Between Rock and a hard place: MWB Business Exchange Centres v Rock Advertising

By Ms Joanna McCunn, Lecturer in Law (University of Bristol Law School).

Since the 19th century, contract law in England has been strongly influenced by will theory: the idea that all contractual liability is founded on the intentions of the parties. Enthusiasm for this model dipped during the 20th century, as it became clear that many contracting parties were being strong-armed into contracts they only vaguely understood. However, will theory is now back with a vengeance, at least in the commercial sphere. Its implications can be seen clearly in the recent case of MWB Business Exchange Centres v Rock Advertising [2018] UKSC 24, judgment in which was helpfully handed down by the Supreme Court the day after the Bristol contract law exam.

In November 2011, Rock Advertising began to occupy offices which were managed by MWB Business Exchange Centres. Rock were unable to meet the licence fee, and within a few months had fallen into arrears of over £12,000. On 27 February 2012, Rock proposed to defer some of its payments to MWB. The result would be that MWB would recoup the arrears, but at a later date, losing interest on the money in the meantime. In a phone conversation, MWB’s representative initially accepted the proposal. However, after consulting with her manager, she later emailed Rock purporting to reject it. On 30 March, MWB locked Rock out of the office for non-payment of the arrears, and gave notice to terminate their licence. The question was whether Rock could enforce the 27 February agreement. (more…)

Contractual interpretation: from the Tudors to Lord Hoffmann

By Ms Joanna McCunn, Lecturer in Law (University of Bristol Law School).

© Folger Shakespeare Library

Contractual interpretation continues to be a controversial topic. In a recent speech, Lord Sumption attacked Lord Hoffmann’s judgment in Investors Compensation Scheme [1998] 1 WLR 896, still the leading case in the area. For Lord Hoffmann, the key question was what a reasonable person would understand the parties to have intended by their contract, even if this was something different to the ordinary meaning of the words they had used. Lord Sumption, however, argued that the courts must give primacy to the meaning of the words.

It is sometimes suggested that Lord Hoffmann’s approach is an aberration in the common law of contract, which has consistently prioritised the meaning of the words over the parties’ apparent intentions. In fact, however, it bears a striking resemblance to the approach taken by the courts in sixteenth century England, where a very similar debate about interpretation was playing out. In a recently-published book chapter*, I explore this history and what it means for contract lawyers today. (more…)

A new duty of care for banks and other financial institutions? The Financial Services Consumer Panel’s proposal

By Dr Holly Powley, Lecturer in Law, and Prof Keith Stanton, Professor of Law (University of Bristol Law School).

© Chris Brown

The past few years have witnessed a debate in the field of banking and broader financial services law: should the law relating to the duty of care owed by financial services firms to their customers be reformed? The Financial Services Consumer Panel (FSCP) argues that the answer to this question is yes; the current law does not provide consumers with adequate levels of protection, and thus the law needs to be. The current regulatory regime requires firms to treat their customers fairly, however the FSCP believes that banks and other financial services firms should be held to a higher standard and for this reason have advanced reform proposals to address this issue.

The purpose of this blog post is to analyse the content of the reform proposals and assess the viability of any reform, in light of the existing legal regime. It will be argued that, as indicated by the Parliamentary Commission on Banking Standards (PCBS) and the Financial Conduct Authority (FCA), the proposal advanced by the FSCP is unlikely to improve the law in this area. (more…)

Penalty clauses and the courts – Does the UK approach differ from the rest of Europe?

by Prof Paula Giliker, Professor of Comparative Law (University of Bristol Law School).*

Contractual penalty clauses raise questions going to the heart of contract law: should the courts enforce clauses which make payment of a large sum of money due on breach of contract? The argument is that such clauses act as a penalty for breach and are used by economically stronger parties to “discourage” the other party from breaching the contract. The sums in question are often extortionate and bear no resemblance to the true losses of the parties. Should the courts intervene – and diminish the parties’ freedom to contract as they will – or should they simply enforce the contract?

This question was addressed by the UK Supreme Court in Cavendish Square Holdings BV v Makdessi; ParkingEye Ltd v Beavis ([2015] UKSC 67) and raises profound questions of the role of judges in policing contractual agreements and the “morality” of contract law. (more…)