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Month: September 2022

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).

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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  But the case has an enduring significance beyond the superseded point it stands for.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.

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