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Arbitration and Contract Law pp 177–188Cite as

Validity

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Part of the book series: Ius Gentium: Comparative Perspectives on Law and Justice ((IUSGENT,volume 54))

Abstract

The main requirements for a valid contract in English law are: the contract must be certain; there are further requirements of consideration, intent to create legal relations, and compatibility with tests of illegality and public policy.

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Notes

  1. 1.

    J Cartwright, Formation and Variation of Contracts (London, 2014), 3-13 to 3-17; G McMeel, The Construction of Contracts: Interpretation, Implication and Rectification (2nd edn, Oxford University Press, 2011), chapter 14.

  2. 2.

    K Lewison, Interpretation of Contracts (6th edn, London, 2015), 8.15.

  3. 3.

    [1934] 2 KB 17 n, HL (decided in 1927, but not reported until 1934).

  4. 4.

    [1934] 2 KB 1.

  5. 5.

    Barbudev v. Eurocom Cable Management Bulgaria Eood [2012] EWCA Civ 548; [2012] 2 All ER (Comm) 963, at [46]; see also Shaker v. Vistajet [2012] EWHC 1329 (Comm); [2012] 2 All ER (Comm) 1010; [2012] 2 Lloyd’s Rep 93, Teare J (deposit repayment conditional on payor having negotiated in good faith; purported condition precedent to repayment; condition held to be void for uncertainty; therefore, deposit repayable without this fetter; [8] to [18]).

  6. 6.

    [2014] EWHC 2104 (Comm), at [64].

  7. 7.

    ibid, at [64].

  8. 8.

    K Lewison, Interpretation of Contracts (6th edn, London, 2015), 8.12, 8.13.

  9. 9.

    ibid, 8.14.

  10. 10.

    [1988] 2 Lloyd’s Rep 108, CA (noted by Reynolds, (1988) 104 LQR 353), considering Sudbrook Trading Estate Ltd v. Eggleton [1983] 1 AC 444, HL; Brown v. Gould [1972] Ch 53, Megarry J (both contracts certain); and Courtney v. Tolaini [1975] 1 WLR 297, CA and Mallozzi v. Carapelli SpA [1976] 1 Lloyd’s Rep 407, CA (both contracts uncertain).

  11. 11.

    (1932) 147 LT 503; [1932] All ER 494, HL; Lord Thankerton’s reference to an ‘objective yardstick’ was cited by Sir Andrew Morritt V-C in Baird Textile Holdings Ltd v. Marks and Spencer plc [2001] EWCA Civ 274; [2002] 1 All ER (Comm) 737, at [26] to [30].

  12. 12.

    [1994] EMLR 17, CA.

  13. 13.

    [2010] EWCA Civ 485; [2011] 1 All ER (Comm) 731; [2011] 1 Lloyd’s Rep 68.

  14. 14.

    [2012] EWCA Civ 417; [2012] 2 All ER (Comm) 1053; [2012] 1 CLC 605; Moore-Bick and Longmore LJJ (Lewison LJ dissenting).

  15. 15.

    [2013] EWCA Civ 394; [2013] 3 All ER 807.

  16. 16.

    [2012] EWCA Civ 638; [2013] 1 WLR 102; for criticism, Neil Andrews, ‘Mediation Agreements: Time for a More Creative Approach by the English Courts’ (2013) 18 Revue de droit uniforme 6–16 (also known as Uniform Law Review).

  17. 17.

    [2002] EWHC 2059 (Comm); [2002] 2 All ER (Comm) 1041; [2002] CLC 1319; [2003] BLR 89, at [21] per Colman J.

  18. 18.

    ibid.

  19. 19.

    (1864) 2 H & C 906; G Gilmore, The Death of Contract (Columbus, Ohio, 1974), 35 ff; AWB Simpson, Leading Cases in the Common Law (Oxford University Press, 1995), 135 ff; C MacMillan, Mistakes in Contract Law (Hart, Oxford, 2010), 186 ff; G Spark, Vitiation of Contracts (Cambridge University Press, 2013), chapter 7; on this 1864 decision, see ‘The Great Peace’ [2003] QB 679, CA, at [28] and [29].

  20. 20.

    [1941] AC 251, HL.

  21. 21.

    J Cartwright, Formation and Variation of Contracts (London, 2014), Part II.

  22. 22.

    For miscellaneous contexts where a written set of terms is required, but their absence does not invalidate the agreement itself: J Cartwright, Formation and Variation of Contracts (London, 2014), 5–39.

  23. 23.

    J Cartwright, Formation and Variation of Contracts (London, 2014), 5–05 ff.

  24. 24.

    Section 4, Statute of Frauds 1677; Actionstrength Ltd v. International Glass Engineering INGLEN SpA [2010] EWCA Civ 1477; [2012] 1 WLR 566. J Cartwright, Formation and Variation of Contracts (London, 2014), chapter 6; G Andrews and R Millett, Law of Guarantees (6th edn, London, 2011), chapter 3; JC Phillips, The Modern Contract of Guarantee (2nd edn, English edn, London, 2010), chapter 3; J Cartwright, Formation and Variation of Contracts (London, 2014), 6–07 ff. O Gordon Ramsay v. Love [2015] EWHC 65 (Ch), Morgan J, see text below 11.11, at paragraph (ii) (relevant signature was an automated facsimile, using a fine nib and ink, of the human signatory’s autograph; the autograph machine had been activated by Ramsay’s manager with the principal’s authority; and so the deed was effective).

  25. 25.

    J Cartwright, Formation and Variation of Contracts (London, 2014), 5–36.

  26. 26.

    On the Bills of Sale Act 1878 (as amended), Online Catering Ltd v. Acton [2010] EWCA Civ 58; [2011] QB 204 (applicable only to individuals and not to companies).

  27. 27.

    J Cartwright, Formation and Variation of Contracts (London, 2014), 5–32.

  28. 28.

    ibid, 6–19.

  29. 29.

    J Cartwright, Formation and Variation of Contracts (London, 2014), 5-33, 5-34, 5-35, 5-37, 5-38.

  30. 30.

    Habibsons Bank Ltd v. Standard Chartered Bank (Hong Kong) Ltd [2010] EWCA Civ 1335; [2011] QB 943, at [34], per Moore-Bick LJ.

  31. 31.

    G Andrews and R Millett, Law of Guarantees (6th edn, London, 2011); JC Phillips, The Modern Contract of Guarantee (2nd edn, English edn, London, 2010).

  32. 32.

    The so-called co-extensiveness principle requires the guarantee payment to match the primary debt: (1) ‘…the surety’s liability is no greater and no less than that of the principal, in terms of amount, time for payment and the conditions under which the principal is liable’, G Andrews and R Millett, Law of Guarantees (6th edn, London, 2011), paragraph 6-002. (2) ‘The surety’s liability must not be different in kind or greater in extent debtor than that of the principal debtor’: see JC Phillips, The Modern Contract of Guarantee (2nd edn, English edn, London, 2010), paragraph 1-25; see also paragraphs 5.-152 to 5-171; (3) the same principle is examined in two articles in the English literature: J Steyn ‘Guarantees—the Co-Extensiveness Principle’ (1974) 90 LQR 246; R Else-Mitchell (1947) 63 LQR 355.

  33. 33.

    Vossloh AG v. Alpha Trains (UK) Ltd [2010] EWHC 2443; [2011] 2 All ER (Comm) 307; 132 Con LR 32, at [24], per Sir William Blackburne; see also, eg, Goulding J in Barclay v. Prospect Mortgages Ltd [1974] 1 WLR 837, at 844.

  34. 34.

    Section 4, Statute of Frauds 1677; Actionstrength Ltd v. International Glass Engineering INGLEN SpA [2010] EWCA Civ 1477; [2012] 1 WLR 566. J Cartwright, Formation and Variation of Contracts (London, 2014), chapter 6; G Andrews and R Millett, Law of Guarantees (6th edn, London, 2011), chapter 3; JC Phillips, The Modern Contract of Guarantee (2nd edn, English edn, London, 2010), chapter 3; J Cartwright, Formation and Variation of Contracts (London, 2014), 6–07 ff.

  35. 35.

    McGuinness v. Norwich and Peterborough Building Society [2011] EWCA Civ 1286; [2012] BPIR 145, at [7].

  36. 36.

    See remarks at first instance by Hoffmann LJ (sic) (too long to quote here) in MS Fashions Ltd v. Bank of Credit and Commerce International SA (In Liquidation) [1993] Ch 425, 436, upheld by the Court of Appeal.

  37. 37.

    In Berghoff Trading Ltd v. Swinbrook Developments Ltd [2009] EWCA Civ 413; [2009] 2 Lloyd’s Rep 233, at [25], Rix LJ explained: ‘In the case of guarantors, the contract of guarantee with the creditor may often make the guarantor into a primary obligor, in order to avoid the pitfalls of guaranties, such as their discharge by waiver and so on. In the normal case, however, the fact that the guarantor is a primary obligor vis-a-vis the creditor does not ordinarily mean that he ceases to have only a secondary liability vis-a-vis the debtor.’

  38. 38.

    Halsbury’s Laws of England (5th edn, London, 2008), vol 49, at paragraph [1214] summarises that technical law as follows: ‘[Any] variation of the principal contract made without his consent discharges [the gurantor] from his guarantee, unless the variation is clearly insubstantial or obviously cannot prejudice him.’

  39. 39.

    e.g., advance payment bonds, as in Kookmin Bank v. Rainy Sky SA [2011] UKSC 50; [2011] 1 WLR 770.

  40. 40.

    Halsbury’s Laws of England (5th edn, London, 2008), vol 49, paragraphs 1271 ff.

  41. 41.

    WS Tankship II BV v. The Kwangju Bank Ltd, Seoul Guarantee Insurance Company [2011] EWHC 3103 (Comm); [2012] CILL 3155, at paragraphs [109] ff, Blair J.

  42. 42.

    e.g., the insurance company in General Surety & Guarantee Co Ltd v. Francis Parker Ltd (1977) 6 BLR 18, which provided a performance bond in respect of a building contract.

  43. 43.

    [2012] EWCA Civ 1629; [2013] 1 All ER (Comm) 1191, at [25] to [28], per Longmore LJ.

  44. 44.

    J Cartwright, Formation and Variation of Contracts (London, 2014), chapter 7.

  45. 45.

    Section 1(2)(3) Law of Property (Miscellaneous Provisions) Act 1989 (as amended by the Regulatory Reform (Execution of Deeds and Documents) Order 2005 (SI 2005/1906, art 7(3)); GH Treitel, The Law of Contract (12th edn, by E Peel, London, 2007), 3–164 ff; Bolton MBC v. Torkington [2004] Ch 66, CA.

  46. 46.

    [2015] EWHC 65 (Ch), Morgan J.

  47. 47.

    ibid, at [7].

  48. 48.

    [2001] 4 All ER 138, CA, at [30] ff.

  49. 49.

    Re Gleeds, Briggs v. Gleeds [2014] EWHC 1178 (Ch); [2015] Ch 212, Newey J, at [40], [43]; and cf Actionstrength Ltd v. International Glass Engineering In. Gl.En SpA [2003] UKHL 17; [2003] 2 AC 541, HL (oral guarantee ineffective and does not give rise to an estoppel: see [8] to [9], [26] to [29], [34] to [35] and [51], distinguishing Shah v. Shah).

  50. 50.

    J Cartwright, Formation and Variation of Contracts (London, 2014), chapter 8.

  51. 51.

    ibid, 8-25 to 8-35.

  52. 52.

    ibid, 3-09 to 3-12.

  53. 53.

    [1964] 1 WLR 349, 354-5.

  54. 54.

    [2012] EWCA Civ 548; [2012] 2 All ER (Comm) 963, at [30].

  55. 55.

    [2013] EWCA Civ 394; [2013] 3 All ER 807.

  56. 56.

    ibid, at [61], [62], [86], [87], per Elias LJ.

  57. 57.

    Section 178, Trade Union and Labour Relations (Consolidation) Act 1992.

  58. 58.

    J Cartwright, Formation and Variation of Contracts (London, 2014), 2-08; K Lewison, Interpretation of Contracts (6th edn, London, 2015), 16-03 to 16-05; G McMeel, The Construction of Contracts: Interpretation, Implication and Rectification (2nd edn, Oxford University Press, 2011), 14.14 ff.

  59. 59.

    [2010] UKSC 14; [2010] 1 WLR 753.

  60. 60.

    [2001] EWCA Civ 274; [2002] 1 All ER (Comm) 737, at [59] to [70], per Mance LJ.

  61. 61.

    [1989] 1 All ER 785, CA.

  62. 62.

    Neil Andrews, Contract Law (2nd edn, Cambridge University Press, 2015), chapter 20.

  63. 63.

    M Furmston and G Tolhurst, Privity of Contract (Oxford University Press, 2015).

  64. 64.

    ibid.

  65. 65.

    ibid.

  66. 66.

    AG Guest, Guest on the Law of Assignment (2nd edn, London, 2015); M Smith and N Leslie, The Law of Assignment (2nd edn, Oxford University Press, 2013); G Tolhurst, The Assignment of Contractual Rights (Hart, Oxford, 2006).

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    Neil Andrews

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Andrews, N. (2016). Validity. In: Arbitration and Contract Law. Ius Gentium: Comparative Perspectives on Law and Justice, vol 54. Springer, Cham. https://doi.org/10.1007/978-3-319-27144-6_11

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