Press "Enter" to skip to content

Edinburgh Private Law Blog Posts

Formation of Contract in Scots Law: Applying the Governing Principles

by Laura Macgregor, Professor of Scots Law, University of Edinburgh.

Many types of contracts do not require to be entered into in writing in Scots law (see Requirements of Writing (Scotland) Act 1995, s1). Where this is the case, it can be difficult to identify whether the parties have reached binding consensus or something short of that. It is possible for parties to reach consensus on all essential terms, and yet agree that they will not be contractually bound until such time as a written contract is signed (Karoulias SA v The Drambuie Liqueur Company Ltd 2005 SLT 813). In Supaseal Glass Ltd v Inverclyde Windows Manufacturing Ltd ([2022] CSOH 49), a recent case decided in the Outer House of the Court of Session, Lord Braid provides a useful summary of the governing principles of formation of contract in Scots law. His objective analysis nicely illustrates Lord President Dunedin’s famous statement that “[c]ommercial contracts cannot be arranged by what people think in their inmost minds. Commercial contracts are made according to what people say” (Muirhead and Turnbull v Dickson (1905) 7F 686 at 694).

Leave a Comment

Nation-Building, Capital Markets and Meaning of le Franc Or

by David Fox, Professor of Common Law, University of Edinburgh*

The Case of the Serbian Loans issued in France (1929) 56 J. Dr. Int’l 977 was one the earliest and most influential of the inter-war cases on the interpretation of gold clauses in long-term bond contracts.  As a decision of the Permanent Court of International Justice in the Hague, its reasoning influenced decisions in the French, English and United States courts.  It established that a payment clause stipulating for payment of gold coin would be interpreted as creating an obligation to pay legal tender money corresponding to the gold value of the money owed by the issuer of the bond.

Now that all world currencies have broken their link with gold, that point of law is unlikely ever to arise again.  But the case has an enduring significance beyond the superseded point it stands for.  The sparse legal record offers a glimpse into important historical events of the early twentieth century, and the way they impinged on the financial arrangements of the governments and investors of the time.  We see financial deals being done by an emerging nation state and the imperial Great Powers of the era.  Less comfortably, we see an example of the inevitable link between finance and war in a time when notions of “ethical investment” were still a century away from being articulated.

1 Comment

State Finance, Monetary Sovereignty, and the First World War

by David Fox, Professor of Common Law, University of Edinburgh*

Questions of state finance rarely figure in litigation before the domestic courts, and the economic instability wrought by the First World War is now a subject for the books on financial history rather than a problem of practical investment. (For the history, on which this note relies, see Burk, Britain, America and Sinews of War 1914-1918 (1985) and Strachan, Financing the First World War (2004)). In 1937, however, both were live questions before the House of Lords. In R v International Trustee for the Protection of Bondholders Aktiengesellschaft [1937] A.C. 500 the Lords engaged with the perennial conflict between contracting parties’ freedom to hedge against economic risk and a state’s sovereign power to control the monetary system. Although the state in question was the United States of America rather than Great Britain, the court’s recognition of America’s sovereign power worked to the financial advantage of the British government. The government found the value of its war debts reduced.

1 Comment

Apparent authority: striking an appropriate balance?   

by Laura Macgregor, Professor of Scots Law, University of Edinburgh.

Introduction

Apparent authority is a key concept in agency law, acting to protect third parties negatively impacted by the activities of agents acting without authority. In relevant cases, the law seeks to strike a balance between the interests of the principal and those of the third party. London & Quadrant Housing Trust v Stokes, a decision by Mr Justice Martin Spencer, sitting in the English High Court, Queen’s Bench Division in March of this year ([2022] EWHC 1120 (QB)) is a case which nicely illustrates the difficulties of achieving such a balance.

Criteria for application of apparent authority

The third party must prove that the principal has made an erroneous representation of the agent’s authority, which representation has been relied on by the third party to his or her detriment (for more detailed analysis, see Laura J Macgregor, The Law of Agency in Scotland (2013) paras 11-01 – 11.26). The principal’s representation can be by words or conduct, and recent cases have extended the meaning of a representation significantly. Famously, in First Energy (UK) Ltd v Hungarian International Bank Ltd ([1993] 2 Lloyd’s Rep 194) an agent was considered authorised to communicate information on behalf of his principal, which information could include the extent of his own authority. This comes very close to recognising the idea of a self-authorising agent.

1 Comment

Any takers? An alternative interpretation to abandonment to facilitate the circular economy in Scots law

by Susanna Macdonald-Mulvihill, doctoral researcher at Edinburgh Law School

In recent years there has been a rise in societal awareness of the need for more sustainability and a general push towards creating a “circular economy” in which one person’s junk becomes another’s useful treasure. Internet based sharing sites, such as Freecycle, or Facebook Community groups, such as The Meadows Share in Edinburgh, have popped up to allow people to freely redistribute their unwanted items to those who might have use for them, thus reducing the amount of waste sent to landfill.  However, as Dr Jill Robbie noted in a blog post for Glasgow University Law School, the Scots law surrounding abandoned property is an impediment to the aims of the circular economy. Robbie is not the first to suggest that the law on abandonment is inadequate: the Scottish Law Commission in their Report on Prescription and Title to Moveable Property also highlighted the absurdity of the Scots position of bona vacantia, whereby the Crown automatically becomes owner of all kinds of useless things, including litter and broken household goods.

The principal problem for the circular economy with the law of abandonment is that anyone who sees something left beside a bin (like the chest of drawers in the picture above) and takes it home is technically stealing (Mackenzie v MacLean 1981 SLT (Sh Ct) 40). My great-uncle would have been shocked to learn that his habit of ‘skip-scavenging’ meant he was, in fact, leading a life of crime. But that is only if we characterise such items as abandoned property. Those who currently think the law requires reform may have overlooked a little known principle that could provide legitimate title to those who can make use of another’s rubbish: traditio incertae personae. In short, this is a “transfer to an uncertain person”. The original owner retains title until another person picks it up and assumes ownership. Thus, the property is never truly abandoned because the intention of the original owner is not simply to surrender ownership but to gift it to whomever wishes to have it.

1 Comment
css.php

Report this page

To report inappropriate content on this page, please use the form below. Upon receiving your report, we will be in touch as per the Take Down Policy of the service.

Please note that personal data collected through this form is used and stored for the purposes of processing this report and communication with you.

If you are unable to report a concern about content via this form please contact the Service Owner.

Please enter an email address you wish to be contacted on. Please describe the unacceptable content in sufficient detail to allow us to locate it, and why you consider it to be unacceptable.
By submitting this report, you accept that it is accurate and that fraudulent or nuisance complaints may result in action by the University.

  Cancel