Commercial Contracts: Recent Developments
13 May 2021, 9:30 am–5:00 pm
This event was rescheduled from May 2020.
UCL Laws Events
UCL Faculty of LawsBentham House, Endsleigh GardensLondonWC1H 0EG
About this conference
This conference will bring together academics and legal practitioners to discuss recent developments relating to commercial contracts. Papers will be distributed before the conference, and the discussion started by an expert commentator.
The conference is organised by Professor Paul S Davies and Dr Magda Raczynska on behalf of the UCL Centre for Commercial Law and Private Law Group, with generous financial support from Norton Rose Fulbright LLP.
The programme (subject to change)
|09:30||Registration and refreshments|
Chair: Lady Arden
Robert Stevens (Oxford) – What is an Agreement?
Catharine MacMillan (King’s College London)- The Doctrine of Mistake in Contract Law: an English peculiarity
Chair: Dame Sue Carr
Michael Bridge QC (Hon) (LSE) - Exceptions Clauses and Contractual Frustration Clauses
Ed Peel (Oxford) – Repudiatory Breach and Damages for Loss of Bargain
Chair: Dame Sara Cockerill
Janet O’Sullivan (Cambridge) – ‘Suitable to the Habits of Mankind’: Prior Negotiations and Implied Terms in Fact
Jo Braithwaite (LSE) - Law after LIBOR: The contract law implications of benchmark transition
Chair: Lord Sales
Graham Penn (UCL) – Derivative Contracts and the Problem of Privity: the Case of Sub-Participation
Paul S Davies (UCL) – Recent Developments in the Law on Third Parties
|17:00||Reception and launch of Paul S Davies and Magda Raczynska (eds) Contents of Commercial Contracts:|
Terms Affecting Freedoms (Hart Publishing, 2020)
The conference is sponsored by
Robert Stevens, ‘What is an Agreement?’
The decision of the Court of Appeal in FSHC Group Holdings Ltd v Glas departs from the traditional understanding of the law of rectification as established by Frederick E Rose (London) Ltd v William H Pim Junior & Co Ltd and unanimously endorsed by the House of Lords (albeit in obiter dicta) in Chartbrook Lrd v Persimmon Homes Ltd. They were wrong to do so.
One understanding of the law of rectification goes like this. Contracts are enforceable because that is what the parties to them intend to happen. The existence and meaning of those intentions is ascertained objectively by the common law because it is commercially certain and one party may have relied upon the appearance created. Equity, adopting a more flexible approach, through the doctrine of rectification gives effect to what the parties actually subjectively intended when it is fair to do so.
This understanding of rectification, and of contract law more generally, is also wrong.The most important thing to understand is that rectification is a doctrine concerned with documents, as shall be explained.
Catharine MacMillan, ‘The Doctrine of Mistake in Contract Law: an English Peculiarity’
Mistake is a doctrine that is notoriously uncertain, difficult to apply and avails itself of no easy analysis. While the decision in Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd, The Great Peace (2002) was intended to create certainty in this area of law it may have done so by effectively removing the doctrine from English law. This paper examines the Great Peace from an historical and comparative perspective. This critical examination suggests that there are good reasons to reconsider the Great Peace, both in the strictness of the propositions it sets out with regard to a common mistake at common law and the removal of a separate jurisdiction in equity. It concludes with a series of proposals designed to reform contractual mistake in English law.
Michael Bridge ‘Exceptions Clauses and Contractual Frustration Clauses’
The paper deals with (a) the difference between a so-called exceptions clause and a cancellation clause in a multi-voyage contract of affreightment; and (b) the measure of damages for breach in a case where the defendant could not claim the benefit of the clause. Both issues were raised in Classic Maritime Inc v Limbungan Makmur Sdn Bhd  EWCA Civ 1102, reversing in part  EWHC 2389 (Comm),  1 Lloyd’s Rep 349. There are also interesting issues of causation raised, as well as issues concerning frustration that are suggested by the case but not dealt with directly by it.
Ed Peel ‘Repudiatory Breach and Damages for Loss of Bargain.’
It is axiomatic that any breach of contract entitles the claimant to an award of damages to compensate for loss which arises as a result of the breach. What is different about “loss of bargain” damages, awarded upon termination for “repudiatory breach”, is that they are awarded for a breach, or breaches which will never in fact be committed. The aim of my paper is to consider when and why a claimant is entitled to anticipatory loss of bargain damages.
Janet O’Sullivan ‘Suitable to the Habits of Mankind’: Prior Negotiations and Implied Terms in Fact
In a casenote on the Supreme Court decision in Marks & Spencer plc v BNP Paribas, I suggested that evidence of the parties’ pre-contractual negotiations should, and would, be admissible to a court in deciding whether to imply a term in fact, at least where the proposed term had been mooted and rejected in those negotiations. In a subsequent speech, Lord Neuberger disagreed, suggesting instead that in those circumstances the term would be implied, then immediately removed by rectification. This paper will consider this issue in depth, picking up the gauntlet thrown down by Lord Neuberger, exploring the issue from a historical perspective, from authority, and from arguments of principle and policy.
Jo Braithwaite, ‘Law after LIBOR: The Contract law Implications of Benchmark Transition’
Since the 1980s, ‘London InterBank Offered Rates’ (LIBORs) have been widely referenced in financial contracts including derivatives and cash products such as syndicated loans, bonds and mortgages. The Bank for International Settlements estimates that there were $400 trillion worth of financial contracts referencing LIBORs as at mid-2018. However, for reasons including shifts in the financial markets since the crisis, and LIBORs’ proven vulnerability to misconduct, for some time regulators have been working to encourage market participants to transition away from LIBORs and use so-called ‘risk-free rates’ (RFRs) instead. 2020 is considered a pivotal year for this major reform, not least as LIBOR is likely to cease to exist after 2021.
Benchmark transition has important economic, legal, policy and regulatory dimensions. This paper focuses on its private law implications, and the underlying objective is to examine how well English law is suited to a project of contractual variation on this massive, cross-market and cross-border scale. Specifically, the focus here is on extant contracts, meaning those which reference LIBOR and are due to continue after end-2021. Three issues are considered: (1) building on work of Gelpern, Gulati and Choi around the evolution of standardised financial contract language, the public-private nature of contractual variation in the international financial markets, contrasting its effectiveness in ‘centralised’ and ‘de-centralised’ markets; (2) the legal processes involved in replacing a reference to LIBOR with new rates, and the inherent limitations of contractual variation in this context; (3) the fate of ‘legacy’ contracts which are not amended: assessing the usefulness of contractual ‘fall-back’ language (recently described by the Chief Executive of the FCA as ‘a seat-belt in case of a crash’); and the applicability of force majeure and frustration.
Graham Penn: ‘Derivative Contracts and the Problem of Privity: the Case of Sub-participation’
Are there limits on the extent to which a derivative contract can legally affect, directly or indirectly, the rights and obligations of the underlying contract on which it is derivatively based?
This paper will examine recent developments in relation to both funded and risk sub-participation agreements and consider whether such agreements can still be characterised as derivative contracts. Do they give rise to privity of contract between the sub-participant and the underlying borrower and is there a risk of them being recharacterized?
Paul S Davies: ‘Recent Developments in the Law on Third Parties’
This paper will consider two areas which have recently been analysed by the Court of Appeal concerning third parties to contracts. The first is when a third party should be able to bring its own claim under the Contracts (Rights of Third Parties) Act 1999 following the important decision in Chudley v Clydesdale Bank Plc  EWCA Civ 344. The second concerns when a promisee should be able to recover damages for a third party’s loss, and the troublesome language of “transferred loss”: BV Nederlandse Industrie Van Eiprodukten v Rembrandt Entreprises Inc.  EWCA Civ 596.
- About the Speakers, Commentators and Chairs
Dr Jo Braithwaite is an Associate Professor of international commercial finance law in the London School of Economics Department of Law. Before LSE, she qualified as a solicitor and practised in a City law firm. Her research interests relate to the use of private law in the international financial markets, and to the law and regulation of the markets in bilateral and cleared derivatives specifically. She is an Associate Academic Fellow of the Honourable Society of the Inner Temple, a Research Associate of the LSE Systemic Risk Centre, and a member of the Editorial Committee of the Modern Law Review.
Richard Calnan is a partner at Norton Rose Fulbright LLP in London and a Visiting Professor at University College London. He is the author of Taking Security (LexisNexis, fourth edition 2018), Proprietary Rights and Insolvency (Oxford University Press, second edition 2016) and Principles of Contractual Interpretation (Oxford University Press, second edition 2017).
Mrs Justice Carr is a High Court Judge of the Queens’ Bench Division. She read law at Trinity College, Cambridge. She went on to have a distinguished career during her 25 years at the Bar, 10 of them as a QC, practising at 4 New Square Chambers and becoming head of chambers in 2012. Her principal areas of practice lay in the field of general commercial and professional liability law. Sue was appointed to the High Court in June 2013 and became a nominated Judge of the Commercial Court and the Technology and Construction Court in 2014. Sue will be sworn in as a Lady Justice of the Court of Appeal in April 2020.
Mrs Justice Cockerill was called to the Bar in 1990 (Lincoln’s Inn) and appointed Queen’s Counsel in 2011. She practiced at the Commercial Bar from 1991 to 2017 as a member of Essex Court Chambers, gaining wide experience in international commercial law in a variety of courts and arbitration tribunals before her appointment as a High Court Judge in November 2017 as a judge of the Queen’s Bench Division. She is a nominated Judge of the Commercial Court and also sits in Upper Tribunal for Immigration and Asylum, Administrative Court and Technology and Construction Court and in criminal cases in the Crown Court and Court of Appeal Criminal Division. Mrs Justice Cockerill is the author of “Compelled Evidence in Civil Proceedings” (2012 OUP) and was a contributing editor of The White book from 2011-2019 (Commercial Court and Arbitration), before taking up a position on the senior editorial Board in 2020. She has a keen interest in medieval history and has become an established author with the release of two books; Eleanor of Castile: The Shadow Queen (2014) and Eleanor of Aquitaine: Queen of France and England, Mother of Empires (2019).
Paul S Davies is Professor of Commercial Law at UCL. He was previously a Fellow of Gonville and Caius College, Cambridge and St Catherine's College, Oxford. Paul has also worked at the Law Commission. Paul is interested in all areas of commercial law, and has written widely on private law more generally. He is the author of Accessory Liability (Hart Publishing, 2015; revised paperback edition, 2017), which won the main Inner Temple Book Prize in 2018, JC Smith’s The Law of Contract (2nd ed, OUP, 2018), and a co-author of Equity and Trusts: Text, Cases and Materials (2nd ed, OUP, 2016 (with Graham Virgo)). Paul is one of the editors of Snell’s Equity and has recently joined the editorial team of Chitty on Contracts. He is also a Barrister of Lincoln’s Inn and an Associate Member of Maitland Chambers.
Peter MacDonald Eggers QC specialises in all aspects of commercial law, with a particular focus on insurance and reinsurance, shipping and transport, energy, commodities and international trade, financial services, professional negligence, and international investment projects. Peter also accepts appointments to act as an arbitrator. In May 2017, Peter was appointed as a Deputy Judge of the High Court. Peter has appeared in a number of recent and leading cases, including Aspen Underwriting v Credit Europe (The Atlantik Confidence), Suez Fortune Investments Ltd v Talbot Underwriting Ltd (The Brillante Virtuoso), The Cultural Foundation v Beazley Furlonge Ltd, The Cape Bari, Rathbone Brothers Plc v Novae Corporate Underwriting, The Princess of the Stars, Sea Glory Maritime Co v Al Sagr National Insurance Co, Arash Shipping v Groupama, and Masefield v Amlin. Peter is a Visiting Professor at University College London and is a contributing editor of Chitty on Contracts, co-author of Good Faith and Insurance Contracts, co-author of Carver on Charterparties, and the author of Deceit: The Lie of the Law, and The Vitiation of Contractual Consent.
Louise Gullifer QC (hon) FBA is Rouse Ball Professor of English Law at the University of Cambridge, and a fellow of Gonville and Caius College, Cambridge. She was formerly Professor of Commercial Law at the University of Oxford and held a Fellowship at Harris Manchester College in 2000. She is an associate member of 3VB, where she practiced for a number of years, and a Bencher of Gray’s Inn. She teaches and writes extensively in all areas of commercial and financial law, especially secured transactions and financial collateral, intermediated securities, set-off and personal property. She is the editor of Goode and Gullifer on Legal Problems of Credit and Security and has co-authored a number of books on commercial law and debt financing, including The Law of Security and Title Financing, The Law of Personal Property, Corporate Finance Law: Principles and Policy and Set-Off in Arbitration and Commercial Transactions. Her most recent co-edited volume is Intermediation and Beyond (2019), which considers the advantages and disadvantages of the holding of securities through the intermediated system, and the way forward. She is currently co-director of a project on digital assets, and is writing and editing a series of books on secured transactions law and reform around the world, of which the volume on Africa will be published in 2019. She has acted as an expert witness in cases concerning set-off, intermediated securities and insolvency law.
Philippa Hopkins QC is a barrister at Essex Court Chambers. Her practice encompasses a wide range of commercial disputes, including shipping, insurance, energy, aviation and general commercial work, in both court and arbitration. Recent cases include the long-running dispute between Her Majesty’s Treasury and Bank Mellat (for the Treasury) and Taqa Bratani v. Rockrose (operator removal in oil and gas contracts). The legal directories describe Philippa as having “an excellent legal brain and an academic approach”, as “exceptionally quick and intellectually strong” and “an absolutely superb tactician and advocate.” Philippa was educated at Merton College, Oxford (BA, BCL, Eldon Scholar), called to the Bar in 1994 and took silk in 2018. She also sits regularly as an arbitrator, and is Deputy Chancellor of the Diocese of Chelmsford. As a mother of three, Philippa is especially keen to encourage and promote women who wish to come to the commercial Bar.
Catharine MacMillan is Professor of Private Law at the Dickson Poon School of Law, King’s College London. Her research is concerned with the nineteenth and early twentieth century development of English private law. Her historical analysis has also formed the basis for further research concerned with modern contractual doctrines and issues. The subjects of her recent publications include the doctrines of frustration, mistake, privity and unconscionability. Professor MacMillan is the Vice-President Elect of the Society of Legal Scholars and the Treasurer of the Selden Society.
Dr Janet O'Sullivan is Senior Lecturer in the Cambridge University Faculty of Law, and is Vice-Master, fellow and director of studies in law at Selwyn College. After graduating top of her year in Cambridge in 1988, she qualified as a commercial property solicitor at Slaughter and May and spent three further years with the firm, before embarking on her academic career in 1994. In 2005 she won Cambridge University's Pilkington prize for excellence in university teaching. She is the author of the successful textbook ‘Core Text: The Law of Contract’ (OUP, 8th ed 2018) and co-authored, with Catherine Barnard and Graham Virgo, ‘What About Law?’ (Hart, 2nd ed). Her research interests are principally in the areas of contract and tort, particularly concurrent liability, remedies and professional negligence, fields in which she has published extensively, with articles cited by the Supreme Court, the House of Lords, the Court of Appeal and the Hong Kong Court of Final Appeals. She has three (almost) grown-up children.
Graham Penn is Co-Head of Sidley Austin LLP’s Global Finance practice and a member of the firm’s Executive Committee. He has taught on UCL’s graduate (LLM) programme for almost 30 years, initially in the capacity as visiting professor and since 2012 as Professor of International Finance Law. He is recognised as a pre-eminent authority on structured finance and securitisation and has worked on many ground breaking transactions since the inception of the European securitisation market in the late 1980’s. Graham was recently recognised as one of the top 10 European Legal Innovators by the Financial Times and was also included in the inaugural Chambers 100 a new ranking in which he was included as one of the top five capital markets lawyers in the UK. The Financial Times report credits him as “a pioneer in structured finance and securitisation” noting that “he has been involved in some of the most ground breaking transactions of the past two decades”.
Graham has written extensively on the law and regulation of banking and international finance, including a number of leading textbooks and has been the editor of the Journal of International Banking Law and Regulation for over 30years. He regularly presents papers at both academic and industry conferences in the UK and abroad.
Edwin Peel is Professor of Law in the Faculty and the Clarendon Harris Fellow in Law at Keble College. He is also a tenant at One Essex Court and sits as an Arbitrator. His research interest lies mainly in the law of Contract and he is most well-known for his work on Treitel: The Law of Contract, for which he has been responsible since the 12th edition. A new edition (15th) is due in April 2020. He is also responsible for Contract in Halsbury's Laws of England: Vol.22 (5th edition). Beyond the law of Contract, he was co-author (with Professor James Goudkamp) of Winfield & Jolowicz on Tort (19th edition).
Joanna Perkins serves as Chief Executive of the Financial Markets Law Committee (“FMLC”). Before joining the FMLC in 2004, Joanna worked for the Law Commission and managed a project on unfair contract terms. She has held lectureships at Durham University, Paris II (Panthéon-Assas), Université de Paris and Birkbeck College, University of London. She has published articles on, inter alia, financial law, financial markets regulation and the conflict of laws, participating in a number of expert panels on these subjects at the invitation of H.M. Government and the E.U. Commission.
After completing a Doctorate in Law at Oxford University, where she worked as a college lecturer, Joanna was called to the Bar in July 2001. In 2014-2015 she served as a Non-Executive Director of ICE Benchmark Administration Ltd and Chair Person for the Oversight Committee of ICE LIBOR.
Rosalind Phelps QC is a barrister specialising in commercial law at Fountain Court Chambers. Her principal areas of practice are banking and finance, arbitration, aviation and travel, civil fraud and professional negligence. Cases in the past year include FSHC Group Holdings (Terra Firma) v GLAS  EWCA 1361, Federal Republic of Nigeria v JP Morgan Chase  EWCA 1641, and acting for the CAA in relation to the collapse of Thomas Cook Airlines.
Lord Sales studied law at Cambridge and Oxford Universities and was called to the Bar in 1985. He practised in the fields of Chancery and commercial law until being appointed First Treasury Junior Counsel (Common Law) (the so-called ‘Treasury Devil’) in 1997. He served in that position until being appointed as a High Court Judge in the Chancery Division in 2008, after becoming a QC in 2006. He was a judge of the Patents Court and of the Competition Appeals Tribunal and was Vice-President of the Investigatory Powers Tribunal. Between 2009-2014 he was the head of the Boundary Commission for England. In 2014 he was appointed to the Court of Appeal and in January 2019 to the UK Supreme Court.
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