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Category: Private Law

The implied term of good faith in English contract law: a view from North of the border

The implied term of good faith in English contract law: a view from North of the border

Published 13th February 2023

by Prof Laura Macgregor, Chair of Scots Law, Edinburgh Law School*

At the time of writing, the Scottish courts have not yet had the opportunity fully to consider the English implied term of contractual good faith (in Unicorn Tower Ltd v HSBC Bank plc [2018] CSOH 30 [72], Lady Wolffe held that there was no need to adjudicate on the parties’ submissions on this question). This is not surprising: the flow of Scottish reported cases is relatively small, and (Unicorn aside) no case has been reported in which a Scottish court has been asked to apply the relevant English precedents.

Whether a Scottish court would be obliged to apply those English precedents in the context of a suitable case is a difficult question. The law of implied terms in English and Scots contract law is similar, and English precedents are routinely cited and applied in the Scottish courts. That is not the case, however, with contractual good faith. Scots law contains a native, albeit nascent and under-developed, idea of contractual good faith. In a House of Lords case from 2004 Lord Hope stated: “Good faith in Scottish contract law […] is generally an underlying principle of an explanatory and legitimating rather than an active or creative nature” (R v Immigration Officer at Prague Airport, ex parte European Roma Rights Centre [2004] UKHL 55, [2005] 2 AC 1, [60]). More recently, the Inner House of the Court of Session reasserted the existence of good faith without expanding on its source or nature (Van Oord UK Ltd v Dragados UK Ltd [2021] CSIH 50).

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What evidence can be taken into account in interpreting a contract? Prohibiting reference to pre-contractual negotiations and the effect of an entire agreement clause

What evidence can be taken into account in interpreting a contract? Prohibiting reference to pre-contractual negotiations and the effect of an entire agreement clause

Published 16th January 2023

by Ms Lorna Richardson, Senior Lecturer in Commercial Law

Scots law, like English law, generally prohibits the use of pre-contractual negotiations when interpreting a contract. This is in contrast to the position in many civilian systems where such negotiations are taken into account in determining what a contract means. The DCFR also permits reference to pre-contractual negotiations, as part of the circumstances in which the contract was entered into, when interpreting a contract (Art II-8:102(1)). The exclusion of such evidence in Scots law is not however absolute and it can be referred to in certain circumstances, for instance, to show that a fact was known to both parties at the time of contract formation, such fact forming part of the “factual matrix” against which the words of the contract must be considered.

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Compensating unpaid domestic care in the testamentary context II: Possible approaches and potential objections

Compensating unpaid domestic care in the testamentary context II: Possible approaches and potential objections

Published 7th December 2022

by Professor Alexandra Braun, Lord President Reid Chair of Law

In a previous blog entry, I examined whether current Scots law allows unpaid domestic carers to bring a claim against the estate of the person whom they have cared for. We saw that in Scotland, unpaid carers who are not in a contractual relationship with the care-recipient and who have not been provided for in the care-recipient’s will, only have a limited set of possible options and that the value of informal care is not currently recognised by way of a specific entitlement against the estate of the care-recipient. What is the situation elsewhere?

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Compensating unpaid domestic care in the testamentary context: An opportunity for Scots lawcarer

Compensating unpaid domestic care in the testamentary context: An opportunity for Scots law

Published 15th November 2022

by Professor Alexandra Braun, Lord President Reid Chair of Law

According to the Scotland’s Carers research report published in 2015, and the latest update release of April 2022, approximately 700,000 people provide unpaid care and the value of such unpaid care in Scotland is estimated at over £36 billion a year. For comparison, in 2019 the NHS Scotland budget was £13.4 billion. Often such unpaid care is provided by family members, frequently but not always women,[1] and in some cases neighbours and friends. The assumption seems to be that domestic care services are intended to be gratuitous and are thus provided for free. Indeed, domestic care services are sometimes described as ‘labours of love’. But while domestic care services might well be motivated partly by love and affection or a sense of duty, this does not necessarily mean that they should not be compensated, especially since such services can be of significant economic and personal benefit to the care-recipient. My question then is can domestic unpaid care services be compensated on death of the care-recipient through a claim against their estate?

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Formation of Contract in Scots Law: Applying the Governing Principles

Formation of Contract in Scots Law: Applying the Governing Principles

Published 22nd September 2022

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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