch {A1.1/53}
Relational: Contract was a not relational contract, in the sense contended for:
§109.
Lacuna: Where the parties have taken a great deal of trouble to spell out their
contractual terms (§106), there was no clear lacuna in the detailed
provisions of the agreement that needed to be filled if the agreement
was to work commercially: §109.
Inconsistency: The proposed implied terms [flowing from a finding of a

relational contract] would be inconsistent with the express terms of
the agreement: §110.
Common issue: (1) Relational contract
References
Written Opening Annexes: Annex II –Relational Contract (p.A10-A11)
12
D&G Cars {A1.1/56}
D&G Cars {A1.1/56}

Full citation: D&G Cars Ltd v Essex Police Authority [2015] EWHC 226 (QB)
Headline: Application of Yam Seng-finding that this was relational contract “par
excellence.”
Court: Dove J, HC
Facts: A private contractor had agreed to dispose of cars for a police

authority. The police authority gave instructions for one particular
vehicle to be completely crushed. It was later discovered that,
contrary to those instructions, the contractor had re-built the car,
transferred the number plates from a different vehicle, and used it in
the contractor’s own fleet.
Legal propositions:
Context: The existence and the content of an implied condition in relation to

honesty and integrity is highly sensitive to the context of the contract
itself: §175.
Integrity: By use of the term ‘integrity’, rather than the term ‘good faith’, the
intention is to capture the requirements of fair dealing and
transparency which are no doubt required (and would, to the parties,
go without saying) in a contract which creates a long-standing
relationship between the parties lasting some years: §175.
Relational: Relatively lengthy period of contractual relationship between the

parties, during which there were going to be a very large number of
individual transactions undertaken under the auspices of the contract
meant this was a relational contract “par excellence,” §176.
Length: Contract for initial fixed term of 5 years: §3.
Termination: Contract terminable immediately on written notice in case of breach:

§15.
13
D&G Cars {A1.1/56}
References
Written Opening Annexes: Annex II – Relational Contract (p.A11-A12, A20)
14
Globe Motors {A1.1/62}

Full citation: Globe Motors v TRW Lucas Varity Electric Steering [2016] EWCA Civ 393
Headline: Court of Appeal approval of Yam Seng relational contract principle
Court: Beatson LJ (with whom Underhill LJ and Moore-Bick LJ agreed), CA
Facts: Respondent produced electric power assisted steering systems for

different car manufacturers. It entered into an exclusive supply
agreement with the claimant under which the respondent had to
purchase all its electric motors from the claimant and the claimant
could not sell the same anyone else. The contract was for the lifetime
of each “platform,” terminable upon insolvency or material breach
(§19).
Legal propositions:
Relational: Reiterated the Yam Seng relational contract principle that in certain
categories of long-term contract that involved a high degree of
cooperation, communication and mutual trust which are not
legislated for in the express terms the court may be more willing to
imply a duty of good faith: §67.
Implication: Whatever the broad similarities between interpretation and

implications of terms, the two are ‘different processes governed by
different rules'. Citing Lord Neuberger in Marks & Spencer (p.19
below). An implication of a duty of good faith will only be possible
where the language of the contract, viewed against its context,
permits it. It is not a reflection of a special rule of interpretation for
this category of contract: §68.
References
Written Opening Annexes: Annex II – Relational Contract (p.A12)
15
16
Al Nehayan {A1.1/72}
Al Nehayan {A1.1/72}
Full citation: Al Nehayan v Kent [2018] EWHC 333 (Comm)
Headline: Leggatt LJ applying Yam Seng and reiterating relational contract is a

category of contract- finding that there was a relational contract
Court: Leggatt LJ, HC
Facts: The parties entered into a joint venture, pursuant to which the
claimant invested in the defendant’s hotel business. The venture was
expanded to include an online travel business. The claimant decided
to separate his interest from the defendant’s, and a scheme was
devised. The parties entered into two agreements to implement this
scheme: a promissory note and a framework agreement. D failed to
make the requisite payments under those agreements.
Legal propositions:
Implied duty: An obligation not to act dishonestly and not to act to undermine the
bargain entered or the substance of the contractual benefit bargained
for; and an obligation to act reasonably and with fair dealing having
regard to the interests of the parties and to the provisions, aims and
purposes of the contract, objectively ascertained: §175.
Fair dealing: This summary is consistent with the English case law as it has so far
developed, with the caveat that the obligation of fair dealing is not a
demanding one and does no more than require a party to refrain from
conduct which in the relevant context would be regarded as
commercially unacceptable by reasonable and honest people: §175.
Common issue: (1) Relational Contract
References
Written Opening: Section B, Issue (1) Relational Contract (p.53)
Annexes: Annex II– Relational Contract (p.A13-A15)
17
18
(2) & (3) IMPLIED TERMS (ANNEX III)
Marks & Spencer {A1.1/61}

Full citation: Marks & Spencer Plc v BNP Paribas Securities Services [2015] UKSC 72,
[2016] A.C. 742
Headline: Leading authority on implication of terms, Lord Neuberger at §21

added six points to Lord Simon’s classic statement in BP Refinery
Court: Lord Neuberger (with whom Lords Sumption and Hodge agreed), SC
Facts: M&S were sub-leasing ‘The Point’ in Paddington Basin. The rent was
paid in quarterly instalments. M&S exercised its break clause to
terminate the lease on 24 January 2012, having previously paid the
full quarter’s rent on 25 December 2011. M&S sought to recover the
rent paid in advance beyond the termination date (namely for the
period 24 January 2012-24 March 2012) on the basis that there was an
implied term to this effect.
Legal propositions:
Intention: (1) No need to show actual intention. Rather, one is concerned with
the notional intention of notional reasonable people in the position of the
parties at the time at which they were contracting: §21, at p.754G
Not fairness: (2) A term should not be implied into a detailed commercial contract
merely because it appears fair or because one considers that the
parties would have agreed it if it had been suggested to them. Those
are necessary but not sufficient grounds for including a term: §21
Reasonable: (3) It is questionable whether reasonableness and equitableness (Lord

Simon’s first requirement), will ever add anything: if a term satisfies
the other requirements, it is hard to think that it would not be
reasonable and equitable: §21, at p.754H
Alternatives: (4) Business necessity and obviousness can be alternatives in the sense
that only one of them needs to be satisfied, although in practice it
19
Marks & Spencer {A1.1/61}
would be a rare case where only one of those two requirements

would be satisfied: §21, at p.755A
Bystander: (5) If one approaches the issue by reference to the officious bystander,
it is “vital to formulate the question to be posed by [him] with the
utmost care”: §21, at p.755B
Necessity: Necessity for business efficacy involves a value judgment. The test is
not one of “absolute necessity”, not least because the necessity is judged
by reference to business efficacy. A more helpful way of putting this
is that a term can only be implied if, without the term, the contract
would lack commercial or practical coherence: §21, at p755C
Common issues: (2) and (3) Implied Terms
References
Written Opening: Section B, Issues (2) and (3) Implied Terms (p.59-62)
Annexes: Annex III – Implied Terms (p.A24-A26)
20
Law Debenture Trust{A1.1/74}
Law Debenture Trust {A1.1/74}

Full citation: Ukraine v The Law Debenture Trust Corporation Plc [2018] EWCA Civ
2026
Headline: No general rule that either Stirling v Maitland or Necessary

cooperation terms will be implied
Court: Gloster LJ, Sales LJ, and David Richards LJ, CA
Facts: In 2014 Russia seized the Crimea and backed a civil war in Ukraine.
Ukraine’s economy almost collapsed and it defaulted on the
repayment of bonds. LDTC was the bond trustee acting on Russia’s
behalf. One of Ukraine’s lines of defence was that there was an
implied term that it would not have to repay the debt to Russia, if
Russia had prevented it from doing so. This was rejected by the Court
of Appeal although Ukraine’s appeal was allowed on other grounds.
Legal propositions:
No rule: No general rule that either Stirling v Maitland or Necessary

Cooperation term will be implied: §207.
Prevention: Where there is some agreed precondition for performance that a party
to a contract needs the other party's assistance to satisfy, an implied
duty not to prevent performance of the condition by failing to provide
assistance might follow: §207.
Scope: The implication of such a term, and, perhaps more importantly, its
scope, will depend on the contract under consideration, and in
particular its express terms: §207.
Shape: Any implied term of cooperation or prevention from performance can

only be given shape in the light of the express terms which set out the
obligations of the parties and only has content by virtue of the express
terms – specifically the court cannot, by implication of such a duty,
exact a higher degree of cooperation than could be defined by
reference to the necessities of the contract, so “…the duty of cooperation
21
Law Debenture Trust{A1.1/74}
or prevention/inhibition of performance is required to be determined, not by

what might appear reasonable, but by the obligations imposed upon each
party by the agreement itself,” §207 (citing with approval judgment of
Cook J in James E McCabe Ltd v Scottish Courage Ltd [2006] EWHC
538 (Comm) at §18).
Common issues: (2) and (3) Implied Terms.
References
Written Opening: Section B, Issues (2) and (3) Implied Terms (p.66)
Annexes: Annex III – Implied Terms (p.A24)
22
Telefonica {A1.1/51}
Telefonica {A1.1/51}
Full citation: British Telecommunications Plc v Telefonica O2 UK Ltd [2014] UKSC 42,
[2014] 4 All E.R. 907
Headline: Contractual discretion must be exercised consistently with

commercial purpose
Court: Lord Sumption (with whom Lords Neuberger, Mance, Toulson and
Hodge agreed), SC
Facts: Case concerned termination charges paid by mobile network

operators to BT where mobile calls are put through to fixed-line
numbers operated by BT containing the “08” prefix. BT introduced a
new scheme of termination charges in 2009 in accordance with its
powers under the agreement between BT and the operators. The
charges would be at a rate varied according to the level at which the
operator charged the caller for the call.
Legal propositions:
Discretion: The scope of a contractual discretion will depend on the nature of the
discretion and the construction of the language conferring it. It is well
established that in the absence of very clear language to the contrary,
a contractual discretion must be exercised in good faith and not
arbitrarily or capriciously: §37.
Purpose: This will normally mean that it must be exercised consistently with its
contractual purpose: §37.
References
Written Opening Annexes: Annex III –Implied terms (p.A28)
23
24
Braganza {A1.1/59}
Braganza {A1.1/59}
Full citation: Braganza v BP Shipping Ltd [2015] UKSC 17, [2015] 1 W.L.R. 1661
Headline: Existence of “Braganza duty” governing decision making by

employer
Court: Lady Hale (with whom Lords Kerr and Hodge agreed; Lords
Neuberger and Wilson dissenting), SC
Facts: Mr Braganza, a Chief Engineer disappeared on one of BP’s oil tankers

in the mid-North Atlantic. BP formed the view that the most likely
explanation was that he had committed suicide by throwing himself
overboard. Under his contract of employment, a finding of suicide
meant his widow was not entitled to certain death benefits. Mrs
Braganza brought a claim against BP for, inter alia, death benefits
amounting to over US $230,000, and sought to impugn BP’s decision.
Legal propositions:
Duty: The party who is charged with making decisions which affect the
rights of both parties to the contract has a clear conflict of interest. That
conflict is heightened where there is a significant imbalance of power
between the contracting parties, as there often will be in an
employment contract. The courts have therefore sought to ensure
that such contractual powers are not abused. They have done so by
implying a term as to the manner in which such powers may be
exercised, a term which may vary according to the terms of the
contract and the context in which the decision-making power is given:
§18.
Wednesbury: Wednesbury has two limbs: the first limb focusses on the decision-
making process—whether the right matters have been taken into
account in reaching the decision. The second focusses upon its
outcome—whether even though the right things have been taken into
account, the result is so outrageous that no reasonable decision-maker
could have reached it: §24.
25
Braganza {A1.1/59}
References
Written Opening: Section B, Issues (2) and (3) Implied Terms (p.62).
Annexes: Annex III –Implied Terms (p.A29-31)
26
Geys v Soc Gen {A1.1/42}
Geys v Soc Gen {A1.1/42}

Full citation: Geys v Société Générale London Branch [2012] UKSC 63
Headline: Classification of implied terms by Lady Hale
Court: Lady Hale, (in agreement with Lords, Hope, Wilson, Carnwath; Lord
Sumption dissenting) SC
Facts: Mr Geys was employed by Soc Gen. His contract provided for a
performance-related bonus and a termination payment linked to the
previous years' bonuses. Soc Gen wrongfully purported to terminate
Geys' employment without cause but with immediate effect (his
contract contained a three-month notice provision). Soc Gen then
sought, in Dec 2007, to exercise a payment in lieu of notice clause by
paying Geys 'three months' notice pay into his bank account. They did
not notify Geys that they had done this until they wrote to him in Jan
2008. This was significant because if Geys' contract terminated in
2008, rather than 2007, the termination payment under his contract
would be almost 2 million euros higher.
Legal propositions:
Classification: First there are those terms which are implied into a particular contract
because, on its proper construction, the parties must have intended to
include them. Such terms are only implied where it is necessary to
give business efficacy to the particular contract in question. Second,
there are those terms which are implied into a class of contractual
relationship, such as that between landlord and tenant or between
employer and employee, where the parties may have left a good deal
unsaid, but the courts have implied the term as a necessary incident
of the relationship concerned, unless the parties have expressly
excluded it: §55.
Common issue: (2) and (3) Implied terms
References
Written Opening: Section B, Issues (2) and (3) Implied Terms (p.59-61)
27
28
Mid Essex Hospital Services {A1.1/44}

Full citation: Mid Essex Hospital Services NHS Trust v Compass Group UK and Ireland
t/a Medirest [2013] EWCA Civ 200
Headline: Adoption of Lady Hale’s classification of implied terms and exercise

of contractual discretion
Court: Jackson LJ (with whom Beatson and Lewison LLJ agreed), CA
Facts: The parties entered into a suite of agreements under which Medirest
was to provide catering and cleaning services to the Trust. If the
services did not reach the requisite standard the Trust could award
service failure points and levy payment deductions against the
monthly contract price payable. The Trust could also terminate the
contract if the service failure points exceeded a specified number in
any 6-month period. The Trust purported to terminate the contract.
Medirest commenced proceedings for breach of contract. No implied
term re exercise of discretion because the express term for calculating
service points and deductions was precise: there was only one right
answer.
Legal propositions:
Classification: It would have been absurd in any of those cases to read the contract
as permitting the party in question to exercise its discretion in an
arbitrary, irrational or capricious manner. By reference to Baroness
Hale’s classification in Geys v Société Générale [2012] UKSC 63 at
[55], [2013] ICR 117, that implied term falls into the first category: §82.
Discretion: Discretion involved making an assessment or choosing from a range

of options, taking into account the interests of both parties. In any
contract under which one party is permitted to exercise such a
discretion, there is an implied term. The precise formulation of that
term has been variously expressed in the authorities. In essence,
however, it is that the relevant party will not exercise its discretion in
an arbitrary, capricious or irrational manner: §83.
Common issue: (2) and (3) Implied Terms
29
References
Written Opening: Section B, Issues (2) and (3) Implied Terms (p.59)
Annexes: Annex III– Implied Terms (p.A28)
30
Paragon Finance {A1.1/19}

Full citation: Paragon Finance Plc v Nash [2001] EWCA Civ 1466
Headline: Example of implied term re contractual discretion
Court: Dyson LJ (with whom Thorpe and Astill LLJ agreed), CA
Facts: Mr and Mrs Nash obtained a mortgage to purchase their house, the
terms of which allowed Paragon to vary the interest rate “at their
discretion.” The Bank of England base rate dropped, but Paragon
failed to match this drop and continued charging an amount above
this rate. Mr and Mrs Nash defaulted and Paragon took steps to
obtain possession, as a precursor to sale of the property. Mr and Mrs
Nash argued that there was an implied term that Paragon’s discretion
has to be exercised in a reasonable and honest way.
Legal propositions:
Wednesbury: We find a somewhat reluctant extension of the implied term to

include unreasonableness that is analogous to Wednesbury
unreasonableness. It is one thing to imply a term that a lender will not
exercise his discretion in a way that no reasonable lender, acting
reasonably, would do. It is unlikely that a lender who was acting in
that way would not also be acting either dishonestly, for an improper
purpose, capriciously or arbitrarily. It is quite another matter to imply
a term that the lender would not impose unreasonable rates: §41.
Discretion: There was an implied term that the Claimant would not set rates of
interest unreasonably in the limited sense that I have described. Such
an implied term is necessary in order to give effect to the reasonable
expectations of the parties: §42.
References
Written Opening Annexes: Annex III– Implied Terms (p.A28)
31
32
Gogay {A1.1/16}
Gogay {A1.1/16}
Full citation: Gogay v Hertfordshire County Council [2000] IRLR 703
Headline: Knee-jerk suspension (or without reasonable grounds) may amount to

a breach of an implied term of trust and confidence
Court: Hale LJ (with whom May LJ and Peter Gibson LJ agreed), CA
Facts: Mrs Gogay worked for the Council as a care assistant in a children’s
home. She worked with a child with learning difficulties who had
been badly abused by her parents and tended to act in a sexually
provocative way. Mrs Gogay asked not to be left alone with the child
and was commended for her professionalism in handling the
situation. The child subsequently made comments that could have
been construed as allegations of abuse against Mrs Gogay. The
Council suspended her telling her she was suspected of abuse. An
inquiry found there was no case to answer and Mrs Gogay was
reinstated, however she could no longer work due to her clinical
depression caused by her suspension. Council was found to be in
breach of its implied duty of trust and confidence.
Legal propositions:
Suspension: The local authority had acted in breach of the implied term of trust
and confidence by making a knee-jerk suspension. The employer
should avoid ‘knee jerk’ reactions with suspensions as the default
position without consideration of alternatives: §59.
(Gogay has been applied and approved as authority for the trite
proposition that suspension is not a neutral act; see e.g. Agoreyo v
Lambeth BC [2017] EWHC 2019 (QB) at §24. See also Sedley LJ in
Mezey v South West London and St George's Mental Health NHS Trust
[2007] IRLR 244 at §12.)
33
Gogay {A1.1/16}
References
Written Opening Annexes: Annex III– Implied Terms (p.A32)
34
(4) SUPPLY OF GOODS & SERVICES (ANNEX IV)
Euroption {A1.1/41}
Full citation: Euroption Strategic Fund Ltd v Skandinaviska Enskilda Banken AB [2012]
EWHC 584 Comm
Headline: Section 13 Supply of Goods and Services Act 1982 only applies to
those services agreed to be provided under the contract for services
and not to any other rights and obligations
Court: Gloster J, HC
Facts: The claimant was an investment fund incorporated in the BVI who
traded options on European exchanges. SEB was the claimant’s
clearing broker pursuant to an agreement entered on 12 May 2008.
SEB could close out the claimant’s position without reference to the
claimant in certain situations. During a volatile time in the markets in
the October 2008 Financial Crash SEB closed out a number of the
claimant’s contracts. The claimant alleged that this was done
negligently and/or in breach of contract. Question of whether the
closing out was a service within meaning of Section 12 Supply of
Goods and Services Act 1982 (“the Act”).
Legal propositions:
Section 13: The definition in Section 12(1) of “contract for the supply of a service”
is (subject to exclusions) “a contract under which a person (‘the
supplier’) agrees to carry out a service”. Thus the “implied term about
care and skill” imposed by Section 13 of the Act only applies to
services agreed to be provided under a contract for services and not to
all rights and obligations under such a contract: §111.
Common issue: (4) Supply of Goods and Services Act
35
Euroption {A1.1/41}
References
Written Opening Annexes: Annex IV– Supply of Goods and Services Act
(p.A35)
36
Marex{A1.1/45}
Marex {A1.1/45}
Full citation: Marex Financial v Creative Finance [2013] EWHC 2155 (Comm)
Headline: Application and approval of Gloster J in Euroption.
Court: Field J, HC
Facts: The claim followed the steep drop in the US Dollar and Japanese Yen
exchange rate after the Japanese earthquake in March 2011.
Accumulated cross-currency positions were closed, obliging the client
to buy NZD 450 million and EUR 360 million in exchange for
Japanese Yen. This was achieved by new back-to-back trades at the
best price available. The claim was between a foreign exchange broker
and a client concerning the close out of cross-currency positions, said
to have been undertaken in an irrational or negligent manner and
whether a term was implied under Section 13.
Legal propositions:
Section 13: The implication under Section 13 is in respect of the particular service
which the supplier has agreed to carry out pursuant to the contract,
and the exercise by Marex of its right to close out the defendants'
positions was not a “service” that Marex had agreed to carry out for
the defendants. Rather, it was a right that Marex elected to exercise in
its own interests and for its own protection: §71.
Common issue: (4) Supply of Goods and Services Act
References
Written Opening: Section B, Issue (4) Supply of Goods and Services Act 1982
(p.84)
Annexes: Annex IV– Supply of Goods and Services Act (p.A35)
37
Marex{A1.1/45}
38
Finch {A2/55}
Finch {A2/55}
Full citation: Finch v Lloyds TSB Bank [2016] EWHC 1236 (QB)
Headline: Application of Section 13 Supply of Goods and Service Act 1982
Court: Pelling QC HHJ, HC
Facts: The claimants’ hotel business took out a 10 year fixed rate loan. They
engaged a financial advisor who acted as a broker in soliciting offers
from various banks and engaged solicitors who negotiated the terms
of the agreement, ultimately entered into by Lloyds. The loan
agreement contained a fairly typical clause that required the borrower
to pay break costs in the event of prepayment in the amount of £1.5
million. The claimants alleged that they only discovered this when
they sought to refinance and were prevented from refinancing.
Legal propositions:
Section 13: Section 13 did not apply in respect of an alleged failure to advise (as
opposed to where the advice was said to be wrong) on the grounds
that if reliance is to be placed on Section 13 in the context of this case,
it follows that it is necessary for the claimants to plead and prove a
contract under which the defendant has agreed to provide a service
that included the provision of advice but the claimants had not done
so: §49.
Common issue: (4) Supply of Goods and Services Act 1982
References
Written Opening Annexes: Annex IV– Supply of goods and Services Act 1982
(p.A35-A36)
39
40
(5) & (6) ONEROUS & UNUSUAL TERMS (ANNEX V)
Interfoto {A1.1/7}
Full citation: Interfoto Picture Library v Stiletto [1989] 1 QB 433
Headline: Onerous or unusual terms must be brought to the attention of the

other party in order to be relied upon
Court: Dillon LJ and Bingham LJ, CA
Facts: The claimants ran a photo transparency lending library. Following a

telephone inquiry by the defendants, the claimants delivered 47
transparencies together with a delivery note containing nine printed
conditions. All the transparencies had to be returned within 14 days
of delivery, otherwise a holding fee of £5 per day plus VAT would be
charged. The defendants did not read the conditions and returned the
transparencies four weeks later, whereupon the claimants invoiced
the defendants for £3,783.50.
Legal propositions:
Narrow: Dillon LJ: narrower principle – consider whether the condition was
sufficiently brought to the defendant’s attention to make it a term of
the contract, at pp.438D to 439B.
Wide: Bingham LJ: wider principle – consider what notice the party alleged
to be bound was given of the particular condition said to bind him;
and to resolve whether in all the circumstances it is fair to hold him
bound by the condition in question , at p.445B.
Common issues: (5) and (6) Onerous or Unusual Terms
References
Written Opening: Section B, Issues (5) and (6) Onerous and Unusual Terms (p.92)
Annexes: Annex II- Relational Contract (p.7); Annex V– Onerous and

Unusual Terms (p.A39-A44)
41
Interfoto {A1.1/7}
42
OCT v Exnor {A2/28}
OCT v Exnor {A2/28}

Full citation: Ocean Chemical Transport v Exnor Crags Ltd [2000] 1 All E.R. (Comm)
519
Headline: Interfoto could, in principle, extend to signed agreements
Court: Evans LJ (with whom Henry and Waller LLJ agreed), CA
Facts: The defendant supplied the claimant with bunkers for use on a ship.
The defendant’s terms referred to separate conditions that contained a
6 month time limit for notification of claims for breach of contract. 17
months later the ship was arrested Egypt by a company claiming they
had not been paid for bunkers. OCT brought an action against the
defendant alleging this was an onerous term and was not
incorporated as it had not been sufficiently brought to their attention.
Legal propositions:
Signature: In what might be regarded as an extreme case (such as where the

clause was unusual or onerous and a signature was obtained under
pressure of time or other circumstances) even a signature might not
be enough: §49.
Clause/effect: The question is whether the defendants have discharged the duty
which lies upon them of bringing the existence of the clause upon
which they rely (and…the effect of that particular clause) to the notice
of the other party in the circumstances of the particular case: §48 .
Common issues: (5) and (6) Onerous and Unusual Terms
References
Written Opening Annexes: Annex V- Onerous and Unusual Terms (p.A41)
43
44
Amiri Flight Authority {A1.1/24}

Full citation: Amiri Flight Authority v BAE Systems Plc [2004] 1 All ER 385
Headline: Interfoto could, in principle, extend to signed agreements
Court: Mance LJ (with whom Rix and Potter LLJ agreed), CA
Facts: Claimant had contracted with the defendant for maintenance of an

aircraft it had also bought from the defendant. The claimant sought
damages for negligence on the basis that the defendant had failed to
prevent a known risk of corrosion.
Legal propositions:
Signature: Bingham LJ [in Interfoto] stressed that whether or not sufficient notice
had been given was a question which also involved broad
considerations of fairness and reasonableness, having regard to the
nature and effect of the clause and the circumstances relied upon as
constituting notice that the contract was to contain a clause of such a
nature and effect. It is unnecessary in this case to consider whether
there may be contracts in writing to which such reasoning would also
apply: cf Rix LJ's doubt in HIH Casualty and General Insurance Ltd v
New Hampshire Insurance Co [2001] CLC 1480. One could take the case
of a car-owner entering a car-park and being asked to sign a ticket
handed to him by a car-parking attendant, or that of the holiday-
maker required to sign a long small-print document in order to hire a
family car at an airport, if, in either case, the relevant document
proved on close reading to contain a provision of an extraneous or
wholly unusual nature: §15.
References
Written Opening Annexes: Annex V– Onerous and Unusual Terms (p.A42)
45
46
One World {A2/47}
One World {A2/47}

Full citation: One World (GB) Limited v Elite Mobile Limited [2012] EWHC 3706 (QB)
Headline: Possible exception (without deciding) to the rule in L'Estrange v F

Graucob Ltd in relation to provisions that are onerous or unusual.
Court: Behrens HHJ, HC
Facts: Defendant was in the business of supplying mobile phone SIM cards
to distributors. It entered into a contract under which it agreed to sell
a number of cards to the claimant, who was to receive a "connection
bonus" for each card that was connected to a network. The agreement
was negotiated orally and by email. The claimant’s director spoke
adequate, but not good, English. The dispute was about whether any
conditions had to be satisfied before the bonus became payable. The
defendant maintained that the claimant had to achieve a 40 per cent
connection rate. As the claimant had not achieved that rate, the bonus
was not paid. Its case was that the condition was contained in a
written document, “the SIM supply agreement”. It also relied on a
“business registration form” signed by the claimant which included
the statement “I accept the attached terms and conditions.”
Legal propositions:
Exception: In the light of the authorities I am content to assume (without

deciding) that there is a possible exception to the rule in L'Estrange v F
Graucob Ltd in relation to provisions that are onerous or unusual.
However I agree with Mr Stacey that on the facts of this case the
requirement of a 40% threshold before a connection bonus is paid is
neither unusual nor onerous: §58.
References
47
One World {A2/47}
48
Nu Skin {A1.1/40}
Nu Skin {A1.1/40}
Full citation: Kaye v Nu Skin Ltd [2012] EWHC 958 (QB), [2012] CTLC 69
Headline: Interfoto principle applied to a signed agreement
Court: Denyer QC HHJ, HC
Facts: The defendant employed the claimant as a distributor under a

contract governed by English law, but with disputes to be arbitrated
in Utah. The claimant was dismissed and commended proceedings
for breach of contract in England, asserting that the arbitration clause
was void on the basis that it was (inter alia) an onerous or unusual
term under the Interfoto principle.
Legal propositions:
Interfoto: Following both the Parker case and what Bingham LJ said in Interfoto,
the arbitration clause in this case was clearly incorporated into the
agreement and therefore the only question is whether, in the words of
Bingham LJ, it is such an unreasonable clause as to require very
specifically being brought to the attention of the claimant and an
otherwise unimpeachable provision for arbitration in Utah was not:
§42.
References
49
50
(7) UNFAIR CONTRACT TERMS (ANNEX VI)
British Fermentation {A1.1/14}

Full citation: British Fermentation Products Ltd v Compair Reavell Ltd [1999] 2 All E.R.
(Comm) 389
Headline: Meaning of standard terms as used in UCTA 1977
Court: Bowsher QC HHJ, HC
Facts: Machinery provided by the defendant under a contract subject to the

Institution of Mechanical Engineers Model Form of General
Conditions Form C (1975 edition) failed to satisfy pre-delivery tests.
Question whether these conditions amounted to the defendant’s
standard terms so as to be covered by section 3(1) UCTA 1977.
Legal propositions:
Definition: The phrase “standard terms” has a wide meaning: §42 – citing with
approval observations made by Lord Dunpark in the Scottish case
McCrone v Boots Farm Sales Limited [1981] SLT 103, at 105:
“wide enough to include any contract, whether wholly written or partly

oral, which includes a set of fixed terms or conditions which the
proponer applies, without material variation, to contracts of the kind in
question.”
Usually used: Even the terms of an outside body may be held to be a party’s
standard terms if “the model form is invariably or at least usually used by
the party in question … either by practice or by express statement a
contracting party has adopted a model form as his standard terms of
business”: §46
Common issue: (7) Unfair Contract Terms
51
References
Written Opening Annexes: Annex VI- Unfair Contract Terms (p.A48)
52
African Export-Import {A1.1/71}
African Export-Import {A1.1/71}

Full citation: African Export-Import Bank v Shebah Exploration and Production Co Ltd
[2017] EWCA Civ 845, [2018] 1 W.L.R. 487
Headline: Review and approval of first instance decisions on meaning of

standard terms
Court: Longmore LJ (with whom Henderson LJ agreed), CA
Facts: Defendants were borrowers and guarantors from the claimants under
a facility agreement and personal guarantees for the exploration of oil.
The defendants defaulted on their repayments and accepted they
were liable for the debt. They sought to set these off against money
owed to them by the claimants, however the agreements contained
clauses excluding any right to set off or counterclaim against any
payments owed to the claimants.
Legal propositions:
Definition: It is relevant to inquire whether there have been more than

insubstantial variations to the terms which may otherwise have been
habitually used by the other party to the transaction. If there have
been substantial variations, it is unlikely to be the case that the party
relying on the Act will have discharged the burden on him to show
that the contract has been made on the other's written standard terms
of business: §25.
References
Written Opening Annexes: Annex VI– Unfair Contract Terms Contractual

Construction (p.A49-A50)
53
54
AXA Sun Life {A1.1/38}

Full citation: AXA Sun Life Services Plc v Campbell Martin Ltd [2011] EWCA Civ 133
Headline: Meaning of section 3(2)(b)(i) UCTA
Court: Stanley Burnton LJ (with whom Rix LJ and Wilson LJ agreed), CA.
Facts: AXA entered into a number of standard appointed representative

agreements. The contracts had been terminated and AXA sought to
recover outstanding sums due. The defendant counterclaimed for
alleged misrepresentations and/or breach implied terms. Court was
asked to rule on whether an entire agreement clause in the contract
prevented these counterclaims.
Legal propositions:
Subjective: Quite how section 3(2)(b)(i) of the Act should operate is not entirely
clear, as is demonstrated by the somewhat tentative discussion in
Chitty on Contracts , [33rd Edition at §15-085]. It is principally aimed at
the small print that entitles a party to a contract to provide something
other than that defined by the principal terms of the contract, as
where a holiday company reserves the right to substitute a hotel or
resort for that specified in the main part of the contract. In most
cases…the performance reasonably expected of a party is that which
is defined by the written contract between the parties. But… section
3(2)(b)(i) refers…to the performance “which was reasonably
expected” of that party. …A pre-contractual representation or
promise may affect the performance that is reasonably expected of a
party: §50. This is therefore a subjective enquiry (controlled by the
objective requirement of reasonableness).
References
Written Opening: Section B, Issue (7) Unfair Contract Terms (p.102)
55
Annexes: Annex VI—Unfair Contract Terms Contractual

Construction (p.A51)
56
Timeload {A1.1/9}
Timeload {A1.1/9}
Full citation: Timeload Ltd v British Telecommunications Plc [1995] E.M.L.R. 459
Headline: Term was subject to the requirement of reasonableness in section 3(2)

of UCTA as BT was attempting to deliver a performance which was
different from that reasonably expected.
Court: Bingham LJ MR , (with whom Hoffmann and Henry LJJ agreed), CA
Facts: The claimant ran a free telephone inquiry service and obtained a
number that was said by BT to have been allocated either by mistake
or due to a breach of duty by a BT employee. The claimant had begun
to market its services when BT gave it one month’s notice of
termination of the contract, relying on a termination clause in their
standard terms. The claimant applied for an injunction restraining BT
from terminating a contract.
Legal propositions:
Expectations: The argument accordingly turns on section 3(2)(b) and that I find
more difficult…. I find the construction and ambit of this subsection
by no means clear. If a customer reasonably expects a service to
continue until BT has substantial reason to terminate it, it seems to me
at least arguable that a clause purporting to authorise BT to terminate
without reason purports to permit partial or different performance
from that which the customer expected: at p.468.
Common law: The common law may respond to an oppressive termination clause
even if it were to fall outside the provisions of section 3(2)(b), by
“treating the clear intention of the legislature expressed in the statute as a
platform for invalidating or restricting the operation of an oppressive clause
in a situation of the present, very special, kind”: at p.468.
Common issue: (7) Unfair Contract Terms; and also (1) Relational Contract
57
Timeload {A1.1/9}
References
Written Opening: Section B, Issue (7) Unfair Contract Terms (p.96, 102)
Annexes: Annex VI—Unfair Contract Terms Contractual

Construction (p.A52)
58
(10) & (11) POST OFFICE AS AGENT (Annex VII)
Bowstead, Agency {A1.3/1}
Full citation: Bowstead & Reynolds on Agency (21st Ed.)
Legal propositions:
Description: Agency is fiduciary relationship which exists between two persons,

one of whom expressly or impliedly manifests assent that the other
should act on his behalf, usually (1) so as to affect his relations with
third parties, but sometimes (4) not – in both cases, where the other
person similarly manifests assent so to act, or so acts, pursuant to the
manifestation. The common thread is assent by both that one should
act on behalf of the other: §1-001.
Authority: The basic notion behind the common law of agency can be explained
along the following lines. The mature law recognises that a person
need not always do things that change his legal relations himself: he
may utilise the services of another to change them, or to do something
during the course of which they may be changed. Thus, where one
person, the principal, requests or authorises another, the agent, to act
on his behalf, and the other agrees or does so, the law recognises that
the agent has power to affect the principal’s legal position by acts
which, though performed by the agent, are to be treated in certain
respects as if they were acts of the principal. The conferral of
authority is voluntary: §1-005
Willingness: The basic justification for the agent’s power as so far explained seems
to be the idea of a unilateral manifestation by the principal of
willingness to have his legal position changed by the agent. To this
any contract between principal and agent is secondary, though there
will usually be one, which often provides the reason for the conferral
and indeed may contain it. The phrase “consensual agency” used in
the previous paragraph and below, and “agency by agreement” used
later in this book, are to be understood in this sense and not as
relating to any supporting contract. There is certainly no conceptual
reason which requires a contract between principal and agent to
59
Bowstead, Agency {A1.3/1}
achieve this creation of power, and it is indeed clear that no contract

is necessary, for a person without juristic capacity may be an agent.
Nor need the agent undertake to act as such. It is sufficient if the
principal manifests to the agent that he is willing for the agent to act,
and the agent does so in circumstances indicating that his acts arise
from the principal’s manifestation. This is not dissimilar from the
formation of a contract, but is notionally separate, as the example of a
power of attorney shows. In common with other situations where in
the civil law it is important to derive a party’s intention, the
principal’s manifestation of will is generally determined on an
objective basis, whether or not the conferral of power meets the
requirements of the law of contract: §1-006.
Discretion: If the agent has a discretion to exercise he must, in general, use proper
care and skill in doing so: §6-020.
Information: An agent is, in general, under a duty to keep his principal informed
about matters which are of his concern: §6-021- citing with approval
of the Canadian case Ocean City Realty Ltd v A & M Holdings Ltd (1987)
36 D.L.R. (4th) 94 at §98): (i) The duty extends to everything known to
an agent respecting the subject-matter of the contract which would be
likely to influence the conduct of his principal would be likely to
operate upon the principal’s judgment; (ii) The test is an objective one
to be determined by what reasonable persons in the position of the
agent would consider, in the circumstances, would be likely to
influence the conduct of the principal.
Common issues: (10) and (11) Post Office as Agent
References
Written Opening Annexes: Annex VII—Post Office as Agent (p.A56-A61)
60
Garnac {A2/14}
Garnac {A2/14}
Full citation: Garnac Grain Co Inc v HMF Faure & Fairclough Ltd [1968] AC 1130
Headline: Relationship of agency can be implied from conduct can be found

even if expressly disclaimed by the parties.
Court: Lord Pearson (with whom Lords Pearce, Morris, Wilberforce and
Reid agreed), HL
Facts: A agreed to sell to B, B to C, C to D and D to A (the original seller)

certain foreign lard for shipment to England in December 1963 or
January 1964. By the end of January 1964 the price of lard had risen
considerably. By a letter of January 17, 1964, B claimed to rescind their
contract with C on the ground that C was A's undisclosed agent and
fraudulent. No agency arose.
Legal propositions:
Agency: The relationship of principal and agent can only be established by the
consent of the principal and the agent. They will be held to have
consented if they have agreed to what amounts in law to such a
relationship, even if they do not recognise it themselves and even if
they have professed to disclaim it, as in Ex parte Delhasse. But the
consent must have been given by each of them, either expressly or by
implication from their words and conduct. Primarily one looks to
what they said and did at the time of the alleged creation of the
agency: at p.1137C.
Admissibility: Earlier words and conduct may afford evidence of a course of dealing
in existence at that time and may be taken into, account more
generally as historical background. Later words and conduct may
have some bearing, though likely to be less important: at p.1137D.
Scope: As to the content of the relationship, the question to be asked is:

“What is it that the supposed agent is alleged to have done on behalf of the
supposed principal?”: at p.1137E.
61
Garnac {A2/14}
References
Written Opening: Section B, Issues (10) and (11) Post Office as Agent
(p.125, 127)
Annexes: Annex VII—Post Office as Agent (p.A56)
62
Branwhite {A1.1/5}
Branwhite {A1.1/5}
Full citation: Branwhite v Worcester Works Finance Ltd [1969] 1 AC 552
Headline: Necessary consent need not be to the agency relationship, but rather
may be to a state of facts upon which the law imposes the
consequences which result from agency.
Court: Lord Wilberforce (with whom Lords Morris, Guest, Upjohn and Reid
agreed), HL
Facts: The intending hirer, under a hire-purchase agreement sold his own
car to the dealer for £130, which was to stand as the initial payment
under the agreement. He signed the agreement in blank. The dealer, a
fraudster, completed the agreement form with wrong figures. The
finance company purported to accept it, but the hirer refused to pay
on the forged document and claimed for the return of the £130.
Legal propositions:
State of fact: The significant words, for the present purpose, are "if they have agreed
to what amounts in law to such a relationship" [Garnac]. These point to
the fact that, while agency must ultimately derive from consent, the
consent need not necessarily be to the relationship of principal and agent
itself (indeed the existence of it may be denied) but may be to a state
of fact upon which the law imposes the consequences which result
from agency. It is consensual, not contractual: at p.587E
References
Written Opening: Section B, Issues (10) and (11) Post Office as Agent
(p.126-127)
63
Branwhite {A1.1/5}
Annexes: Annex VII—Post Office as Agent (p.A56)
64
Marine Blast {A2/32}
Full citation: Marine Blast Ltd v Targe Towing Ltd & Anor [2004] EWCA Civ 346
Headline: Correct test for implied authority to act on behalf of another being
whether one party had conducted itself towards another in such a
way that it was reasonable for that other to infer from that conduct
assent to the agency relationship.
Court: Mance LJ (with whom Peter Gibson LJ agreed), CA
Facts: The parties (M and T) had contracted on Towcon terms for a dredger,
belonging to N and chartered by M, to be towed from Sweden to
Scotland. The dredger capsized and became a constructive total loss.
N was indemnified by its insurers who claimed against T in Sweden.
T settled with the insurers and issued proceedings in England
claiming an indemnity from M under the contract, which provided
that loss of the tow would be for the sole account of the hirer and that
the hirer would indemnify the tug owner in respect of any liability
adjudged due to a third party or any claim by a third party
reasonably compromised. T argued that N was a third party. M
argued that N was a party to the towage contract so that T was
entitled to the benefit of the exclusions as against N in respect of the
claim which it had settled
Legal propositions:
Consent: Implied authority depends on consent not contract: §19.
Test: Approving Article 8 in Bowstead {A1.3/1/3}: correct test is that

agreement between principal and agent may be implied in a case
where one party has conducted himself towards another in such a
way that it is reasonable for that other to infer from that conduct
consent to the agency relationship: §21.
65
Marine Blast {A2/32}
References
Written Opening Annexes: Annex VII—Post Office as Agent (p.A58)
66
Yasuda Fire {A1.1/10}

Full citation: Yasuda Fire & Marine Insurance Co of Europe Ltd v Orion Marine
Insurance Underwriting Agency Ltd [1995] QB 174
Headline: The relationship of principal and agent can exist independently of any
contract between the parties
Court: Colman J, HC
Facts: The defendants acted as underwriting agents for the claimant under
various underwriting agency agreements. Those agreements were
terminated and ceased to operate for further underwriting, but the
defendants were authorised to continue to manage the run-off
business in relation to risks written on behalf of the claimant. Each of
the agreements contained an express provision whereby the claimant
was entitled to inspect and take extracts from or make copies of
books, accounts, records and other documentation appertaining to the
insurance business transacted on its behalf, although the records were
to be the property of the defendants. The claimant terminated the
defendants' authority to conduct the run-off operations. The claimant
thereafter had to operate the run-off business itself and made
repeated requests for the accounts/records. The defendant refused
access.
Legal propositions:
Consent: Although in modern commercial transactions agencies are almost

invariably founded upon a contract between principal and agent,
there is no necessity for such a contract to exist. It is sufficient if there
is consent by the principal to the exercise by the agent of authority
and consent by the agent to his exercising such authority on behalf of
the principal: at p.185F.
Records: In the absence of express agreement to the contrary, the agent's duty
to provide to his principal the records of transactions effected
pursuant to the agency must subsist notwithstanding termination of
the agent's authority. That…is a duty that is imposed by law in
67
consequence of the existence of the agency relationship and is not

founded on the existence of a contract of agency, at p.186A.
References
Written Opening Annexes: Annex VII—Post Office as Agent (p.A59-A60)
68
Lewes v Morgan {A1.1/1}

Full citation: Lewes v Morgan (1817) 5 Price 42
Headline: Settled accounts may be re-opened with regard to the relative

situation of the parties, and whether the balance is in favour of one
party under the peculiar circumstances affecting the case.
Court: MacDonald, Chief Baron, Court of Exchequer
Facts: Old case concerning a solicitor acting as agent for the mortgagor and
mortgagee, in the matter of the mortgage, and as agent and quasi
banker, for the mortgagor (that is, receiving the mortgage money, and
giving his accountable receipts to the mortgagor) will not be allowed
to charge the mortgaged premises with a greater sum (although
actually advanced by him on account of his principal and client, and
within the amount of the sum to be borrowed on mortgage) than shall
be proved to have been really paid to him in money by the
mortgagees, on account of and as agent for the mortgagor.
Legal propositions:
Accounts: Settlement of accounts between attorney and client, not conclusive:

the nature of their connection, excepting their accounts from the
operation of the general rule in equity. Therefore, accounts settled and
signed, and where vouchers are delivered up, and a note given for the
balance, will be re-opened at a very considerable distance of time after
such settlement, where the parties stand in the relative situation to
each other of attorney and client, agent and principal and where the
balance is in favour of the former under the peculiar circumstances
affecting this case: §42 at p.530.
Advances: In the dealings and transactions of parties of this description, and

when an account of those dealings and transactions has been ordered
to be taken by the Court, a person standing in the situation of
solicitor, agent, general manager, and director, and having the whole
concerns of the other party, and having made such other party
execute instruments of this sort, which are therefore liable to
69
suspicion, it becomes necessary not merely to rely on the instruments

themselves, but to shew that the advances were actually made: §83 at
p.543.
Common issues: (10) and (11) Post Office as Agent; (12) and (13) Subpostmasters as
Agents
References
Written Opening Annexes: Annex VIII—Subpostmasters as Agents (p.A66)
70
(12) & (13) SUBPOSTMASTERS AS AGENTS (ANNEX VIII)
Bristol and West Building Society {A2/26}

Full citation: Bristol and West Building Society v Mothew [1998] Ch. 1
Headline: Leading case on fiduciary obligations of agents
Court: Millet LJ (with whom Staughton and Otton LJJ agreed)
Facts: The defendant, a solicitor, (“M”) acted for both the lender and
borrower in the purchase of a property. M had negligently given
information to the lender which failed to state the purchaser's
arrangement to take out a second charge over the property, but
argued that had the lender been aware of the second charge it would
still have proceeded with the transaction and suffered the same loss,
with the effect that no damages were recoverable at common law. The
lender submitted that it could recover the whole net loss without
having to prove that it would have proceeded had it known the true
facts, and that it would therefore be unnecessary to establish whether
M had been guilty of breach of trust or fiduciary duty in equity.
Legal propositions:
Basis of duty: Citing and respectfully agreeing with Lord Browne-Wilkinson in

Henderson v. Merrett Syndicates Ltd [1995] 2 A.C. 145, 205 “It is the fact
that they have all assumed responsibility for the property or affairs of others
which renders them liable for the careless performance of what they have
undertaken to do, not the description of the trade or position which they
hold": at p.17A-B
Fiduciary: A fiduciary…is someone who has undertaken to act for or on behalf

of another in a particular matter or circumstances which give rise to a
relationship of trust and confidence: at p.18A-B
71
Loyalty: A fiduciary must act in good faith; he must not make a profit out of
his trust; he may not act for his own benefit or the benefit of a third
person without the informed consent of his principal: at p.18B
Fair dealing: Where the fiduciary deals with his principal, the must prove
affirmatively that the transaction is fair and that in the course of the
negotiations he made full disclosure of all facts material to the
transaction. Even inadvertent failure to disclose will entitle the
principal to rescind the transaction. The rule is the same whether the
fiduciary is acting on his own behalf or on behalf of another: at p.18D
Common issues: (12) and (13) Subpostmasters as Agents
References
72
John Youngs {A1.1/35}

Full citation: John Youngs Insurance Services Ltd v Aviva Insurance Service UK Ltd
[2011] EWHC 1515 (TCC)
Headline: The agreement of the parties or background of the case may establish
either that the relationship is not one of agency or that the fiduciary
duties have been modified from the normal standards.
Court: Ramsey J, HC
Facts: Agreement entered into between Youngs and Aviva in relation to

property damage insurance work. Youngs provided services to Aviva
which consisted of handling claims made by Aviva's policy holders
and undertaking building repair work where the damage was
insured.
Legal propositions:
Fiduciary: Citing Millet LJ as at above “A fiduciary is someone who has

undertaken to act for or on behalf of another in a particular matter in
circumstances which give rise to a relationship of trust and
confidence”: §76
Modified: Youngs found to owe to fiduciary duties in respect of building-repair

services to an insurer, which are services provided to the policy
holder in respect of which no single minded loyalty is owed to the
insurer nor was the company precluded from making a profit: §98
References
Written Opening: Section B, Issues (12) and (13) Subpostmasters as Agents

(p.135)
73
Annexes: Annex VIII—Subpostmasters as Agents (p.A64)
74
Coleman v Mellersh {A1.1/2}

Full citation: Coleman v Mellersh (1850) 2 Mac. & G. 309
Headline: Seminal case on principles on which the Court deals with settled
accounts in reference to granting relief either by a decree to surcharge
and falsify or by a decree to take an open account (esp. with regard to
the manner in which settlement took place, and if those circumstances
gave one party a commanding power or influence over the other)
Court: The Lord Chancellor, Lord Cottenham Court of Chancery
Facts: Very old case concerning defendants Mellersh and Marshall who
presented two separate petitions of appeal from a decree of the Vice-
Chancellor of England, in favour of the widow of the late W.
Coleman, directing the taking of an open account (rather than merely
liberty to surcharge and falsify).
Legal propositions:
Not binding: If the relative situation of the parties, or the manner in which the
settlement took place, or the nature of the error proved, shew that the
alleged settlement ought not be considered as an act binding upon the
party signing, and that it would be inequitable for the accounting
party to take advantage of it, the Court is not content with enabling
the party to surcharge and falsify an account which never ought to
have been so settled, but directs the taking of an open account: §314 at
p.121
References
75
76
Watson v Rodwell {A1.1/3}

Full citation: Watson v Rodwell (1879) 11 Ch.D. 150
Headline: The acute disadvantage under which a widow had agreed to pay
unlimited solicitor’s costs vitiated the ‘settled account’. Opportunities
to tax costs and the absence of error proved were irrelevant. Settled
accounts may be re-opened with regard to whether the settling party
had full information available to it, taking into account all the
circumstances of the case.
Court: James LJ (with whom Baggallay and Thesiger LJJ agreed), CA
Facts: Action was brought by Mrs. Watson, a widow, aged 77, against her
solicitor, seeking to open a settled account, dated 22 May, 1874, and to
tax bills of costs which had been paid more than twelve months
before the institution of the suit.
Legal propositions:
Legal effect: How the alleged obligation came about was of essential relevance:
“In terms and in legal effect it was a covenant by Mrs. Watson with the
several covenantees to pay their costs; but in intention and practical effect it
was an obligation by Mrs. Watson to dis-charge all Mr. Rodwell's bills of
costs against all the parties in respect of anything that he had ever done, said,
or written to or for every one of the parties in any way in respect of the
testator's estate. He being her solicitor, and she having no other advice or
assistance, takes from her an obligation to pay all these costs without any
information as to the amount, or probable amount, or as to how they had
been incurred”: at p.158.
No account: The settled account is based upon this deed, and it is obvious that a
settlement so based cannot stand: at p.158.
Consent: No settlement, no payment, no taxation even, is or would have been

of any avail between a solicitor who had got his client bound by such
an obligation and that client, unless and until she had the fullest
information and independent legal advice as to that obligation, and as
77
to all the circumstances under which he had continued to multiply

and accumulate costs against her: at p.159.
No error: Opportunities to tax costs and the absence of error proved were
irrelevant: at p.159.
References
78
(17) & (18) TRUE AGREEMENT (ANNEX IX)
Autoclenz {A1.1/39}
Autoclenz {A1.1/39}
Full citation: Autoclenz v Belcher [2011] UKSC 41
Headline: Court can go behind the express terms of a contract to ascertain the
true agreement between the parties
Court: Lord Clarke (with whom Lords Hope, Walker, Collins and Wilson
agreed), SC
Facts: Autoclenz provided car-cleaning services to motor auctioneers.

Belcher were 20 individuals who had been engaged as car valeters.
They alleged they were "workers" under the relevant Regulations and
were entitled to the minimum wage and paid holiday. They were
described as sub-contractors and under their written contracts they
were responsible for paying their own tax and national insurance, and
were entitled to provide a substitute to carry out the work. The
contracts also stated that Belcher were not obliged to work and
Autoclenz did not undertake to provide work. However, Autoclenz
told them how to carry out the work, provided the cleaning materials,
determined the rate of pay, prepared their invoices and required them
to give prior notification if they were unable to work. The Court of
Appeal found that the contracts did not reflect what had actually been
agreed between the parties, and that Belcher was an employee.
Legal propositions:
Factual matrix: While employment is a matter of contract, the factual matrix in

which the contract is cast is not ordinarily the same as that of an arm’s
length commercial contract: §33, at p.1168D
Power: The relative bargaining power of the parties must be taken into
account in deciding whether the terms of any written agreement in
truth represent what was agreed and the true agreement will often
79
Autoclenz {A1.1/39}
have to be gleaned from all the circumstances of the case, of which the
written agreement is only a part: §34 and §35, at p.1168E-H
Agreement: In cases of contracts concerning work or services, where it is alleged

that the written contract terms do not accurately reflect the true
agreement of the parties, there may be various reasons why, but the
question to be addressed is: what contractual terms did the parties
actually agree: §21.
Practice: A clause saying that there was no obligation on Autoclenz to offer

work or on the claimants to accept work was wholly inconsistent with
the practice described in paragraph 18 of Mr Hassell’s witness
statement where he refers to a requirement for valeters to notify him
in advance if they were unavailable for work, which indicates that
there was an obligation to attend for work unless a prior arrangement
had been made.
Employment: Indicia of employment set out extensively: §36 - §37, at pp.1169A-

1170G
Common issues: (17) and (18) True Agreement
References
Written Opening: Section B, Issues (17) and (18) True Agreement (p.148-
150)
Annexes: Annex IX—True Agreement (p.A67-A70)
80
Dynasystems {A2/60}
Dynasystems {A2/60}
Full citation: Dynasystems for Trade and General Consulting Ltd & Ors v Moseley [2018]
1 WLUK 416
Headline: The Court can have regard to events subsequent to the date when the
contract was made in determining the true agreement.
Court: Langstaff J, EAT
Facts: A contract of employment was entered into by the claimant. He

claimed unfair and wrongful dismissal, and alleged that the
appropriate Respondent amongst a group of companies (whom he
said was the Second Respondent to the claim) was in breach of the
contract it had made with him. The First Respondent, another
member of the group, argued that it was the true contracting entity,
since a written contract had been entered into with it. A written
contract was entered into with the First Respondent, but on the same
day the Claimant was given a letter to the passport office from the
Second Respondent as if it was his employer.
Legal propositions:
Evidence: The reality is that it must always be the case that actions after an
agreement has been made may help as evidence, not as being
conclusive but as evidence, of the nature of that agreement. After all,
if the parties to an agreement have indeed agreed X but they behave
as if they have agreed Y, that would be surprising. If, however, they
have agreed Y it is entirely to be expected. To behave as if they have
agreed Y is therefore some evidence that they have indeed done so. It
is not conclusive, and of course in many cases there may be
contractual terms which are simply never acted upon because the
occasion for doing so never arises. In such cases it would be futile, as
many authorities show, to suggest that they are not still terms of the
contract merely because they have not been put into operation.
However, though the weight of it must be examined with care, it can
be evidence as to what was in fact agreed to look to see if the parties
had behaved as if that were the case, particularly immediately after
81
Dynasystems {A2/60}
the date of initial agreement, but following on from that as well, and
equally so where there is an unbroken series of events telling overall
the same tale: §36.
Common issues: (17) and (18) True Agreement
References
Written Opening Annexes: Annex IX—True Agreement (p.A67)
82
(21) SUBSEQUENT APPOINTMENTS (ANNEX I)
Watchfinder {A1.1/65}
Full citation: Watson v Watchfinder.co.uk Ltd [2017] EWHC 1275 (Comm)
Headline: Apparent ‘veto’ correctly construed as a discretion.
Court: Waksman QC HHJ (sitting as Judge of the High Court)
Facts: The claimants ran a business development consultancy and had

connections with luxury goods companies, including one that
specialised in watches (R). The defendant bought and sold watches
and wanted R as an investor. It entered into a services agreement with
the claimants under which the claimants introduced prospective
customers and investors to the defendant for a monthly retainer. The
parties also entered into a share option agreement, which provided
that the option could only be exercised with the consent of a majority
of the defendant's board of directors. Despite the claimants' efforts, R
would not invest, but another of the companies they introduced
became a major investor and contributed significantly to the
defendant's growth. The defendant terminated the services agreement
when R made its position clear. The claimants later sought to exercise
the share option. The defendant vetoed the option without discussion
and asserted that it would have vetoed even if the matter had been
considered, as the claimants' services were unsatisfactory and the
option had depended on obtaining R's investment. The issues were
whether the defendant had an absolute or discretionary right to veto
the share option and, if discretionary, whether it had properly
exercised that discretion.
Legal propositions:
Veto: A supposed ‘veto’ which was said to be able to defeat the purpose of
an option would be a “commercial absurdity” by effectively rendering
the option valueless. Properly construed it was a discretion not a veto
and subject to implied constraints in its exercise. This was not one of
those cases where (as noted by Lord Neuberger PSC) the importance
of commercial common sense was being overstated or over-used: §98.
83
(21) SUBSEQUENT APPOINTMENTS (ANNEX I)
Watchfinder {A1.1/65}
Common issues: (21) Subsequent Appointments
References
Written Opening: Section B, Issues (14) to (21) Suspension, etc (p.157- 158)
Annexes: Annex III-Implied terms (p.A31)
84
(22) & (23) ASSISTANTS (ANNEX X)
Prudential Assurance {A2/41}

Full citation: Prudential Assurance Co Ltd v Ayres [2007] EWHC 775 (Ch)
Headline: Meaning of requirement that the term must “purport” to confer a

benefit under section 1 (1)(b) Contracts (Rights of Third Parties) Act
1999.
Court: Lindsay J, HC
Facts: The claimant intermediate landlord sought to recover rent from the
defendants, as previous tenants of premises, in their capacity as
guarantors of the partnership to which an underlease had been
assigned and which had become insolvent.
Legal propositions:
Confer: The requirement that the term must “purport” to confer a benefit …is
satisfied if on a true construction of the term in question its sense has
the effect of conferring a benefit on the third party in question. There
is within section 1(1)(b) no requirement that the benefit on the third
party shall be the predominant purpose or intent behind the term: §28
Appeal: Note the first instance decision was reversed ([2008] EWCA Civ 52,
[2008] 1 All E.R. 1266) on the different ground that the contract, on its
true construction, purported, not to benefit the third party, but to
restrict the third party’s rights.
Common issues: (22) and (23) Assistants
References
Written Opening: Section B, Issues (22) and (23) Assistants (p.163)
85
Annexes: Annex X—Assistants (p.A72)
86
Dolphin Maritime {A1.1/34}

Full citation: Dolphin Maritime and Aviation Services Ltd v Sveriges Angfartygs
Forening [2009] EWHC 716
Headline: There is no requirement for the benefit to be a predominant purpose

or intent behind the term, but it must be a purpose, i.e. it is not
enough simply to show that a third party would happen to benefit from
it or their position improved by its performance
Court: Clarke J, HC
Facts: The applicant (S) applied (inter alia) for summary judgment on a claim
against it on the ground that the claim had no realistic prospect of
success. S was a Swedish P & I club. The respondent (D) was an
English company which carried on business as a cargo recovery agent
and claims correspondent. Following a collision at sea D had been
instructed by Turkish cargo insurers (T) to seek to recover
compensation. D entered into an agreement on behalf of T with the
owners of the vessel on which the cargo was being carried. Owners'
interests were represented by S. S issued a letter of undertaking by
which it undertook to pay to D on T's behalf such sums as might be
due pursuant to a judgment or as might be agreed to be recoverable
from the owners of the ship in respect of cargo claims up to a total of
$17.5 million. T and S then settled the cargo claim between themselves
on terms that S would pay $8.5 million directly to T. When D was
notified of the settlement it invoiced T for its commission but T
declined to pay. D issued proceedings claiming that S was (inter alia)
in breach of the obligation to pay D under the letter of undertaking
which was enforceable by D.
Legal propositions:
Purpose: A contract does not purport to confer a benefit on a third party simply
because the position of that third party will be improved if the
contract is performed. The reference in the section to the term
purporting to “confer” a benefit seems to me to connote that the
language used by the parties shows that one of the purposes of their
87
bargain (rather than one of its incidental effects if performed) was to

benefit the third party: §74.
References
Written Opening Annexes: Annex X—Assistants (p.A72)
88
Nisshin Shipping {A1.1/23}
Nisshin Shipping {A1.1/23}

Full citation: Nisshin Shipping Co Ltd v Cleaves & Co Ltd [2003] EWHC 2602
Headline: If a term purports to confer such a benefit, it is then necessary to

construe the contract as a whole to determine the nature and extent of
the third party’s right to enforce the term. The question of whether
the parties intended to confer a benefit is one of construction.
Court: Colman J, HC
Facts: Cleaves negotiated nine time charters on behalf of Nisshin. The

contract between Cleaves and Nisshin stated that Cleaves was to
receive a commission as a broker and contained an arbitration clause
which was wide enough to entitle a claim by the charterers against
the owners for failing to pay the promised commission. After Nisshin
refused to pay the commission to Cleaves, the matter went to
arbitration. Nisshin claimed that Cleaves had repudiated the contract
by having an interest with one of Nisshin’s competitors, taking this as
a termination of contract and cancellation of any entitled commission
Legal propositions:
Purpose: The real issues are (i) whether those clauses purported to confer a
benefit on Cleaves within sub-section (1)(b) of section 1 and (ii)
whether sub-section 1(b) is disapplied by sub-section (2) because on a
proper construction of the contract it appears that the parties did not
intend the term to be enforceable by the third party: §10.
References
Written Opening Annexes: Annex X—Assistants (p.A72)
89

Bates V Post Office Claimants' Appendix of Authorities

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THE POST OFFICE GROUP LITIGATION

Claim No. HQ16X01238, HQ17X02637 & HQ17X04248

IN THE HIGH COURT OF JUSTICE

QUEEN’S BENCH DIVISION

ALAN BATES & OTHERS

POST OFFICE LIMITED

Solicitors for the Claimants

OVERVIEW: CONTRACTUAL CONSTRUCTION (ANNEX I) ................................. 1

(1) RELATIONAL CONTRACT (ANNEX II) ................................ 7

(2) & (3) IMPLIED TERMS (ANNEX III) ............................ 19

(4) SUPPLY OF GOODS & SERVICES (ANNEX IV) ............................ 35

(5) & (6) ONEROUS & UNUSUAL TERMS (ANNEX V).............................. 41

(10) & (11) POST OFFICE AS AGENT (Annex VII) .............................. 59

(12) & (13) SUBPOSTMASTERS AS AGENTS (ANNEX VIII).......................... 71

(17) & (18) TRUE AGREEMENT (ANNEX IX) ............................ 79

(21) SUBSEQUENT APPOINTMENTS (ANNEX I) ............................... 83

(22) & (23) ASSISTANTS (ANNEX X) .............................. 85

Investors Compensation Scheme {A1.1/78}

Headline: Leading authority on construction of contracts in context; but see

Facts: Investors received negligent advice from the respondent. The

Interpretation: Interpretation is the ascertainment of the meaning which the

Background: Subject to the requirement that it should have been reasonably

Common issue: All – general principles of contractual construction

Written Opening Annexes: Annex I– Contractual Construction (p.A1-A3)

Rainy Sky {A1.1/37}

Headline: Construction of contracts is an iterative process and should accord

Iterative: The resolution of an issue of interpretation is iterative,

Commercial intention: The exercise of identifying the parties' commercial intention

Common issue: All –principles of contractual construction

Written Opening Annexes: Annex I– Contractual Construction (p.A1-A3)

Wood v Capita {A1.1/67}

Headline: Textualism and contextualism are not conflicting paradigms but

Unitary exercise: Interpretation is a unitary exercise: §11

a view as to which construction is more consistent with

Quality of drafting: In striking a balance between the indications given by the

Common issue: All –principles of contractual construction

Written Opening Annexes: Annex I – Contractual Construction (p.A4-A5)

Yam Seng {A1.1/43}

Headline: Leading authority on relational contracts

Facts: An exclusive distribution agreement between two entities for the

Intention: Following established methodology of English law for the implication

need to state them. The advantage of including reference to fair

Relational: Typically, such implication will be where the contract is ‘relational.’

Written Opening: Section A: Introduction, Relational Contract & Implied Terms

Section B: Issue (1) Relational Contract (p.38, 41-42); Issues (2)

Annexes: Annex II –Relational Contract (p.A7-A21)

Bristol Groundschool {A1.1/52}

Headline: Application of Yam Seng-finding that there was a relational contract

Court: Richard Spearman QC (sitting as a Deputy Judge of the Chancery

Termination: Contract was terminable on reasonable notice (9 months, §156).

Common issue: (1) Relational Contract

Written Opening Annexes: Annex II –Relational Contract (p.A10)

Headline: Application of Yam Seng-finding that there was no relational contract

No analogy: How close the relationship was to employment relationship, on the

Inconsistency: The proposed implied terms [flowing from a finding of a

Common issue: (1) Relational contract

Written Opening Annexes: Annex II –Relational Contract (p.A10-A11)

D&G Cars {A1.1/56}

Facts: A private contractor had agreed to dispose of cars for a police

Context: The existence and the content of an implied condition in relation to

Relational: Relatively lengthy period of contractual relationship between the

Length: Contract for initial fixed term of 5 years: §3.

Termination: Contract terminable immediately on written notice in case of breach: