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Contract, Conflict and Cooperation (PDFDrive)

Q: Discuss how contract law could evolve to better accommodate modern commercial needs as revealed by empirical studies.

Contract law could evolve by integrating empirical findings highlighting the importance of cooperation in modern commercial interactions. This evolution might involve embedding a duty to cooperate as a standard clause in contracts, which reflects practitioners' experiences and expectations. Such changes would involve adopting flexible rules that allow for creative problem-solving and relationship-building rather than strict adherence to punitive measures. This could entail developing legal frameworks that prioritize communication and management over litigation, thereby aligning with the practical realities of complex contract execution .

Q: In what ways does the empirical research challenge traditional perspectives on contract termination disputes?

Empirical research challenges traditional perspectives on contract termination by presenting evidence that commercial practitioners favor cooperative solutions over termination. The research indicates that while traditional legal approaches may permit immediate termination upon breach, commercial players see such actions as a last resort, preferring conflict resolution through communication and cooperation. This contradicts the long-held view in law that punitive measures, such as termination or litigation, are standard responses to breach .

Q: What are the potential benefits and drawbacks of incorporating a duty to cooperate in commercial contracts as proposed by recent studies?

Benefits of incorporating a duty to cooperate in commercial contracts include facilitating successful performance by emphasizing mutual expectations and fostering an environment of communication and constructive problem-solving . It aligns with modern commercial practices by recognizing that cooperation, including the sharing of information and active management, is critical in complex contracts, thus supporting the commercial interests of both parties . Additionally, it has been shown that a well-defined duty to cooperate does not necessarily compromise the certainty needed in contractual obligations . Drawbacks may include potential reductions in the predictability of contract outcomes, especially if the duty is too broadly or vaguely defined, which could lead to disputes regarding its scope and execution . The challenge lies in balancing the duty of cooperation with clearly defined contractual rights to avoid undermining legal certainty . Overall, while a duty to cooperate can enhance mutual performance expectations and facilitate problem-solving, it must be carefully integrated into contracts to maintain the predictability and enforceability of agreements .

Q: Evaluate the role that surveys play in bridging the gap between judicial understanding and commercial realities.

Surveys help bridge the gap between judicial understanding and commercial realities by providing empirical data on the expectations and behaviors of commercial actors, which are not always aligned with judicial interpretations. The surveys highlight norms such as cooperation, communication, and problem-solving, which are crucial for successful contract performance . Surveys can expose discrepancies between legal interpretations and commercial practices, helping judges to understand the implicit norms and expectations that drive business relationships . They offer unique insights into the expectations of commercial parties regarding contract management, which is invaluable for aligning legal standards with commercial practice . By incorporating survey data that outlines trade customs and business norms, courts can achieve a more contextual interpretation of contracts, thus improving the alignment between legal frameworks and commercial realities .

Q: How does the duty to cooperate impact the performance of commercial contracts according to recent empirical studies?

The duty to cooperate significantly impacts performance in commercial contracts by enhancing communication, information flow, and problem-solving, thus supporting successful execution of agreements . Empirical studies indicate that in symbiotic and complex contracts, a defined duty to cooperate incorporates elements like prevention of performance obstruction, facilitating necessary actions, and reasonable problem resolution, which are essential for contract management . The empirical data show commercial expectations prioritize cooperation as mission-critical, highlighting reciprocal management, relationship building, and effective communication as key elements . These studies suggest that a coherent duty to cooperate aligns with commercial needs and can enhance certainty without disrupting the adversarial nature of commercial transactions ."}

Q: What role does judicial interpretation play in aligning legal outcomes with commercial practices regarding the duty to cooperate?

Judicial interpretation plays a key role in aligning legal outcomes with commercial practices regarding the duty to cooperate by incorporating and interpreting cooperation terms in contracts. Courts infer a duty to cooperate based on the assumption that cooperation between parties is fundamental to fulfilling contractual obligations, especially in complex, symbiotic contracts. This inference can be through construction, where courts interpret the contract based on its terms and the surrounding context, or implication, where the duty is considered an inherent part of the contract without explicit terms . The judiciary uses a framework of construction, gap-filling, and interpretation to ensure that cooperation aligns with commercial expectations and practices, maintaining a balance between flexibility and the need for certainty in contract law . By doing so, courts attempt to reflect the commercial reality and expectations of parties, ensuring that contractual obligations are met in a way that reflects modern commercial practices .

Q: What critical insights do the empirical studies provide regarding communication's role in fulfilling commercial contracts?

Empirical studies emphasize that communication plays a critical role in fulfilling commercial contracts by fostering mutual understanding and alignment through openness, clarity, and active engagement. Effective communication is vital for pre-empting and solving problems, aligning expectations, and ensuring seamless contract performance, particularly in complex and symbiotic contracts . Respondents in studies highlight that poor management of information flow is a primary source of contract-related issues, underscoring the necessity for clear and consistent communication channels . The results also suggest that problem-solving and relationship-building depend heavily on formal and informal communication to maintain cooperation and contract effectiveness, even recommending that punitive actions be avoided in favor of resolving disputes through communication and management . Overall, these insights point to communication as a cornerstone in achieving successful contract performance by aligning the parties' goals and expectations .

Q: How do empirical survey findings potentially impact the legal understanding of commercial expectations in contract law?

Empirical survey findings can impact the legal understanding of commercial expectations in contract law by revealing insights into the implicit understandings, practices, and norms that parties are actually aware of or can reasonably be expected to be aware of. These expectations are typically not rendered express but are crucial for ensuring that contracts function effectively in practice . Surveys provide evidence of market practice and customary dealings that judges can use to align legal rulings with the reasonable expectations of commercial actors . Empirical data helps bridge the gap between judicial perspectives and real-world commercial practices, ensuring that the law evolves with changing commercial realities . Moreover, empirical research highlights the importance of cooperation and communication in the successful performance of contracts, suggesting these should be considered in legal interpretations and rulings . Such findings encourage a more contextual approach to contract interpretation, supporting adjustments to policy-based restrictions on evidence that align with contemporary commercial expectations .

Q: How does the concept of a 'third way' duty to cooperate differ from traditional and minimalist contract theories?

The 'third way' duty to cooperate represents a distinct approach in contract theory, emphasizing active cooperation within symbiotic contracts, characterized by interdependence and joint problem-solving, to ensure successful performance. Unlike traditional contract theories, which focus on minimal obligations and predictable enforcement of agreements without necessarily promoting cooperation, and relational contract theory, which may impose broad, undefined expectations of cooperation, the 'third way' approach is neither entirely traditional nor fully relational. It constructs a deeper duty based on commercial realities and relationships rather than rewriting legal principles entirely. This approach articulates cooperation as a specific, duty-bound framework crucial for modern commercial practice, reducing ambiguity by clearly defining mutual expectations of proactive engagement and communication without causing legal uncertainty .

Q: Analyze how a duty to cooperate might affect dispute resolution mechanisms in commercial contexts.

A duty to cooperate could significantly affect dispute resolution mechanisms by encouraging parties to resolve conflicts through dialogue and negotiation rather than litigation. The implementation of this duty might lead to the adoption of alternative dispute resolution methods, such as mediation or arbitration, which emphasize collaboration and mutual understanding over adversarial approaches. Consequently, courts may see reduced litigation caseloads, and contracts may include specific clauses for cooperative resolutions, thus aligning legal frameworks with commercial practices that prioritize relationship maintenance and conflict avoidance .

This PhD thesis examines the common law approach to cooperation in complex modern contracts. It analyzes hundreds of court cases on cooperation duties and conducts an empirical survey of commercial experts. The survey finds that while courts lack coherence on cooperation, the law is not wholly incoherent. The thesis argues that interpreting contracts based on their purpose and context could provide coherence. It defines cooperation through expert opinions and compares this to legal doctrines and theories. The duty to cooperate is justified based on the implicit agreement of parties in complex contracts that require cooperation for success. The thesis tests this duty against hard cases and argues it would not decrease contractual certainty in English commercial law.

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Contract, Conflict and Cooperation (PDFDrive)

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CONTRACT, CONFLICT

AND

COOPERATION

A Critical Analysis

of the

Common Law Approach

to the

Breakdown of Complex, Modern, Symbiotic Contracts

Charles Haward Soper

PhD Submission

Leicester Law School

2017

i
Figure 1 Cooperation in Action

ii
Abstract
Contract, Conflict and Cooperation

A Critical Analysis of the Common Law Approach to the Breakdown of Modern, Com-
plex, Symbiotic Contracts

Charles Haward Soper

The springboard of a real-world, doctrinal, and theoretical investigation of the role

played by cooperation in complex modern contracts allows me to articulate and justify
a deep and concrete Transcendent Duty to Cooperate (TDTC) for these contracts. The
source of the TDTC is the express words and/or the background of such contracts, the
commercial expectations of the parties; which reveal that successful performance re-
quires cooperation. The inevitable inference from this is that parties implicitly agree to
cooperate. As the duty is implicit, it follows, I argue, that there are no gaps to be filled;
merely meaning to be unearthed from the words and/or the background (construction).

In doctrinal work, I review cases in categories (prevention, facilitation, defect-rectifica-

tion, communication, decision-making, and active cooperation), showing that the law
is far from coherent but also far from incoherent. Shifting from judicial policy making
and gap-filling to context/purpose based contract construction, using evidence, is pos-
sible and would provide coherence.

I create a clear and enforceable definition of cooperation through analysing the opinions
of around five-hundred commercial experts and synthesising those with doctrine and
theory.

My empirical work analyses experts’ views; collected by interview, an online survey

and workshops, using vignettes developed from adjudicated/real-life cases including
opinion on what cooperation is and how it is achieved. The findings of my survey are
compared with others. At an abstract level, it aligns with comparable surveys and at a
detailed level, it is unique.

In theoretical work, I show that basing the TDTC on construction is superior and more
efficient, brings coherence to the law and that it is underpinned by shared, normative,
“community” values.

I test the TDTC against various “hard” cases, analysing remedial issues, showing that it
would not decrease certainty in English Commercial Law, and is defensible by an ap-
peal for coherence.

iii
Acknowledgements

My Supervisors, Professor Francois du Bois, Dr Sebastian Peyer and Dr Richard Craven

for their patience, salient commentary and encouragement and advice. On the rare oc-
casions when there has been disagreement we have resolved this through construc-
tive engagement and good communication.

Dr Masood Ahmed for pointing me to various dispute resolution cases and materials
which helped form my constructive engagement concept.

The hundreds of experts who contributed to my survey. I can’t name any but former
colleagues in Shell, ALSTOM, British Shipbuilders, and Siemens have obviously forgiven
me and they and many others that I have met in the course of a long and interesting
career took real time and care in answering my complex questions.

Dr Shambhavi Naik for helping me to turn data into graphs.

ISS – for giving me permission to use the graphics and information derived therefrom
in my subchapter on the change in commercial reality.

Dr Roger Dickinson – for survey pilot advice and general encouragement.

Jimmy Anklesaria – general advice on the concept and on commercial practice (and for
lunch in San Diego).

Celia Murray – for general tolerance, great encouragement, and final survey proof-
reading and advice in Miraflores, Lima, in April 2015. Also for looking after me in 2013
when I needed to be looked after.

Barbara Evans of the Chartered Institute of Building who provided me with excerpts
from their standard Facilities Management Form of Contract.

Lexis-Nexis for providing access to their invaluable Manual of Construction Agree-

ments.
iv
Hogan Lovells for advice and guidance on facilities management contracting and on
the use of expert evidence.

The IT Services trainers at the University of Leicester, especially Hazel Guyler for their
professional training and expert advice.

The Social Science Doctoral Training Programme providers. This programme was excel-
lent and those who trained me were always willing to assist with questions at the time
and later.

My fellow PhD students who have always been a source of encouragement and assis-
tance.

The Prince Court Medical Centre in Kuala Lumpur, especially Dr Azrif Muhammad An-
nuar and Dr Ryan Ponnudarai. The Royal Marsden Hospital in Chelsea and Sutton espe-
cially William Allum. Without these experts, and the huge number of associated health
professionals involved I would not be here to undertake this research.

v
Table of Contents
Abstract iii
Acknowledgements ......................................................................................................... iv
Table of Contents ............................................................................................................. vi
Table of Cases ................................................................................................................... x
All Cases Cited................................................................................................................ x
Scotland ...................................................................................................................... xxii
United States ..............................................................................................................xxii
Canada ........................................................................................................................ xxii
Bermuda .................................................................................................................... xxiii
Hong Kong ................................................................................................................. xxiii
Jamaica ...................................................................................................................... xxiii
Australia ..................................................................................................................... xxiii
New Zealand .............................................................................................................. xxiii
Belize xxiv
Table of Legislation ....................................................................................................... xxiv
Table of Tables ............................................................................................................... xxv
Table of Figures (figures in Appendices not listed) ....................................................... xxv
Chapter 1 Introduction ..................................................................................................... 1
The Research Question ...................................................................................... 4
Methodology .................................................................................................... 10
1.2.1 Review of the Law and Theory ..................................................................... 14
1.2.2 Empirical Survey ........................................................................................... 15
1.2.3 Critique of the Law ....................................................................................... 17
Chapter Structure ............................................................................................. 18
1.3.1 Chapter 2 -Duty to Cooperate – Case Law and Comment ........................... 18
1.3.2 Chapter 3 Empirical Research Results .......................................................... 19
1.3.3 Chapter 4 The Source and Justification of the Duty to Cooperate .............. 20
1.3.4 Chapter 5 The Duty to Cooperate ................................................................ 22
vi
1.3.5 Chapter 6 A Few Hard Cases and Concluding Thoughts on Reform ............ 22
Summary .......................................................................................................... 23
Chapter 2 duty to cooperate – case law and comment ................................................ 25
Basic Principle and Overview of Case-Law ....................................................... 26
Prevention of performance .............................................................................. 28
Reasonable Endeavours, Diligence/Facilitation ............................................... 31
Defects and Rights to Cure ............................................................................... 38
Communication or constructive engagement ................................................. 40
active cooperation/accepting reasonable solutions ........................................ 50
control of contractual decision making ........................................................... 60
2.7.1 General Principles ......................................................................................... 62
2.7.2 Decisions to Exercise Absolute Contractual Rights ...................................... 64
2.7.3 Commercial Contracts .................................................................................. 70
2.7.4 Construction Contracts ................................................................................. 71
2.7.5 Taking the Interests of the other Party into account ................................... 73
2.7.6 Conclusion .................................................................................................... 74
The Apparatus of Contract Interpretation ....................................................... 78
2.8.1 The Process of Judicial Interpretation of Contracts ..................................... 80
2.8.2 Reading the words ........................................................................................ 82
2.8.3 Reading the Words and Examining the Matrix ............................................ 85
2.8.4 Reading the Words, Examining the Matrix and Gap-Filling ......................... 91
2.8.5 Reading the Words, Examining the Matrix, Making Policy and Gap-Filling . 93
2.8.6 Construction Creates Coherence.................................................................. 95
conclusion ........................................................................................................ 98
Appendix A to Chapter 2 – typical contract decision making powers ........... 101
Chapter 3 Empirical Research- survey and Results ..................................................... 103
Methods ......................................................................................................... 105
3.1.1 Respondent Sample and Demographics .................................................... 110
3.1.2 Survey and Interview Design ...................................................................... 123
3.1.3 Variables and Variance ............................................................................... 130
Rationales for Mixed Methods – Ian Parker .......................................................... 133
Survey Results ................................................................................................ 134
vii
3.2.1 Open questions – Enjoyment and Success ................................................. 134
3.2.2 Vignette 1 – The Power and the Story ....................................................... 145
3.2.3 Vignette 2 – Decide or Concur? .................................................................. 152
3.2.4 Vignette 3 – An Offer he can’t Refuse? ...................................................... 156
3.2.5 Vignette 4 – Is It About the Ketchup? ........................................................ 168
3.2.6 Governance Questions ............................................................................... 177
3.2.7 Negotiation Questions................................................................................ 180
3.2.8 Punitive Measures ...................................................................................... 182
3.2.9 Termination ................................................................................................ 185
3.2.10 Fast Track Dispute Resolution Measures ................................................... 187
3.2.11 Self-help Remedies ..................................................................................... 189
3.2.12 How Important is Cooperation in the Management of Contracts? ........... 190
3.2.13 What does Cooperation Mean? ................................................................. 193
3.2.14 Which Contract Terms Promote Cooperation? .......................................... 194
3.2.15 How is Cooperation Achieved? .................................................................. 197
Conclusions from this Empirical Evidence ..................................................... 205
3.3.1 Cooperation is Important ........................................................................... 205
3.3.2 What Cooperation Means .......................................................................... 205
3.3.3 Cooperation is Achievable .......................................................................... 206
3.3.4 Summary ..................................................................................................... 207
Chapter 4 The Source, Justification and Application of the Duty to Cooperate ......... 213
Theoretical Perspectives on Commercial Expectations ................................. 215
4.1.1 The Change in Commercial Reality and Commercial Practice ................... 216
4.1.2 Meaning of Commercial Expectations........................................................ 222
4.1.3 Why These Expectations should be given Legal Force ............................... 235
The Source of the Duty - Commercial Expectations – Polyfilla, Penumbra or
Polysemia? Giving it Some Ayr .................................................................................. 241
4.2.1 Evidence of Market Practice ....................................................................... 242
4.2.2 Custom ........................................................................................................ 248
4.2.3 The Parties’ History .................................................................................... 250
4.2.4 Surveys........................................................................................................ 255
4.2.5 The Commercial Judge ............................................................................... 256
viii
Conclusion ...................................................................................................... 260
4.3.1 Appendix 1 to Chapter 4.2 .......................................................................... 262
Chapter 5 The third way – how it is different ............................................................. 264
The Third Way ................................................................................................ 264
Definitions of cooperation ............................................................................. 268
5.2.1 Full-Blooded Relational Scholarship ........................................................... 269
5.2.2 Other Academic Constructs – Mainstream Obligations Scholars and Hybrid
or Para-Relationists ................................................................................................ 272
5.2.3 Law and economics definitions .................................................................. 276
5.2.4 Trust Based Definitions............................................................................... 277
5.2.5 Managerial Thoughts .................................................................................. 279
5.2.6 Tit-for-tat ≠ cooperation............................................................................. 280
Remedies and Enforcement Mechanisms reconsidered ............................... 282
5.3.1 Remedies for Prevention ............................................................................ 284
5.3.2 Wrotham Park Damages............................................................................. 287
5.3.3 Statutory Adjudication ............................................................................... 288
5.3.4 Limiting the Right to Determine ................................................................. 289
5.3.5 cost penalties .............................................................................................. 291
Conclusion ...................................................................................................... 292
Chapter 6 A Few Hard Cases and Concluding Thoughts on reform ............................ 294
Applying the Duty to Cooperate to the Hard Cases ....................................... 294
6.1.1 Medirest ..................................................................................................... 295
6.1.2 Portsmouth City Council v Ensign Highways .............................................. 299
6.1.3 Baird Textile Holdings v Marks and Spencer plc......................................... 301
6.1.4 Yam Seng Pte Ltd v International Trade Corporation Ltd (Yam Seng) ....... 303
6.1.5 Bristol Groundschool Ltd v Intelligent Data Capture Ltd ........................... 305
6.1.6 Communication cases – Mona Oil, Tradax, AE Lindsay, and Peter Dumenil
306
6.1.7 J& H Ritchie Ltd v Lloyd Ltd ........................................................................ 310
6.1.8 D&G Cars Ltd v Essex Police Authority ....................................................... 312
6.1.9 Decision Making Powers – Nash and Lymington ....................................... 314

ix
6.1.10 Walter Lilly & Co Ltd v Giles Patrick Cyril Mackay and DMW Developments
Limited.................................................................................................................... 315
6.1.11 Changes in circumstances .......................................................................... 317
6.1.12 General Thoughts on the Cases .................................................................. 320
Concluding Thoughts and Suggestion for Reform ......................................... 320
Bibliography ....................................................................................................................... I
Appendices to Chapter 3 ................................................................................................... i
Face to Face Interview Decisions ....................................................................................... i
Question Design Checklist ................................................................................................ ii
Subsamples used for Variance Analysis ........................................................................... iv
Variance Snapshot ......................................................................................................... viii
Vignette 1 – Supplier refuses to provide a report - detailed graphs ................................ x
Vignette 2 – Decision Making/Discretion - detailed graphs ......................................... xxix
Vignette 3 – the Blackmailing Subcontractor - detailed graphs ................................... xxxi
Vignette 4 – the Client making absurd deductions - detailed graphs ........................... lvii
How important is cooperation in managing your contracts? .................................... lxxviii
What does cooperation mean? ................................................................................... lxxix
Which contract provisions promote cooperation? ..................................................... lxxxi

Table of Cases

All Cases Cited

A Baily v Clark Son and Morland [1938] AC 557 (HL)

A V Pound Ltd v M W Hardy Inc [1956] 1 All ER 639 (HL)
A. E. Lindsay & Co Ltd v Cook. [1953] 1 Lloyd's LR 328 (QBD)
Abbey Developments v PP Brickwork Ltd [2003] EWHC 1987 (TCC)
Abu Dhabi National Tanker Co v Product Star Shipping Ltd, The Product Star (No 2)
[1993] 1 Lloyd's Rep 397, (1992) Times, 29 December
A-G of Belize v Belize Telecom Ltd [2009] UKPC 10
Alan Auld Associates Ltd v Rick Pollard Associates [2008] EWCA Civ 655
Alstom Signalling Ltd v Jarvis Facilities Ltd [2004] EWHC 1232 (TCC)

x
Amey LG Limited v Cumbria County Council [2016] EWCH 2856 (TCC)
Anglo Group plc v. Winther Brown & Co. Ltd [2000] EWHC Technology 127 (TCC)
Appleby v Myers (1865-66) LR 1 CP 615 (Court of Common Pleas)
Arcos v Ronaassen [1933] AC 470 (AC)
Arnold v Britton [2015] UKSC 36
Arterial Drainage Co v Rathangan Drainage Board (1880) 6 LR Ir 513
Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB
223,[1947] 2 All ER 680
Astea (UK) Ltd v Time Group Ltd [2003] EWHC 725 (TCC)
Atlas Express Ltd v Kafco (Importers and Distributors) Ltd [1989] QB 833, [1989] 1 All ER
641
Attorney-General v Blake [2000] UKHL 45
Baird Textiles Holdings Ltd v Marks & Spencer plc [2001] EWCA Civ 274, [2002] 1 All ER
(Comm) 737
Balfour Beatty Civil Engineering Ltd v Docklands Light Railway Ltd 49 ConLR 1
Banner Homes Plc v Luff Developments Ltd [2000] Ch 372, CA
Barber v Taylor (1839) 5 Meeson Welsby 527 (Exchequer)
Barclays Bank Plc v Unicredit Bank AG [2014] EWCA civ 302
Berkeley Community Villages Ltd v Pullen [2007] 3 EGLR 101
Beaufort Developments (NI) Ltd v. Gilbert-Ash NI Ltd and Others [1998] UKHL 19
Birse Construction Ltd v St David Ltd [1999] BLR 194
Bluewater Energy Services BV v Mercon Steel Structures BV [2014] EWHC 2132 (TCC)
BMA Special Opportunity Hub Fund Ltd v African Minerals Finance Ltd [2013] EWCA Civ
416
Bolton v Mahadeva [1972] 1 WLR 1009
Borrowman, Phillips, & Co. v. Free & Hollis (1878) 4 QBD 500
Bournemouth & Boscombe Football Club Ltd V Manchester United Football Club Ltd
1974 B No 1531 (AC)
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 52 ALJR 20
Braganza v BP Shipping Ltd (The "British Unity") [2015] UKSC 17
Braunstein v The Accidental Death Insurance Company (1861) 121 ER 904

xi
Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corp Ltd [1981]
AC 909 HL
Bristol Groundschool Ltd v Intelligent Data Capture [2014] EWHC 2145 (Ch)
British Crane Hire Corpn Ltd v Ipswich Plant Hire Ltd [1975] QB 303, [1974] 1 All ER 1059
Brookfield Construction Ltd v Foster & Partners Ltd [2009] EWHC 307 (TCC)
Bruce v Carpenter and others - [2006] EWHC 3301 (Ch)
Buckland v Bournemouth University Higher Education Corporation [2010] All ER (D) 299
(Feb)
Buller v Crips 87 ER 793
Bunge Corpn v Tradax SA [1981] 2 All ER 513, (HL)
Bunge Corpn v Vegetable Vitamin Foods (Pte) Ltd [1985] 1 Lloyd's Rep 613
Burquitlam Care Society v Fraser Health Authority, 2015 BCSC 1343
Business Environment Bow Lane Ltd v Deanwater Estates Ltd [2009] EWHC 2014
Butt v MacDonald (1896) 7 QLJ 68
Canterbury Pipelines v Christchurch Drainage Board [1979] 2 NZLR 347
Cantor Fitzgerald International v Bird and others [2002] IRLR 267
Cantrell v Wright and Fuller Ltd [2003] EWCA Civ 1565
Carewatch Care Services Ltd v Focus Caring Services Ltd [2014] EWHC 2313 (Ch)
Carillion Construction Ltd v Felix (UK) Ltd [2000] All ER (D) 1696
Cehave v Bremer Handelsgesellschaft mbH [1975] 3 All ER 739
Chambers v Goldthorpe [1901] 1 KB 624
Charrington and Co v Wooder [1914] AC 71
Chartbrook Limited v Persimmon Homes Limited [2009] UKHL 38
Chelsfield Advisers LLP v (1) Qatari Diar Real Estate Investment Co (2) Qatari Diar
Development Co (Uk) Ltd (2015) [2015] EWHC 1322 (Ch)
City Inn Ltd v Shepherd Construction Ltd [2007] CSOH 190 (OH)
Clarke v Dunraven [1897] AC 59
Clegg v Andersson [2003] All ER (D) 150
Colley v. Overseas Exporters [1921] 3 KB 302
Commonwealth Bank of Australia v Barker [2014] HCA 32
Compass Group UK and Ireland Ltd (t/a Medirest) v Mid Essex Hospital Services NHS
Trust [2012] EWHC 781 (QB)
xii
Consarc Design Ltd v Hutch Investments Ltd (2003) 19 Const LJ 91 (QBD (T&CC))
Contact Energy Ltd v The Attorney General [2005] All ER (D) 428 (Mar)
Cory Ltd v City of London Corp [1951] 2 KB 476 (AC)
Courtaulds Northern Textiles Ltd v Andrew [1979] IRLR 84, EAT
CPC Group Limited v Qatari Diar Real Estate Investment Company [2010] EWHC 1535
(Ch)
Cream Holdings Ltd v Stuart Davenport (2011) [2011] EWCA Civ 1287
Crema v Cenkos Securities Plc [2010] EWCA Civ 1444, [2010] EWHC 461 (Comm)
Croninger v. Crocker 62 N Y 158
Crossley v Faithful and Gould [2004] EWCA Civ 293
CTN Cash and Carry Ltd v Gallaher Ltd [1994] 4 All ER 714
Cudmore v. Petro-Canada Inc. 1986 Carswell BC 93
Cunliffe-Owen v Teather [1967] 3 All ER 561
D&G Cars Ltd v Essex Police Authority [2015] EWHC 226 (QB)
Dalkia Utilities Services plc v Celltech International Ltd [2006] EWHC 63 (Comm), [2006]
1 Lloyd's Rep 599
Dallman v King (1837) 132 ER 729
Darlington Borough Council v. Wiltshier Northern Ltd [1995] 1 WLR 68
Data & Scientific Inc. v. Oracle Corp 2015 ONSC 4178 (CanLII)
Deluxe Art & Theme Ltd v Beck Interiors Ltd [2016] EWHC 238 (TCC)
Doe d. Cox v. Roe (1803) 4 Esp 185
Doman v Royal Mail Group Ltd ET/2803550/10
Donoghue v Stevenson [1932] UKHL 100
Durham Tees Valley Airport Ltd v BMI Baby Ltd [2010] EWCA Civ 485, [2011] 1 All ER
(Comm) 731
EA Grimstead and Son v McGarrigan [1999] All ER (D) 1163
Emirates Trading Agency LLC v Prime Mineral Exports Private Ltd [2014] EWHC 2104
(Comm)
Equitable Life Assurance Society v Hyman [2000] 3 All ER 961 at 971, [2002] 1 AC 408
Esso v Addison [2004] EWCA Civ 1470
Eurodynamic Systems Plc v General Automation Ltd unreported
F&C Alternative Investments v Barthelemy [2011] EWHC 1731 (Ch)
xiii
Fechter v. Montgomery (1863) 23 Beav 22
Fernbrook Trading v Taggart [1979] 1 NZLR 556
First Energy (UK) Ltd v Hungarian International Bank Ltd [1993] 2 Lloyd’s Rep 194
Fitzroy House Epsworth Street (No. 1) Ltd v Financial Times Ltd [2006] EWCA Civ
Fitzroy Robinson Ltd v Mentmore Towers Ltd [2009] EWHC 1552 (TCC)
Foley v. Classique Coaches Ltd. [1934] 2 KB 1
Ford v Cotesworth (1868) LR 4 QB 127 (QB)
Foreman S T and S Bank v Tauber (1932) 348 Ill 280
Fortis Bank Sa/Nv v Indian Overseas Bank [2010] EWHC 84 (Comm)
Freeman v Hensler (1900) JP 260
Galaxy Energy International Ltd v Assuranceforeningen Skuld (Ejensidie) (The “Oakwell”)
[1999] 1 Lloyd's Rep 249
Gan Insurance v Tai Ping Insurance [2001] EWCA Civ 1047 [2001] 2 All ER (Com) 299
Garcia v Page & Co Ltd (1936) 55 Ll L Rep 391 (KBD)
Gibson v Small (1853) 4 HLC 353
Re Golden Key Ltd [2009] EWCA Civ 636
Golden Strait Corporation v Nippon Yusen Kubishika Kaisha [2007] UKHL 12, (Transcript)
Goldswain v Beltec [2015] EWHC 556 (TCC)
Greenclose Ltd v National Westminster Bank [2014] EWHC 1156 (Ch)
Grove Investments Ltd v Cape Building Products Ltd [2014] CSIH 43
Gul Bottlers (PVT) Ltd v Nichols Plc [2014] EWHC 2173 (Comm)
H. E. Crook Co., Inc. v. United States 270 US 4 (1926) (Supreme Court)
Hadley v Baxendale (1854) 23 LJ Ex 179, 9 Exch 341
Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576
Hardwick Game Farm v Suffolk Agricultural etc Association [1966] 1 All ER 309 (AC)
Hargreaves Transport v Lynch [1969] 1 All ER 455
Harris v Best (1892) 68 LT 76
Hart v McDonald (1910) CLR 417
Hayes v Willoughby [2013] UKSC 17
Helene Curtis Industries, Inc. v The United States 312 F2d 774 (United States Court of
Claims)
Hick v Raymond & Reid [1893] AC 22
xiv
Hillas & Co Ltd v Arcos Ltd (1932) 38 Com Cas 23, [1932] All ER Rep 494
Hoe International Limited v Martha Andersen and Sir James Aykroyd [2016] CSOH 33
Hoenig v Isaacs [1952] 2 All ER 176
Holland, Hannen and Cubitt v. Welsh Health Technical Services Organisation (1981) 18
BLR 1
Holme v Guppy (1838) 150 ER 1195
Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26, [1962] 1 All
ER 474 (AC)
Horkulak v. Cantor Fitzgerald International [2004] EWCA Civ 1287
Hvalfangerselskapet Polaris A/S v Unilever Ltd (1933) 26 Lloyds LRep 29
IBM UK Holdings Ltd v Dalgleish [2014] EWHC 980
Ilkerler Otomotive Sanayai v Perkins Engines Company Ltd [2015] EWHC 2006 (Comm)
Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] 1 WLR 589
In Re An Arbitration between the Anglo-Russian Merchant Traders, Limited, and John
Batt & Co. (London), Limited [1917] 2 KB 679 (AC)
International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] 1 Ch 513
Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896
Isle of White Tourist Board v Coombes [1976] IRLR 413, EAT
iSoft Group plc v Misys Holdings Ltd [2002] All ER (D) 217 (Oct)
J & H Ritchie Ltd v Lloyd Ltd [2007] UKHL 9; [2007] 1 WLR 670
J Murphy & Sons Limited v Johnston Precast Limited [2008] EWHC 3024 (TCC)
J Toomey Motors Limited v Chevrolet UK Limited [2017] EWHC 276 (Comm)
James E McCabe Ltd v Scottish Courage Ltd [2006] EWHC 538 (Comm)
Jani-King (GB) Ltd v Pula Enterprises Ltd [2007] EWHC 2433 (QB)
Jet2.com Ltd v Blackpool Airport Ltd [2012] EWCA Civ 417 [2012] 1 CLC 605
John Barker Construction Ltd v London Portman Hotel Ltd 83 Build LR 35
John D. Wood & Co. (Residential & Agricultural) Limited v Knatchbull - [2002] EWHC
2822 (QB)
Johnson v Unisys Ltd [2000] UKHL 13, [2001] IRLR 279
Joseph Hunt v Bishop 155 ER 1523 (Exchequer)
Kelly v. Battershell [1949] 2 All ER 830

xv
Kingscroft Insurance Co v Nissan Fire & Marine Insurance Co Ltd (No 2) [2000] 1 All ER
(Comm) 272, [1999] Lloyd's Rep IR 603, 622
Kyprianou v Cyprus Textiles Ltd [1958] 2 Lloyds Rep 60
Laporte and another v Commissioner of Police of the Metropolis [2015] EWHC 371 (QB)
Lewis v Rucker (1761) 97 ER 769 (KB)
Libyan Investment Authority v Goldman Sachs International [2016] EWHC 2530 (Ch)
Lister v Romford Ice & Cold Storage Co [1957] 1 All ER 125
Ludgate Insurance Company Limited -v- Citibank NA [1998] EWCA Civ 66, [1998] Lloyds
Reports IR 221
Luxor (Eastbourne) Ltd v Cooper [1941] All ER 33 (HL)
Lymington Marina Ltd v Macnamara [2007] All ER (D) 38 (Mar)
Mackay v Dick (1881) 6 App Cas 251 (HL)
Mahmud v Bank of Credit and Commerce International SA (In Liquidation) [1998] AC 20;
[1997] 3 WLR 95 (HL)
Makin v Watkinson (1870) LR 6 Ex 25 (Exchequer)
In re Malpass, Decd. Lloyds Bank Plc. V. Malpass - [1985] Ch. 42
Mamidoil-Jetoil Greek Petroleum Co SA v Okta Crude Oil Refinery AD [2001] EWCA Civ
406
Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, [1997] 3 All
ER 352 (HL)
Maple Flock Co Ltd v Universal Furniture Products (Wembley) Ltd [1934] 1 KB 148
Market Street Associates Ltd. Partnership v. Frey 941 F.2d 588 (7th Cir. 1991)
Marks & Spencer Plc v Interflora Inc [2012] EWCA Civ 1501
Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Limited
[2015] UKSC 72
Martin Grant & Co Ltd v Sir Lindsay Parkinson & Co Ltd 3 ConLR 12
McKay v Centurion Credit Resources [2012] EWCA Civ 1941
Mediterranean Salvage & Towage Ltd v Seamar Trading & Commerce Inc [2009] EWCA
Civ 531
Meehan v Jones (1982) 149 CLR 571, (HCA)
Merton London Borough Council v Stanley Hugh Leach Limited (1985) 32 BLR 51

xvi
Mid Essex Hospital Services NHS Trust v Compass Group UK and Ireland Ltd (t/a
Medirest) [2013] EWCA Civ 200
Millars of Falkirk Ltd v Turpie 1976 SLT (Notes) 66
Modern Engineering v Gilbert-Ash Northern [1974] AC 689
Mona Oil Equipment & Supply Co Ltd v Rhodesia Railways Ltd [1949] 2 All ER 1014
Monk v Largo Foods Ltd [2016] EWHC 1837 (Comm)
Morris-Garner v One Step (Support) Ltd [2016] EWCA Civ 180
MR H TV Ltd v ITV2 Ltd [2015] EWHC 2840 (Comm)
Multi-Link Leisure Developments Ltd v North Lanarkshire Council [2010] UKSC 47; [2011]
1 All ER 175 SC
Myers Appellant; and Director of Public Prosecutions Respondent [1965] AC 1001 (HL)
Nanakuli Paving & Rock Co. v. Shell Oil Co. 664 F2d 772 (9th Cir 1981)
Nash v Paragon Finance Plc [2001] EWCA Civ 1466
National Grid Co plc v Mayes [2001] UKHL 20, [2001] 2 All ER 417
National Westminster Bank plc v Rabobank Nederland [2007] EWHC 1056 (Comm)
Neodox Ltd v Swinton and Pendlebury Borough Council (1958) 5 BLR 34 QBD
Nichimen Corporation v. Gatoil Overseas Inc 1987 2 Lloyd's Law Rep 46
Nissho Iwai Petroleum Co Inc v Cargill International SA [1993] 1 Lloyd's Rep 80
NLA Group Ltd v Bowers [1999] 1 Lloyds Rep 109
Oakdown Ltd v Bernstein & Co (1984) 49 P & CR 282
Ogilvie v Neyrfor-Weir Ltd EATS/0054/02 (EAT (Scotland))
Overlook v Foxtel [2002] NSWSC 17
Pallant v Morgan [1953] Ch 43
Palmanor Ltd v Cedron [1978] ICR 1008
Panamena Europea Navigacion (Compania Ltda) v Frederick Leyland & Co Ltd (J Russell
& Co) [1947] AC 428
Pao On v Lau Yiu Long [1980] AC 614, [1979] 3 All ER 65 (PC)
Park v Brothers (2005) 222 ALR 421
ParkingEye Limited (Respondent) v Beavis (Appellant) [2015] UKSC 67
Patterson v. Meyerhofer 204 NY 96 (NY 1912) (Court of Appeals NY)
Pavia & Co v Thurmann Nielsen [1952] 1 Lloyds Rep 153
Pawley v Turnbull (1861) 3 Giff 70
xvii
Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) 69 LGR 1, 1 BLR
111 (CA)
Pearce and High Limited v Baxter and Baxter [1999] EWCA 789
Peter Dumenil & Co. Ltd. v James Ruddin Ld [1953] 1 WLR 815 (AC)
Petroleo Brasileiro SA v Ene Kos 1 Ltd [2012] UKSC 17
Petromec Inc v Petroleo Brasileiro SA Petrobras [2005] EWCA Civ 891
PGF II SA v OMFS Co 1 Ltd [2013] EWCA Civ 1288
Philips Electronique Grand Public SA v British Sky Broadcasting Ltd [1995] EMLR 472
Photo Production Ltd v Securicor Transport Ltd [1980] AC 827
Pickering v Barkley (1648) Sty 132
Porter v Tottenham UDC [1915] 1 KB 776
Portsmouth City Council v Ensign Highways Ltd [2015] EWHC 1969 (TCC)
Postlethwaite v. Freeland 5 App Cas 599
Prenn v Simmonds [1971] 3 All ER 237, [1971] 1 WLR 1381 (HL)
Process Components Ltd v Kason Kek-Gardner Ltd [2016] EWHC 2198 (Ch)
Proforce Recruit Ltd v The Rugby Group Ltd [2006] EWCA Civ 69
Proudfoot v Montefiore (1867) LR 2 QB 511, 8 B & S 510 (QB)
Quick Switch Ltd v Shining Star Super Seafood Ltd [2011] HKEC 232
Quilpué (Barque) Ltd v Brown [1904] 2 KB 264, 73 LJKB 596 (KB)
Raffeisen Zentralbank Osterreich AG v. Royal Bank of Scotland [2011] 1 Lloyd’s Rep 123
Rainy Sky SA and others v Kookmin Bank [2011] UKSC 50; [2011] 1 WLR 2900
Rank Enterprises Ltd v Gerard [2000] 1 All ER (Comm) 449
Re Moore & Co v Landauer [1921] 2 KB 519 (KB)
Re Sigma Finance Corp [2008] EWCA Civ 1303
Reardon Smith Line Ltd v Yngvar Hansen-Tangen and Sanko Steamship Co Ltd [1976] 2
Lloyd's Rep 60
Red Sea Tankers Ltd v Papachristidis (The Hellespont Ardent) [1997] 2 Lloyd's Rep 547
(QBD)
Reda v Flag Ltd [2002] UKPC 38
Reid v Buckinghamshire Healthcare NHS Trust [2015] EWHC B21
Rey v Wyoherly 8 C&P (1838)
Richardson v. Smith (1870) LR 5 ChApp 648
xviii
Ritz Hotel Ltd v Charles of the Ritz Ltd [1989] RPC 333
Robert H. Dahl v Nelson, Donkin (1881) 6 App Cas 38 (HL)
Roberts v The Bury Improvement Commissioners (1870) LR 5 CP 310 (Exchequer)
Rosserlane Consultants Ltd v Credit Suisse International [2015] EWHC 384 (Ch)
Royal Bank of Scotland plc v McCarthy [2015] EWHC 3626 (QB)
RTS Flexible Systems Ltd v Molkerei Alois Muller Gmbh & Co Kg (UK Productions) [2010]
1 WLR 753 : [2010] 3 All ER 1
Russell v Viscount Sa da Bandeira (1862) 143 ER 59 (Common Pleas)
SAM Business Systems Ltd v Hedley & Co [2002] EWHC 2733
Samuels v Davis [1943] 2 All ER 3 (AC)
Saphena Computing Limited v Allied Collection Agencies Limited [1995] FSR 616
Scally v Southern Health and Social Services Board [1992] 1 AC 294; [1991] 3 WLR 778
(HL)
Schuler (L) AG v Wickman Machine Tool Sales Ltd [1974] AC 235, [1973] 2 All ER 39 (HL)
Secretary of State for Transport v Birse-Farr Joint Venture 1993 62 BLR 36
Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty [1979] HCA 51
Severfield (UK) Ltd v Duro Felguera UK Ltd [2015] EWHC 3352 (TCC)
Shell UK Ltd v Lostock Garage Ltd [1977] 1 All ER 481, [1976] 1 WLR 1187
Shirlaw v. Southern Foundries (1926), Limited. [1939] 2 KB 206
Sinason-Teicher Inter-American Grain Corpn v Oilcakes & Oilseeds Trading Co Ltd [1954]
3 All ER 468
Sir Richard Hotham v The East India Company 99 ER 1295
Skanska Rashleigh Weatherfoil Ltd v Somerfield Stores Ltd [2006] EWCA Civ 1732
Smit v Hughes (1871) LR 6 QB 597 (QB)
Smith v Wilson (1832) 3 B & Ad 728
Société d'Avances Commerciales (London) Ltd v A Besse & Co (London) Ltd [1952] 1
Lloyd's Rep 242, [1952] 1 TLR 644 (QBD)
Société Générale v Geys [2012] UKSC 63
Socimer International Bank Ltd (in liquidation) v Standard Bank London Ltd [2008] EWCA
Civ 116
Southern Foundries (1926) Ltd v Shirlaw [1940] AC 701 (HL)
Spar Shipping AS v Grand China Logistics Holding (Group) Co Ltd [2016] EWCA Civ 982
xix
Spar Shipping AS v Grand China Logistics Holding (Group) Co [2016] EWCA Civ 982
Spurling (J) Ltd v Bradshaw [1956] 2 All ER 121, [1956] 1 WLR 461
St Shipping & Transport Inc v Kriti Filoxenia Shipping Co SA [2015] EWHC 997 (Comm)
Stanton v Austin (1872) LR 7 CP 651 (Common Pleas)
Starbev GP Ltd v Interbrew Central European Holdings BV [2014] EWHC 1311 (Comm)
Startup v Macdonald (1843) 12 LJ Ex 477
Static Control Components v Egan [2004] EWCA 392
Stevens v University Of Birmingham [2015] EWHC 2300 (QB)
Strathclyde Regional Council v Border Engineering Contractors Ltd 1998 SLT 175
Stratton v Dorintal Insurance [1987] 1 Lloyds Rep 482
Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444; (HL)
Sutcliffe v Thackrah [1974] 1 All ER 859
Swallowfalls Ltd v Monaco Yachting & Technologies SAM [2014] 2 All ER (Comm) 185
Syers v Jonas 2 Ex 112 426
Tate & Lyle Food and Distribution Ltd v Greater London Council [1981] 3 All ER 716
Taylor & Co v Landauer & Co [1940] 4 All ER 335, 85 Sol Jo 119 (KBD)
Teekay Tankers Ltd v STX Offshore & Shipbuilding Co Ltd [2017] EWHC 253 (Comm)
Tekdata Interconnections Ltd v Amphenol Ltd [2009] EWCA Civ 1209
Terry v Moss's Empires (1915) 32 TLR 92
The Antaios [1984] 3 All ER 229
The Aramis [1989] 1 Lloyds Rep 213
The Hannah Blumenthal [1983] 1 AC 854, [1983] 1 All ER 34 (HL)
The Helene Knutsen [2003] EWHC 1964 (Comm)
The Karen Oltmann [1976] 2 Lloyd’s Rep 708
The Mass Glory [2002] EWHC 27 (Comm)
The Zephyr [1984] 1 Lloyd’s Rep 58
Throgmorton v Tracey (1555) 2 Dyer 124a, 1 Plowd 145
Torrens v. Walker [1906] 2 Ch 166
Total Gas Marketing Ltd v Arco British Ltd [1998] All ER (D) 227
Tradax Export S.A. v. Dorada Compania Naviera S.A. (The "Lutetian") [1982] Vol 2 Lloyd's
Rep 140
Trans Trust S.P.R.L. v Danubian Trading Co. [1951 T 507], [1952] 2 QB 297 (AC)
xx
Trumpet Software Pty Ltd v. OzEmail [1996] 560 FCA 1
TSG Building Services PLC -v- South Anglia Housing Ltd [2013] 1151 (TCC)
Tyco Fire & Integrated Solutions (UK) Limited v Regent Quay Development Company
Limited [2016] CSOH 97
Union Eagle v Golden Achievement Ltd [1997] 2 All ER 215
United Bank of Kuwait v Prudential Property Services Ltd [1995] EG 190
United Group Rail Services Ltd. v Rail Corporation NSW [2009] NSWCA 1707
Vallejo v Wheeler (1774) 1 Cowp 143, 153; 98 ER 1012, 1017
Van Oord UK Limited v Allseas UK Limited [2015] EWHC 3074 (TCC)
Varden v Parker (1799) 170 ER 505
Wade’s Case (1601) 5 Co Rep 114A
Walford v. Miles [1992] 2 AC 128
Walter Lilly & Co Ltd v Giles Patrick Cyril Mackay and DMW Developments Limited
[2012] EWHC 1773 (TCC)
Watts v McLeay 19 WLR 916 (Canada)
Wells v Army & Navy Co-operative Society (1902) Hudson BC Vol 2
WestLB AG v Nomura Bank International Plc [2012] EWCA Civ 495
White v Reflecting Road Studs Ltd [1991] IRLR 331, [1991] ICR 733
William Stirling the Younger v Maitland and Boyd (1864) 122 ER 1043 (KB)
Williams v Roffey Bros and Nicholls (Contractors) Ltd [1991] 1 QB 1 (AC)
Willmott Dixon Housing Ltd v Newlon Housing Trust [2013] EWHC 798 (TCC)
Willmott Dixon Partnership Ltd v London Borough of Hammersmith and Fulham [2014]
EWHC 3191 (TCC)
Withers v Drew (1597) 78 ER 913
Wmc Resources Limited -V- Leighton Contractors Pty Ltd [1999] WASCA 10; 20 WAR
489
Wood v Capita Insurance Services Limited [2017] UKSC 24
Woodlands Oak Ltd v Conwell and Anr [2011] EWCA (Civ) 254
Workers Trust & Merchant Bank Ltd v Dojap Investments Ltd [1993] AC 573
World Transport Agency, Ltd. V. Royte (England), Ltd. [1957] Vol 1 Lloyd's Rep 381 (QBD)
Wrotham Park Estate Co v Parkside Homes Ltd [1974] 2 All ER 321, [1974] 1 WLR 798

xxi
WWF-World Wide Fund for Nature v World Wrestling Federation Entertainment Inc
[2007] EWCA Civ 286
Yam Seng Pte Ltd v International Trade Corporation Ltd [2013] EWHC 111 (QB)
York Buildings Co v Mackenzie (1795) 8 Bro Parl Cas 42, 3 ER 432 (HL)

Scotland
City Inn Ltd v Shepherd Construction Ltd [2007] CSOH 190 (OH)
Donoghue v Stevenson [1932] UKHL 100
Grove Investments Ltd v Cape Building Products Ltd [2014] CSIH 43
Hoe International Limited v Martha Andersen and Sir James Aykroyd [2016] CSOH 33
J & H Ritchie Ltd v Lloyd Ltd [2007] UKHL 9; [2007] 1 WLR 670
Mackay v Dick (1881) 6 App Cas 251
Millars of Falkirk Ltd v Turpie 1976 SLT (Notes) 66
Ogilvie v Neyrfor-Weir Ltd EATS/0054/02 (EAT (Scotland))
Strathclyde Regional Council v Border Engineering Contractors Ltd 1998 SLT 175
Tyco Fire & Integrated Solutions (UK) Limited v Regent Quay Development Company
Limited [2016] CSOH 97

United States
Croninger v. Crocker 62 N Y 158
Foreman S T and S Bank v Tauber (1932) 348 Ill 280
H. E. Crook Co., Inc. v. United States 270 US 4 (1926) (Supreme Court)
Helene Curtis Industries, Inc. v The United States 312 F2d 774 (United States Court of
Claims) Nanakuli Paving & Rock Co. v. Shell Oil Co. 664 F2d 772 (9th Cir 1981)
Market Street Associates Ltd. Partnership v. Frey 941 F.2d 588 (7th Cir. 1991)
Patterson v. Meyerhofer 204 NY 96 (NY 1912) (Court of Appeals of the State of New
York)

Canada
Burquitlam Care Society v Fraser Health Authority, 2015 BCSC 1343

xxii
Cudmore v. Petro-Canada Inc. 1986 Carswell BC 93
Data & Scientific Inc. v. Oracle Corp 2015 ONSC 4178 (CanLII)
Watts v McLeay 19 WLR 916 (Canada)

Bermuda
Reda v Flag Ltd [2002] UKPC 38

Hong Kong
Pao On v Lau Yiu Long [1980] AC 614, [1979] 3 All ER 65 (Privy Council)
Quick Switch Ltd v Shining Star Super Seafood Ltd [2011] HKEC 232

Jamaica
Workers Trust & Merchant Bank Ltd v Dojap Investments Ltd [1993] AC 573

Australia
BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 52 ALJR 20
Butt v MacDonald (1896) 7 QLJ 68
Commonwealth Bank of Australia v Barker [2014] HCA 32 (10 September 2014)
Hart v McDonald (1910) CLR 417
Meehan v Jones (1982) 149 CLR 571, (High Court of Australia)
Overlook v Foxtel [2002] NSWSC 17
Park v Brothers (2005) 222 ALR 421
United Group Rail Services Ltd. v Rail Corporation NSW [2009] NSWCA 1707
Wmc Resources Limited -V- Leighton Contractors Pty Ltd [1999] WASCA 10; 20 WAR
489

New Zealand
Canterbury Pipelines v Christchurch Drainage Board [1979] 2 NZLR 347
Fernbrook Trading v Taggart [1979] 1 NZLR 556

xxiii
Belize

A-G of Belize v Belize Telecom Ltd [2009] UKPC 10

Table of Legislation
Sale of Goods Act 1979 (1979 c 54)
Uniform Commercial Code

xxiv
Table of Tables
Table 1 Duty To Cooperate - Interpretive Mechanisms ................................................. 98
Table 2 Survey Responses in Numbers ......................................................................... 104
Table 3 Denzin and Lincoln's Interpretive Paradigms................................................... 109
Table 4 Location of Interviews ...................................................................................... 115
Table 5 Do Contracts Reduce Trust?............................................................................. 125
Table 6 Management Theme – Enjoying Contract Management ................................ 135
Table 7 Intellectual Challenge Theme - Enjoying Contract Management .................... 137
Table 8 Meeting People/Variety Theme - Enjoying Contract Management ................ 137
Table 9 Outcome/Performance Theme - Enjoying Contract Management ................. 138
Table 10 Negotiation and Contract Formation - Success Themes................................ 140
Table 11 Contract Execution - Success Themes ............................................................ 141
Table 12 Contract Delivery - Success Themes .............................................................. 142
Table 13 Achieving Cooperation in Complex Contracts – Agreement/Contract Theme
...................................................................................................................................... 199
Table 14 Achieving Cooperation in Complex Contracts - Communication Theme ...... 200
Table 15 Achieving Cooperation In Complex Contracts - Management Theme .......... 201
Table 16 Achieving Cooperation In Complex Contracts - Attitude Theme................... 203
Table 17 Achieving Cooperation In Complex Contracts - Values/Behaviour Theme ... 204
Table 18 Is an Interview Appropriate? .............................................................................. i
Table 19 Question Design Checklist .................................................................................. ii
Table 20 Subsamples used in Variance Analysis .............................................................. iv
Table 21 Variance Overview/Snapshot.......................................................................... viii

Table of Figures (figures in Appendices not listed)

Figure 1 Cooperation in Action ......................................................................................... ii
Figure 2 The Real Deal ...................................................................................................... 8
Figure 3 Participant Location ........................................................................................ 116
Figure 4 Participant Gender .......................................................................................... 116
Figure 5 Participants By Profession .............................................................................. 117
Figure 6 Participants by Industry .................................................................................. 118
Figure 7 Participants by our Relationship ..................................................................... 119
Figure 8 Legal Culture ................................................................................................... 120
Figure 9 Experience/Longevity ..................................................................................... 121
Figure 10 Participants by Portfolio ............................................................................... 122
Figure 11 Participants by Seniority ............................................................................... 123
Figure 12 Snapshot of Subgroup Variance ................................................................... 131
xxv
Figure 13 Participant’s Relationalism ........................................................................... 134
Figure 14 Interviewee Comment - Contract Management .......................................... 143
Figure 15 How to Achieve Cooperation ........................................................................ 197
Figure 16 Evolving Client Demands in Facilities Management ..................................... 217
Figure 17 The Journey of the Mini’s Crankshaft ......................................................... 218
Figure 18 Oliver Williamson's Governance Charts ....................................................... 219
Figure 19 Evolution Of Facilities Management Contracting ......................................... 220
Figure 20 Buncefield Oil Depot Network ...................................................................... 232
Figure 21 The Contract/Real Deal ................................................................................. 241
Figure 22 Approximate Numbers of Litigation Cases and Adjudications in the UK ..... 289
Figure 23 The Real Deal ................................................................................................ 322
Figure 24 Contract Structure - Formal and Informal .................................................... 324
Figure 25 Red Hand Clauses.......................................................................................... 327

xxvi
i
CHAPTER 1 INTRODUCTION

To cooperate [kəʊˈɒpəreɪt] is to “work together, act in conjunction (with another per-

son or thing, to an end or purpose or in a work)”. Cooperation is the “act of cooperat-
ing….”1 In contract, cooperation, I argue, is an enabling or facilitating mechanism, mak-
ing working towards an end possible, and the role of the Court is to ensure that con-
tracts are construed in such a way that parties recognise their cooperative obligations
to facilitate or enable.

The first appearance of “cooperation” in terms in an English contract case seems to be

in 1843 in Startup v MacDonald; Rolfe J referring to delivery in shipping as “that common
act which can only be effected by the cooperation of both”.2 In 1892, in Harris v Best
Lord Esher refers to such activity as “joint” meaning that: -
Each is to do his own part of the work, and to do whatever is reasonable to ena-
ble the other to do his part. 3
The word “cooperation” then appears to vanish from the judicial vocabulary until 1941;
Lord Simon saying: -
where B is employed to do a piece of work which requires A's cooperation - eg
to paint A's portrait, - it is implied that the necessary cooperation will be
forthcoming - eg A will give sittings to the artist.4

1 The Oxford English Dictionary (OUP 1970); “co-operate” and “cooperate” have been
alternatives since the 17th century. I use “cooperate”.

2 Startup v Macdonald (1843) 134 ER 1029; (1843) 6 Manning and Granger 593 at 611.
I ran a word search on multiple databases. I am reasonably confident that this is cor-
rect.

3 Harris v Best (1892) 68 LT 76; [1891-94] All ER Rep 567 at 569.

4 Luxor (Eastbourne) Ltd v Cooper [1941] All ER 33 (HL) at 39. See also Samuels v Davis
[1943] 2 All ER 3 (AC); patient/dentist cooperation. See Langham Steamship Co. v.

1
In ground-breaking work, in 1963, Stewart Macaulay made the now uncontroversial ob-
servation that: -

… businessmen often fail to plan exchange relationships completely, and seldom

use legal sanctions to adjust these relationships or to settle disputes. Planning
and legal sanctions are often unnecessary and may have undesirable conse-
quences. 5

Lord Devlin recognized a similar issue in 1951, saying that business men think of the
contract as “merely a seal”6 whereas the law is apt to “canonise”7 judgments, and is
insufficiently flexible to react to changes in commercial practice, ending with a plea: -
… that the law might go further than it does towards meeting the business atti-
tude. 8
Since then many empirical studies9 have supported the claim that much, mainly longer
term, commercial activity, is characterized by cooperation, problem-solving, relation-
ship building and maintenance, and ad-hoc deal-making together with a reluctance to

Gallagher [1911] 2nd Ir Rep 348 (KB) at 376 - Kenny J saying - "The act of discharge ….
requires co-operation on the part of the ship and on the receiver.” at 376.

5 Stewart Macaulay, ‘Non-Contractual Relations in Business: A Preliminary Study'

(1963) 28 American Sociological Review 55, perhaps the most-cited article in legal his-
tory - Fred R. Shapiro, ‘The Most-Cited Law Review Articles Revisited' (1996) 71 Chi-
Kent LRev 751.
6 Patrick Devlin, ‘The Relation between Commercial Law and Commercial Practice'
(1951) 14 MLR 249 at 265.
7 Ibid at 263.

8 Ibid at 266.

9 Hugh Beale and Tony Dugdale, ‘Contracts between Businessmen: Planning and the
Use of Contractual Remedies' (1975) 2 British Journal of Law and Society 45, Terence
Daintith and Gunther Teubner (eds), Contract and Organisation : Legal Analysis in the
Light of Economic and Social Theory (De Gruyter 2011), Simon Johnson, John MacMil-
lan and Christopher Woodruff, ‘Courts and Relational Contracts' (2002) 18 Journal of
Law, Economics, & Organization 221, a study in post-communist economies which
found a mix of formal and informal preferences. See John Tillotson, Contract Law in
Perspective (Butterworths 1985) at 19 observing that the Macaulay article is “rather

2
enter into black letter negotiation or initiate formal end-game mechanisms.10 The sur-
vey I have undertaken supports that claim and provides detail on the nature of cooper-
ation expected by commercial players. I engage in a critical analysis and evaluation of
the current law by examining whether and when a duty to cooperate does and should
exist, and seek to identify consequent needs for legal reform; which may require more
imaginative or flexible use of currently available remedies.

Most major English Law texts deal descriptively, rather than analytically, with the duty
to cooperate.11 Much of the theoretical literature is predicated on a binary dichotomy
between discrete transactions and long-term contracts. I show that neither model de-
scribes modern business contracts. Many modern contracts are medium/long-term,
fixed-term, complex and multi-layered/multi-disciplinary/multi-site, incorporating man-
agement provisions which deal with change through, for example, unilateral powers to
vary and termination for convenience provisions which allow the parties to adjust the
relationship without Court intervention. In these contracts cooperation means, as well
as not getting in the way, facilitating, communication, providing information and in-
structions, good management practice, constructive engagement and problem solving.

Cooperation debates are dominated by classical contract theory, probably best de-
scribed by Patrick Atiyah,12 and relational contract theory, the latter being spawned by

narrow in its scope”. For a survey of this material see Stewart Macaulay, ‘The Real and
the Paper Deal: Empirical Pictures of Relationships, Complexity and the Urge for Trans-
parent Simple Rules' (2003) 66 MLR 44 and Stewart Macaulay, ‘Elegant Models, Em-
pirical Pictures, and the Complexities of Contract' (1977) 11 Law & Society Review
507.

10 See the great Scots draughtsman - Sir Mackenzie Chalmers, The Sale of Goods Act;
1893 (Clowes 1902) at 129 that "Lawyers see only the pathology of commerce and not
its healthy physiological action, and their views are apt to be warped and one-sided".

11 See also David M Walker, Principles of Scottish Private Law (2nd edn, OUP 1975). A
search in Harvey McGregor, McGregor on Damages (Sweet & Maxwell 2012) proved
fruitless.

12 P. S. Atiyah, The Rise and Fall of Freedom of Contract (Clarendon Press 1979) Chap-
ters 8&9 - Freedom of Contract in the Courts, 1770–1870.

3
Macaulay’s work. 13 Crudely, but typically, classical contract theorists are asserted to
support a law red in tooth and claw, in which amoral and opportunistic self-interested
commercial actors prey on the unwary; awaiting the chance to earn or save a quick
buck.14 This is not a plausible picture of contract law; the reality is more nuanced.15 A
comparable parody of relational theory is that it ends in support for a fluffy compromise
which is subjective and cannot be expressed in default rules which allow parties a rea-
sonable degree of certainty in analysing the end game.16 This is also extreme and it is
not impossible to envisage ways of effecting certain relational norms such as preserva-
tion of the relationship, and adjustment to new situations while preserving certainty.

THE RESEARCH QUESTION

13 Another school which I call the Complacent Imperialist School is led by Lord Fal-
coner, quoted in Jean Braucher, John Kidwell and William C. Whitford (eds), Revisiting
the Contracts Scholarship of Stewart Macaulay : on the Empirical and the Lyrical, Vol-
ume 10 (International Studies in the Theory of Private Law) (1. edn, Hart 2013), at 383,
saying - “The English common law contract is now a worldwide commodity. It has be-
come so because it is a system that people like. It provides predictability of outcome,
legal certainty, and fairness. It is clear and built upon well-founded principles, such as
the ability to require exact performance and absence of any duty of good faith”.

14 See Brownsword at 14 in David Campbell and Peter Vincent-Jones (eds), Contract

and Economic Organisation (Dartmouth 1996) – “the classical model has it that con-
tractors operate as ruthless utility maximisers, exploiting every opportunity to advance
their own self interest”. But see Atiyah (n12) at Chapter 9 – “… much of what has been
said was somewhat theoretical, and at no time did this austere and amoral market law
ever wholly represent the practice of the Courts.”.

15 See for example John Wightman, Contract: A Critical Commentary (Pluto Press
1996) especially at 86-91. Richard Lewis, ‘Contracts between Businessmen: Reform of
the Law of Firm Offers and an Empirical Study of Tendering Practices in the Building
Industry' (1982) 9 JLS 153 suggests that his empirical findings need not imply a need
for legal reform. Hugh Collins, Regulating Contracts (OUP 2005) at 190-191 noted that
“these business expectations provided the reason for leaving the law as it is”.

16 Michael J. Trebilcock, The Limits of Freedom of Contract (Harvard UP 1993) at 141-

142 argues that Macneil does not "yield determinate legal principles”. Jonathan
Morgan, Contract Law Minimalism (CUP 2013) agrees at 69.

4
When symbiotic contracts threaten to break down, a mutual duty to cooperate may
reinforce the mutual or symbiotic nature of the contract providing Courts and parties
with options to manage or prevent breakdown. The research question assumes that
parties share a common goal, embedded in the contract, entailing a duty to work
together in a constructive manner towards that goal. 17 This is close to Charles Fried’s
analysis of contractual relations - which is, in turn, described by Ian Macneil 18 as
“excellent relational thinking”: -

……engaging in a contractual relation A and B become no longer strangers to

each other. They stand closer than those who are merely members of the same
political community. . .[T]hey are joined in a common enterprise, and therefore
they have some obligation to share unexpected benefits and losses in the case
of an accident in the course of that enterprise. 19

Fried may go too far in this passage - contracts are not all equal, and sharing goes too
far in the commercial world. Even for symbiotic contracts I do not assume that parties
must wholly abandon their own interests, nor that they must entirely put opportunism
aside.20 I assume that the behaviour of the parties should uphold and preserve the con-

17 This may be seen as explicitly relational – see Ian Austen-Baker, ‘Comprehensive

Contract Theory - A Four Norm Model of Contract Relations' (2009) 25 JCL 216 at 222.

18 Ian R. Macneil, ‘Relational Contract: What We Do And Do Not Know' (1985)

WisLRev 483 at 520. Peter Rosher, ‘Good Faith in Construction Contracts under French
Law' (2015) ICLR 302 at 306 quotes Professor Demogue on French Law – “the obliga-
tion of cooperation means that parties "must work together towards a common goal,
which is the sum of their individual goals".

19 Charles Fried, Contract as Promise (Harvard UP 1981) at 69-73.

20 See Guido Alpa and Mads Andenas (eds), Private Law beyond the National Systems
(British Institute of International and Comparative Law London 2007) - Ewan
McKendrick at 693 citing National Grid Co plc v Mayes [2001] UKHL 20, [2001] 2 All ER
417 “a good faith obligation does not ordinarily require a party to neglect its own in-
terests”.

5
tract and that destruction of the contract should be possible only in extreme circum-
stances. As Lord Tomlin advocated in Hillas v Arcos, the law should not be a “destroyer
of bargains”.21

Some relational theorists and some law and economics scholars argue for cooperation
as a general foundation or norm for contract law. 22 Jonathan Morgan, however, not-
withstanding accepting that cooperative relationships are important in business and
agreeing that this proposition is well supported by empirical evidence, argues firmly
against any reformulation of the law to bring cooperation into play: -

… whether this means that the law of contract must be reformulated to promote
co-operation rather than to resolve disputes in a clear-cut fashion is questiona-
ble. A ‘co-operative’ law of contract may paradoxically fail to promote co-oper-
ation, or rather to curb opportunism ….23

This assumes that the debate lies between a contract law wholly based on cooperation
and one in which there is no duty of cooperation or that cooperation simply means the
opposite of opportunism.24

21 Hillas & Co Ltd v Arcos Ltd (1932) 38 Com Cas 23, [1932] All ER Rep 494 at 499.

22 See eg John Adams and Roger Brownsword, Key Issues in Contract (Butterworths
1995) at 301-302.

23 Morgan (n16) at 69. The article on which Dr Morgan bases this claim is less definite.
The abstract notes that the right balance “requires establishing a monitoring/bonding
package that may well result in optimal output and a satisfactory risk-allocation “ -
Charles J. Goetz and Robert E. Scott, ‘Principles of Relational Contracts' (1981) 67
VaLRev 1089.

24 See also Catherine Mitchell, ‘Publication Review - Contract Law Minimalism: A

Formalist Restatement of Contract Law' (2014) 25 ICCLR 324 where she describes this
work as an “excellent and comprehensive new contribution to the ongoing formalist-
relationalist debate over the design and function of contract law.” indicating the bi-
nary nature of the debate.

6
I argue that there is a “third way” in which an enlarged or deeper duty to cooperate can
be envisaged for symbiotic contracts without creating uncertainty. I take a pragmatic,
incremental approach, consistent with the general approach of the English and Com-
monwealth courts, arguing that these contracts should meet commercial expectations
and that to help make symbiotic contracts successful Courts must construe them, con-
textually, as including a deep duty to cooperate. I explore the possibility that the classi-
cal law is not quite so red in tooth and claw as sometimes claimed25 and that an exten-
sive duty to cooperate in symbiotic contracts is not likely either to cause major uncer-
tainty or destroy the adversarial commercial spirit inherent in contracting. Indeed, it
may increase certainty as it will be more in line with the expectations of those who
manage and negotiate contracts. I demonstrate that commercial expectations are that
cooperation in the day to day work is vital in a commercial context. I argue that com-
mercial expectation is based on party respect for the deal, on a perceived need of suc-
cessful performance, hedged by realism and a pragmatic approach. Recognising that the
pathway to success in performing these contracts lies in cooperation characterised by
communication and problem-solving, those at the sharp end know that they must build
relationships to discern what drives the other party, which, in turn, provides a founda-
tion for solid communication, and practical problem-solving activity; requiring some
“give and take”.

The “third way” also differs from relationalism. I concentrate more on the day to day
needs of the parties in the basic transaction than on the need to cope with wholly un-
foreseen events. It is less concerned with preserving a relationship in circumstances not
planned for at the time the contract is made than with ensuring the success, and per-
formance, of an agreed deal.

The “real deal”, in my conception, includes both express and assumed elements.

25 See Brownsword at 14 in Campbell and Vincent-Jones (n14).

7
Figure 2 The Real Deal

I address the question of whether a duty to cooperate can be accommodated in classical

contract law, whether it could create incentives for parties to maintain relationships
without damaging the commercial ethos, the requirement for certainty26 which perme-
ates English Contract Law. Ian MacNeil, however, citing the success of US industry in a
half-century of commercial law uncertainty, describes certainty as “illusory”.27

26 See for example J. S. Hobhouse, ‘International Conventions and Commercial Law'

(1990) 106 LQR 530 at 532 “…The first and paramount requirement [of the commercial
community] is the achievement of certainty … The commercial man needs to be able
to obtain prompt and accurate advice about the effect of contracts …., or about unu-
sual situations .... He must be able to obtain promptly and efficiently … legal remedies
….”. See Chadwick LJ – “it is reasonable to assume that the parties desire commercial
certainty” in EA Grimstead and Son v McGarrigan [1999] All ER (D) 1163 (just before
the conclusion).

27 I.R. Macneil, Contracts, Instruments for Social Cooperation (F.B. Rothman 1968) -
preface. See Macaulay, ‘The Real and the Paper Deal: Empirical Pictures of
Relationships, Complexity and the Urge for Transparent Simple Rules’ at 52-53 and at
62. Catherine Mitchell makes the point effectively, describing claims for certainty as
“somewhat spurious” in a review of the three Court/three markedly different deci-
sions saga of RTS Flexible Systems Ltd v Molkerei Alois Muller Gmbh & Co Kg (UK
Productions) [2010] 1 WLR 753 : [2010] 3 All ER 1 in Catherine Mitchell, Contract Law

8
The following classes and types of contract are among the type of contracts I consider
symbiotic: -.

• Facilities management, back office support and other contracts where “inter-
nal” enterprise work is outsourced, and success is dependent on medium to
long-term party interaction; “continuing, highly interactive”.28
• Long/medium-term service and maintenance contracts.
• Infrastructure contracts in construction, engineering and petrochemical indus-
tries.
• Contracts described by Gillian Hadfield as having the properties of "a mini soci-
ety with a vast array of norms beyond those centered on the exchange and its
immediate processes." 29
• Research and development contracts where confidential information, know-
how, and intellectual property is shared in pursuit of a common goal.
• Information technology or management system implementation contracts
• Contracts referred to as “relational” in Yam Seng Pte Ltd v International Trade
Corporation Ltd; “some joint venture agreements, franchise agreements and
long-term distributorship agreements.”30

and Contract Practice: Bridging the Gap Between Legal Reasoning and Commercial
Expectation (Hart Publishing 2013) at 252.

28 As Goetz and Scott (n23) describe relational contracts at 1090.

29 Gillian K Hadfield, ‘Problematic Relations: Franchising and the Law of Incomplete

Contracts' (1990) 42 StanLRev 927 - footnote 9.

30 Yam Seng Pte Ltd v International Trade Corporation Ltd [2013] EWHC 111 (QB) Leg-
gatt J at [142]. See also at 301 in Hugh Collins, ‘Implied Terms: The Foundation in
Good Faith and Fair Dealing' (2014) 67 CLP 297 – “Although the category of ‘relational
contracts’ is both imprecise and unsuitable … it is possible to identify a group of con-
tracts (… networks) that shares crucial relevant features in common—an intensified
economic logic of both competition and cooperation that arises from their structure as
a quasi-integrated production regime ….”

9
• Agency contracts; albeit some agency duties are fiduciary rather than contrac-
tual.
• Contracts where the parties intend their relationship to be so regulated; as dis-
cussed by Mary Arden: –
.. contracting situations where the parties expressly do not want to give
each other the right to take decisions exclusively in their own inter-
ests...likely to be long term contracts...31

METHODOLOGY

My search for a duty to cooperate is functional and real-world. My aspiration is to find

means of making contract law fit better in the commercial world; finding a better fit
between the law and the expectations of those at the sharp end. This is a pragmatic,
instrumental, approach, not wholly dependent on theory because it involves working
on the mechanics as opposed to the structure of contract law. It will provide a detailed
analysis of existing duties to cooperate and show how extended versions might fit into
symbiotic contracts. In describing and defending my concept of a duty to cooperate I
recognise that this is second-order question, a content question; which I answer instru-
mentally.32

As Lord Wright in Hillas v Arcos reminds us; there is a pragmatic and commercial thread
in judicial thinking: -
Businessmen often record the most important agreements in crude and
summary fashion… It is, accordingly, the duty of the court to construe such

31 Mary Arden ‘Coming to Terms with Good Faith' (2013) 30 JCL 199at 212-213.

32 Stephen A. Smith, Contract Theory (OUP 2004) at 269-270 describing rules for de-
termining content. See the Oxford Dictionary online defining instrumentalism as a
“pragmatic philosophical approach which regards an activity (such as science, law, or
education) chiefly as an instrument or tool for some practical purpose….”
https://www.oxforddictionaries.com/.

10
documents fairly and broadly, without being too astute or subtle in finding
defects; … the court should seek to apply the old maxim of English law, verba ita
sunt intelligenda ut res magis valeat quam pereat.33

Likewise; Lord Reid: -

I have never taken a narrow view of the functions of this House as an appellate
tribunal. The common law must be developed to meet changing economic con-
ditions and habits of thought.34

John Gava argues that any market utility of contract law is accidental, the law being
developed though legal reasoning, doling out rough and ready justice, but the clarity of
instrumental judicial expression cannot easily be gainsaid, and he produces no evidence
that Judges operate as if in a silent order; closed off from the real world. 35 Great com-
mercial Judges tend to keep contracts alive, make them work; imposing appropriate du-
ties on parties to that end.

Jonathan Morgan, arguing that the purpose of commercial contract law is to provide a
suitable framework for commercial relations, refuses to defend an instrumental claim
in detail. Claiming that contract law is “a tool of social policy”, 36 he rejects Smith’s crit-
icism of instrumental claims,37 saying, correctly, that “Great Judges have consistently
kept the needs of commerce before them” 38 and that any “English contract lawyer

33 Hillas v Arcos (n21) at 503.

34 Myers v DPP [1965] AC 1001 (HL) at 1021.

35 John Gava, ‘Taking Stewart Macaulay and Hugh Collins Seriously' (2016) 33 JCL 108.

36 Morgan (n16) at 3.

37 Smith (n32) at 132-136.

38 Morgan (n16) at 3.

11
would recognise the truth in it”.39 In a wide-ranging historical review, Stephen Wad-
dams says that Courts have “often taken account of social economic and political con-
siderations”.40

In many of the cases I cite, judges justify their approach instrumentally. For example,
they rationalise choices between competing, potentially equally meaningful outturns,41
by reference to business common sense and, in adding words, to business efficacy. Lord
Hoffmann’s reference to “social reality”42 is inescapable as is Sir Robert Goff’s opinion:
-

We are there to oil the wheels of commerce, not to put spanners in the works,
or even grit in the oil.43

In a famous phrase in the Antaios Lord Diplock observed that: -

if detailed semantic and syntactical analysis of words in a commercial contract is

going to lead to a conclusion that flouts business common sense, it must be
made to yield to business common sense.44

39 Ibid at 6. See also Mitchell, Bridging the Gap (n27) at 3-6. Johan Steyn, ‘Contract
Law: Fulfilling the Reasonable Expectations of Honest Men' (1997) 113 LQR 433 at 436
- the “prime function” of contract law is to “facilitate commercial dealings”.

40 S. M. Waddams, Principle and Policy in Contract Law (CUP 2011) at 217.

41See eg; Lord Hoffmann in Investors Compensation Scheme v West Bromwich Building
Society [1998] 1 WLR 896.
42 Johnson v Unisys Ltd [2000] UKHL 13, [2001] IRLR 279 at [35].

43 Sir Robert Goff, ‘Commercial Contracts and the Commercial Court' (1984) LMCLQ
382.

44 The Antaios [1984] 3 All ER 229 at 233.

12
Lord Steyn’s45 claim that the purpose of the law is to support commercial dealings also
supports an instrumental view of contract.

There is a realist element in my approach in that I believe that there is a difference in

what Judges say and what they do. Some Judges appear to hold an inaccurate percep-
tion of the commercial world. I do not intend to ascribe any value system to that, so
there is no Critical Legal Studies approach. While I agree with Baroness Hale that “an
important project of feminist jurisprudence has been to explode the myth of the dis-
interested, disengaged, and distant judge”46 I take the law as fact; as a systematic, to
which end, value based analysis is unnecessary.

I could place myself squarely in the Realist School in that I agree that law should include
the study of other disciplines, that practising and researching law requires skills and
knowledge which go beyond legal skills and knowledge; as Karl Llewellyn observed: -

substantive rights and rules should be removed from their present position at
the focal point of legal discussion, in favour of the area of contact between judi-
cial behaviour and the behaviour of laymen... 47

The description of the rest of us as laymen seems a bit old-fashioned nowadays. My

work is, however, as he recommends, based on method, less on theory: -

The only tenet involved is that the method is a good one. “See it fresh”, see it as
it works…48

45 Steyn (n39).

46 Baroness Hale, ‘Maccabean Lecture in Jurisprudence - A Minority Opinion’ (154

Proceedings of the British Academy). This seems a little unfair on John A. G. Griffith,
The Politics of the Judiciary (Fontana 1997) who could be claimed to have “exploded”
the myth.

47 William Twining, Karl Llewellyn and the Realist Movement (CUP 2012) at 547-548.

48 Ibid at 574 citing Karl N. Llewellyn, The Common Law Tradition: Deciding Appeals
(Little, Brown 1966).

13
The research methodology is three-pronged, innovative and unusual in studies of
contract law, combining doctrinal analysis and theoretical reflection with an empirical
investigation seeking a practical way to implement the views of commercial actors while
preserving the commercial strengths of the Law.

Existing case law will be analysed in depth to determine how the Courts enforce or do
not enforce cooperation in contracts. Theoretical literature including ‘relational con-
tract theory’ will be investigated and analysed, as this contains sophisticated reflection
on the need for contract law to support the maintenance of contractual relations. Criti-
cal reflection on this body of literature will be used to consider criteria for assessing
whether and when a duty of cooperation is appropriate. Much literature is, however,
of a highly theoretical nature and its correctness cannot simply be taken for granted.
Case law, commentary, and theory suggest that it is likely to be necessary to differenti-
ate contextually between different contract transactions to identify contracts where
such a duty of cooperation would be appropriate. The research methodology will also
involve a survey eliciting the views of contract managers, procurement professionals,
legal practitioners, and project managers regarding the role of cooperation in the man-
agement of contracts and the support they require from the contract and the law. This
work will not be limited to practitioners involved in symbiotic contracts but will cover a
wider range of contracts which will allow me to determine how far commercial actors
differentiate the need for cooperation between differing contract types. The foundation
for the survey is provided by analysis which shows that neither cooperation nor com-
mercial expectations are well defined in the literature; my hypothesis being that asking
commercial players for their opinions will help us to fill this gap. I seek to reconcile com-
mercial reality with the law, by consideration of what commercial reality, exposed by
the survey, tells us about contract law and contract theory.

1.2.1 REVIEW OF THE LAW AND THEORY

I review many cases, identifying different terms of cooperation, producing a breakdown

and hierarchy, determining whether some fusion of concepts of the duty to cooperate

14
would be possible without damaging the integrity of the law. I select various hard cases,
which may be controversial or conflicting, and review them in detail to illustrate how a
duty to cooperate could work in those cases.
My method includes a detailed, fact-driven analysis of various hard cases; asking
whether on the facts my third way duty could be incorporated and, had it been would
this have changed the outcome and would it have had the effect of reducing commercial
certainty.

1.2.2 EMPIRICAL SURVEY

To generate data on what cooperation means to commercial players and to determine

the needs of those commercial players in the management of complex contracts I de-
signed and distributed a survey (online, by interview and, in a few cases, both) which
asked for their opinions on the meaning and importance of cooperation in the manage-
ment of contracts, to assess how it is achieved, and to comment on vignettes derived
from some of the hard cases. I found no other empirical work on the source of reason-
able or commercial expectations, and my work shows that these can be uncovered and
defined at a level of abstraction that can underpin a duty to cooperate. Scholars are
divided on what cooperation means and on its usefulness and on how to assess com-
mercial expectations.49 I demonstrate that cooperation is amongst commercial expec-
tations. I suspect that there is a major gap between the Judges and the commercial
world. The survey, which provides a wealth of contemporary commercial opinion, from
an elite group of contract and project managers, lawyers, consultants, and procurement
people, provides significant, original, unique data to enable us to fill this gap in judicial
understanding of the commercial world. Qualitative and quantitative methods were

49 See eg Mitchell, Bridging the Gap (n27) and Steyn (n39).

15
used, mixing open and closed questions with multiple choice questions and case studies.
I have been unable to find any work of this nature having been undertaken previously.50

As Robson points out, surveys have been around for a very long time, the Domesday
Book and seventeenth century efforts to assess the effects of the plague being notable
landmarks.51 This reductive methodology, used to turn the world into data or create
knowledge, or to tell a story, from answers to survey questions, provided unique input
from contract practitioners, those in the field, with the hard-day-to-day experience of
managing contracts.

There is a thread which runs through the case law and the expressed views of the judi-
ciary asserting that the primary requirement of the law of commercial contract is the
achievement of certainty. I have accepted this as a working assumption, 52 considering
the strength of judicial opinion on the point,53 and concentrated on eliciting, in a survey
of contract management professionals, an elite group,54 views on the need for and the
meaning of cooperation in contract, and what support they need, if any, within the con-

50 Despite the claim that “In fact, there is good reason to believe, both in theory and
from empirical studies, that commercial contractors do prefer a formalist law of con-
tract” – Morgan (n16) at 42.

51 Colin Robson, Real World Research (3rd edn, Wiley 2011) at 236.

52 Notwithstanding MacNeil (n27) above.

53 See e.g. Vallejo v Wheeler (1774) 1 Cowp 143, 153; 98 ER 1012, 1017 and Baird
Textiles Holdings Ltd v Marks & Spencer plc [2001] EWCA Civ 274, [2002] 1 All ER
(Comm) 737. See the qualification in Golden Strait Corporation v Nippon Yusen Ku-
bishika Kaisha [2007] UKHL 12, (Transcript) Lord Scott at [38] – “Certainty is a desidera-
tum and a very important one, particularly in commercial contracts. But it is not a prin-
ciple and must give way to principle”.

54 Bill Gillham, The Research Interview (Continuum 2000) – those in positions of au-
thority, with power or with special knowledge at 81 onwards. On interviewing elites
see Rosalind Edwards and Janet Holland, What is Qualitative Interviewing?
(Bloomsbury Academic 2013).

16
tract and under the law to encourage cooperation. I will analyse their opinions, and as-
sess their suggestions and seek a match with, or proposal for workable reform of, cur-
rent law.

The results of the survey and interviews are used to determine how respondents might
have dealt with the hard cases identified in Chapter 2.

1.2.3 CRITIQUE OF THE LAW

I compare survey results with the law, and review hard cases, to ascertain how far apart
commerce and law stand. I question whether the judiciary fully understands the expec-
tations of modern commercial actors and appreciates the needs of modern commerce
in which new complex contract types such as outsourcing and facilities management
and engineering procurement and construction (EPC/EPCm), have evolved.55Using ex-
isting techniques of interpretation, and working from existing cooperation terms I as-
sess the possibility of building a framework showing how a duty to cooperate might be
expressed, and incorporated into these symbiotic contracts. I also consider how the
duty might be enforced considering incentive and deterrence based mechanisms, and
remedial possibilities.

55 See Arden (n31) and Zoe Ollerenshaw in ‘Managing Change in Uncertain Times’ in
Larry A. DiMatteo and others (eds), Commercial Contract Law : Transatlantic
Perspectives (CUP 2013).

17
CHAPTER STRUCTURE

1.3.1 CHAPTER 2 -DUTY TO COOPERATE – CASE LAW AND COMMENT

English Law is not short of cases in which a duty to cooperate has been incorporated56
by the Courts; indeed, “countless” cases feature in law reports. 57 I examine the extent
of the duty and undertake a review of many cooperation cases, including US and Com-
monwealth cases. By placing similar cases side by side and finding that the duty is some-
times incorporated by construction and in other cases by implication I create a basis for
the discussion of incorporation; examining whether a coherent basis for incorporating
a duty to cooperate can be created through a more consistent, construction based ap-
proach to contract interpretation.

I draw out six hierarchical threads beginning with the basic duty not to prevent the other
party from performing through to a duty where the interests of the other party must be
considered in executing one’s contractual obligations and where reasonable efforts
must be made to resolve problems: -

• Prevention
• Facilitating/enabling duties
• Rights to cure defects
• Communication duties
• Decision making limitations
• Active cooperation

56 I use incorporated or inferred to cover construction or implication.

57 J. W. Carter, Carter's Breach of Contract (Hart 2012) at 2-027.

18
This breakdown differs from Professor Stoljar’s 1953 work, which informed much of my
early research. Stoljar created a breakdown of duties to cooperate into Building58, Com-
mission, Employment, and Notice categories. 59 I found a cross-category, functional,
breakdown more useful; because similar duties apply across categories. I considered
other categories such as bad language and employment cases, concluding that employ-
ment law and bad language cases (albeit entertaining), tell us little about the commer-
cial landscape.

I examine decision-making powers in contracts and whether consideration of the inter-

ests of the other party, and/or a requirement of fairness and impartiality should be the
default position for those charged with making decisions which enable or facilitate per-
formance.

1.3.2 CHAPTER 3 EMPIRICAL RESEARCH RESULTS

My empirical paradigm is fundamentally constructivist, with lived experience, critical-

realist, normative and cultural investigatory elements. I use grand narrative, a contex-
tual style, based on the investigation of natural or quasi-natural settings, which I place
into the dual contexts of legal and business worlds.

I review survey results and interviews to determine how my five-hundred plus respond-
ents might have dealt with some hard cases. My sample, drawn judgmentally, is non-
random; typical in management studies. It is a diverse and global sample of commercial
experts, experienced in the management of complex contracts. It is possible that the
Court’s view of what makes a contract work and that of the commercial person differ.
That gap in understanding is filled by the empirical survey results; which provide a reli-
able guide to the objectively reasonable expectations of commercial players in symbi-
otic contract environments. In analysing responses, I have run basic quantitative and

58 SJ Stoljar, ‘Prevention and Cooperation in the Law of Contract' (1953) 31 CanBar

Rev 231 - Building cases cited are mainly prevention cases, subsequently the law has
developed more towards positive duties.

59 Ibid.

19
qualitative analysis to see how far cooperation is important to commercial actors and
what they mean by cooperation. This is tested against several real-world case studies in
which respondents are invited to give their reaction to cases in which cooperation might
have been the better modus operandi.

Respondents overwhelmingly consider cooperation to be important or mission critical.

The theme which runs through responses is management/problem solving. Sometimes
that is by problem avoidance; seizing on issues early. At other times building a rela-
tionship, communicating formally and informally, creating an atmosphere where give-
and-take can work. When matters become difficult, unravelling the problem, whether
through escalation or fast track dispute resolution, and getting on with the business
are leitmotifs. The least acceptable option is always abandonment of the contract; ter-
mination. Punitive action, deducting money or charging money, is also eschewed. This
is in line with analyses suggesting that amongst the causes of project failure poor com-
munication, inadequate sponsor support and poor change management come high on
the list.60

One very interesting finding is that tit-for-tat, reciprocity is not regarded as effective,
which contradicts much law and economics scholarship and undermines much so-
called x-phi work. Another is the similarity between male and female responses. I re-
viewed other empirical work to compare responses. Where direct comparison is possi-
ble I show that the answers I have are consistent with other studies or attempt to ex-
plain the differences.

1.3.3 CHAPTER 4 THE SOURCE AND JUSTIFICATION OF THE DUTY TO COOPERATE

Assuming that my survey has revealed the attitudes of many involved in the day to day
management of symbiotic contracts I address the “so what” question. Even if the survey
can be differentiated from other empirical evidence in that it gathers opinions from the
front line and uses real-life, adjudicated, case studies to determine reactions how does

60 See Alison Coleman, ‘Spot the Signs of a Failing Project’ Sunday Times
(02/08/2015).

20
this inform my argument that a duty to cooperate should be incorporated into such
contracts? I explore theoretical writings, concentrating on those of Catherine Mitchell,
Hugh Collins, and Roger Brownsword, on commercial expectations reviewing both defi-
nition and source ideas, and follow this up by examining the tools available to Judges
and litigants to evince commercial expectations in trial conditions.

I examine community based models, to attribute source. The expectations I expose may
be said to derive from a community of interest, but the community is very diverse, multi-
layered, and hard to describe as a true community. I say that the expectations which
have been uncovered in my survey can justifiably be described as norms which commer-
cially experienced actors say are necessary to successful performance.
I explore the case law showing how commercial expectations are uncovered and used
in practice, and the theoretical literature to create a solid doctrinal argument; asserting
that commercial expectations should be central to our understanding of these modern
complex contracts. I show that they are neither external to the contract, nor subjective
and can be uncovered by conventional evidentiary methods. I argue that current re-
strictions on contract interpretation such as those limiting the use of previous dealing
practices, negotiation evidence or post agreement conduct are illogical and could be
relaxed without opening any floodgate. Relational theory remains unclear and unfo-
cussed; too vague to be of assistance to the commercial player. 61
I argue that change is possible. In employment contracts, there has been a fundamental
shift in the law since the 1970s based on a change in social reality and there is no logical
reason such change is not possible where there are demonstrable changes in
commercial reality. I show that there has been major change in the commercial world.
Not so long ago, firms, banks, government organisations and local authorities employed
large in-house teams of people to run back office functions, change the light bulbs,
maintain the air conditioning, run the transport fleet, and so on. Nowadays, the norm is
that such functions are outsourced to third parties.

61 Eg Braucher, Kidwell and Whitford (n13) cite few cases and subject few to analysis
demonstrating the possible effects of a relational contract law.

21
1.3.4 CHAPTER 5 THE DUTY TO COOPERATE

In this chapter, I examine various definitions of cooperation in contract and assess them
against my review of existing law and the views of commercial actors. I suggest a
Transcendent Duty to Cooperate creating a concrete, detailed, modern duty to
cooperate, requiring solid communication, and active cooperation.

As we see from case law Judges can lay down fairly clear definitions of cooperation in
practice. It sometimes seems that theorists have trouble matching judicial levels of
definition and creativity in describing cooperation.

Finally; I examine remedies and legal process. Where a party fails to engage construc-
tively, fails to communicate effectively, or will not try to resolve problems can the Courts
provide incentives to make them more likely to do so? My proposition is that fast-track
adjudication works well in the construction industry, was considered helpful by survey
respondents, and could be extended. I also examine Wrotham Park type remedies and
demonstrate that remedies which lean towards abuse of rights remedies or extend
those available where prevention occurs, including Judges taking matters into their own
hands, might work without becoming too exotic or too distant from existing Common
Law mechanisms.

1.3.5 CHAPTER 6 A FEW HARD CASES AND CONCLUDING THOUGHTS ON REFORM

I analyse several difficult cases to examine the effect of incorporating a full-blown duty
to cooperate. In part, this is to answer criticism that academics do not do enough
“design” but it is also intended to demonstrate that the duty can work in concrete cases
without reducing certainty. I ask whether applying a duty to cooperate in each case
would change the result and if so, whether this would be desirable or reduce certainty.

I conclude by summing up the performance based analysis I have made, providing, in

diagrammatic form, a conception of contract which shows formal, informal and cloudy

22
elements, reflecting the “messy reality” (a phrase stolen from David Ibbetson) of con-
tractual relations.

SUMMARY

The hard-boiled contextualist proposition, 62 at the heart of this thesis is that for
symbiotic contracts (and some others) a deep, active, duty to cooperate, arising through
recognition of mutual commercial party expectation and based on the need for
successful performance should be recognised and articulated more clearly and
coherently by the Courts. The overarching norms of relationist theory are too ambitious
and amorphous. The approach of classical theory, minimalists or formalists and the
Judiciary are limited and incongruent with modern commercial practice and
expectation. I identify a third way to import cooperation, at an abstract level, supported
by worked examples at a detailed level asserting that cooperation is expected, core to
the deal, and can be exposed by evidence in proceedings. The third way, derived from
the commercial expectation of commercial experts, requires for symbiotic contracts a
construction demanding a high level of cooperation, communication, problem solving,
active cooperation, and constructive engagement. The empirical evidence
demonstrates that reciprocity and punishment are not regarded as effective; the goal is
almost always performance. A properly defined and circumscribed duty to cooperate
can and should be incorporated into (mainly) symbiotic but also some less complex
contracts, such as those where, for example parties must exchange information to make
them work. There is no tension between a deep duty to cooperate and the commercial
need for certainty. Cooperation, essential to successful performance, is characterised
by good communication between the parties, timeous and accurate information flow,
solid formal and informal governance, good management, and leadership worked in

62 “Committed” is another way of putting it. See Hugh Collins ‘Objectivity and Com-
mitted Contextualism in Interpretation’ in Sarah Worthington (ed) Commercial Law
and Commercial Practice (Hart 2003) at 189.

23
formal and informal channels, creation of mutual understanding, fair decision-making,
and reasonable attempts to solve problems and disputes (constructive engagement).

24
Chapter 2 DUTY TO COOPERATE – CASE LAW AND COMMENT

Where action by one contracting party is required to enable or facilitate action or per-
formance by the other the law is, and has been since the late 19th Century, that the
Courts will infer a duty, or construe a contract, to find an obligation not to prevent per-
formance, or to do what is “necessary “,1 to use “diligence”,2 “to do what is necessary
to make the contract workable”3, or to do what is “reasonable”.4 This duty to cooperate
has positive, negative, and regulatory aspects which are explored in this Chapter.

JF Burrows believed that the law will go a little beyond “absolute necessity” but that: -

… it stops short of demanding co-operation because that would be reasonable…

By and large the motto seems to be “each man for himself … 5

The case law, however, shows that the Courts, case by case, incrementally, incorporate
duties to cooperate into commercial contracts because such cooperation is fundamen-
tal to the bargain under examination. Those contracts range from the day-to-day, rela-
tively simple, to the highly complex and interactive. The duty incorporated varies with
that context, growing from a mechanical duty not to get in the way to active managerial
duties to find ways to resolve problems and allow defects to be cured.

1 Butt v MacDonald (1896) 7 QLJ 68 at 70-71.

2 Ford v Cotesworth (1868) LR 4 QB 127 (QB) at 134, Garcia v Page & Co Ltd (1936) 55
Ll L Rep 391 (KBD) at 392.

3 Mona Oil Equipment & Supply Co Ltd v Rhodesia Railways Ltd [1949] 2 All ER 1014 at
1018.

4 Harris v Best at 569 in [1891-94] All ER Rep 567.

5 J. F. Burrows, ‘Contractual Co-operation and the Implied Term' (1968) 31 MLR 390 at
390 & 404.

25
I will describe what the duty requires in various circumstances, breaking it down into
functional categories (prevention, facilitation, curing defects, communication, use of
decision-making power and active cooperation), in a hierarchy leading to duties in mod-
ern complex contracts. In each sub-chapter, I examine the content of the duty and the
interpretive mechanism by which it is exposed, further examining whether construction
would achieve high-level coherence.

I use construction as meaning the extrication of meaning by reading the contract or by

reading the contract and considering the background or matrix.6 I use gap-filling to de-
scribe the process whereby Judges, having read the contract and considered the back-
ground, conclude that there is something missing; and that they must fill that gap either
to give the contract “efficacy” or for policy reasons.

I consider how Judges go about the process of interpretation of contracts and examine
whether it may be better for Courts to make reasoning more explicit and differentiate
more clearly between construction and gap-filling. The cases show that the duty to co-
operate often emerges through construction, sometimes as gap-filling and sometimes,
illogically, using both methods. Practitioners, accordingly, cannot predict results with
anything approaching certainty and I argue that construction is possible and superior.
Terminology is less important than methodology.7

BASIC PRINCIPLE AND OVERVIEW OF CASE-LAW

6 See Chitty, Chitty on Contracts (Hugh Beale ed, 31st edn, Sweet & Maxwell 2012) at
13-041 describing construction as how “a court arrives at the meaning to be given to
the language used by the parties in the express terms of a written agreement”.

7 See Elisabeth Peden, Good Faith in the Performance of Contracts (LexisNexis

Butterworths 2003) at 128-129 arguing that the duty to cooperate should always be a
matter of construing the “fundamental obligation”. See Kim Lewison The
Interpretation of Contracts. (3rd edn, Sweet & Maxwell. 2004)at 6-15 arguing that im-
plication is interpretation against the relevant background and that there is no conflict
between what Lord Blackburn says and the language of implication.

26
The basic principle,8 still cited today,9 was outlined in 1881 in Mackay v Dick (the MvD
rule) by Lord Blackburn, illustrating it with a 1469 Mildenhall Bell case, emphasizing “ob-
vious good sense and justice”: -

where in a written contract it appears that both parties have agreed that some-
thing shall be done, which cannot effectually be done unless both concur in do-
ing it, the construction of the contract is that each agrees to do all that is neces-
sary to be done on his part for the carrying out of that thing, though there may
be no express words to that effect. 10

This dictum, described as “austere” by J F Burrows 11, encapsulates the generality in an

elegant and economical way, while lucidly stressing that the interpretive technique is
construction.
Ian Duncan Wallace describes the need for a high degree of cooperation in construction
contracts as giving rise to “two correlative and generalised implied terms”, being Lord
Mackay’s dictum and the “negative” obligation not to prevent, which “unite” the Em-
ployer’s obligations.12 In addition to these positive and negative rules, regulatory rules
come into play when Courts control contractual decision-making powers to ensure that
they are used purposively; to enable or facilitate performance requiring, for example,

8 Carter at 2-027 - the concept relies on two famous statements, one Lord Blackburn’s,
the other Cockburn J in William Stirling the Younger v Maitland and Boyd (1864) 122
ER 1043 (KB) at 1047.

9 St Shipping & Transport Inc v Kriti Filoxenia Shipping Co SA [2015] EWHC 997 (Comm)
at [93].

10 Mackay v Dick (1881) 6 App Cas 251 (HL) at 263-264.

11 Burrows (n5) at 402.

12 Alfred A. Hudson, Hudson's Building and Engineering Contracts (Nicolas Dennys and
Robert Clay eds, 13th edn, Sweet & Maxwell 2015)at 3.127. Interestingly the 10th Edi-
tion, Alfred A. Hudson and I. N. Duncan Wallace, Hudson's Building and Engineering
Contracts (Sweet & Maxwell 1970), neither cites Mackay v Dick (n10), nor mentions
cooperation; my first professional textbook, bought for £52 - still with me. Scots law is
similar – see Walker at 777-778.

27
that decision-makers act fairly and impartially when making decisions in relation to val-
uation of work or extensions of time, allowing contractors to plan resource utilisation
and manage cashflow.13

In this subchapter I have broken the cases down functionally. The first discussion relates
to prevention by one party, a negative duty not to get in the way or create obstacles,
followed by a discussion of basic facilitation/diligence duties which require positive ac-
tion to ensure that a contract can be performed. I then review rights to cure defects, an
emerging right, with messy law abutting it; a duty that requires one party to facilitate
the other’s performance. Duties to communicate or provide suitable information are
then reviewed and I then review the duty of “active” cooperation. Finally, I discuss the
role of decision-making, especially considering decisions required to enable perfor-
mance.

PREVENTION OF PERFORMANCE

The essence of prevention is that one party acts or fails to act, placing the counterparty
in a position where it cannot perform one or more of its contractual obligations or take
advantage of the bargain struck. Courts will neutralize such action or inaction. Some
aspects of the duty may be underpinned by a “rule of law”, as Lord Atkin once explained,
that where a party prevents performance "of his own motion" this is a breach.14 Decid-
ing whether the contract prohibits the conduct in question still requires someone to
construe it.15 The negative principle, “implied in every contract”, was clearly articulated
by Vaughan Williams J, faced with a case of delayed unloading: -

13 Sutcliffe v Thackrah [1974] 1 All ER 859.

14 Southern Foundries (1926) Ltd v Shirlaw [1940] AC 701 (HL) at 717.

15 Lewison (n7) - at 6.14 - since ultimately the rule of law (if such it is) depends upon
the intention of the parties, … it may properly be categorised as an implied term.

28
There is an implied contract by each party that he will not do anything to prevent
the other party from performing a contract or to delay him in performing.16

Cockburn CJ, referring to the “whole object” of the contract in question ruled that
where the bargain can only be effected or “operative”: -

… by reason of the continuance of a certain state of circumstances, there is an

implied engagement … that he shall do nothing of his own motion to put an
end to that …17

In an “extraordinary”18 case Max Tauber and Frances Bleier agreed an ante-nuptial con-
tract that Tauber would pay $20,000 in the event of his predecease. They married in
1924. In December 1928 Tauber shot and killed Frances, then shot himself; dying of the
wound the following day. The Court held that shooting his wife operated to “waive the
condition of survivorship”.19

A refusal to agree terms of engagement for a valuer, preventing a share transfer, per-
suaded the Court to imply an “obvious and necessary” term requiring cooperation in
the appointment.20

16 Quilpué (Barque) Ltd v Brown [1904] 2 KB 264, 73 LJKB 596 (KB) at 271 See similar
phrasing in the US - Patterson v. Meyerhofer 204 NY 96 (NY 1912) (Court of Appeals
NY).

17 Stirling v Maitland (n8). Crompton J described the breach as a direct or indirect

breach of covenant at 1047.

18 Stoljar.

19 Foreman S T and S Bank v Tauber (1932) 348 Ill 280.

20 Cream Holdings Ltd v Stuart Davenport (2011) [2011] EWCA Civ 1287 at [37].

29
Accidents (such as fire)21, third party prevention22 or new bye-laws (even where they
emanate from the employing party)23 do not constitute prevention.

Sir Kim Lewison says that the term is “necessarily implied” as parties “must be taken to
have agreed that neither will actively prevent performance”.24 This was cited by Picken
J in Royal Bank of Scotland plc v McCarthy who seemed to hedge his bets by relying on
both the MvD rule and implying the term as an implied-in-fact term. 25 He goes so far
as to accept that there are two possibilities one being that “this is what the agree-
ment, read as a whole against the relevant background, would reasonably be under-
stood to mean” and the other “that this term is necessary to make the contract work”.
26 In Swallowfalls Ltd v Monaco Yachting & Technologies SAM, also relying on the MvD
rule and Cockburn CJ’s Judgment, but agreeing with Counsel that the test is one of ne-
cessity, Longmore LJ refers to prevention as
an ordinary implication in any contract for the performance of which co-opera-
tion is required.27

This is confusing (but not exceptional28). In one breath Longmore LJ accepts that the
nature of the contract, which requires cooperation, means that prevention is an ordi-
nary implication, which appears to be construction but in the next he applies implied-

21 Appleby v Myers (1865-66) LR 1 CP 615 (Court of Common Pleas).

22 Porter v Tottenham UDC [1915] 1 KB 776.

23 Cory Ltd v City of London Corp [1951] 2 KB 476 (AC).

24 Lewison (n7) at 6-14 and at 6-11.

25 Royal Bank of Scotland plc v McCarthy [2015] EWHC 3626 (QB) at [269] and [145].

26 Ibid at [271].

27 Swallowfalls Ltd v Monaco Yachting & Technologies SAM [2014] 2 All ER (Comm)
185 at [32].

28 See F&C Alternative Investments v Barthelemy [2011] EWHC 1731 (Ch) where Sales
J, seems to assume that there is only one kind of implied term, also quoting Lewison at

30
in-fact rules. What appears to be happening is that Judges read Lewison, see the de-
scription “implied term” and alight on implied-in-fact rules.

If one takes Lewison at face value and the term is necessarily implied, parties being
“taken” to have agreed not to get in the way, then the implied-in-fact hurdle merely
duplicates matters. The rule obviously emanates from the fact of agreement. A natural
corollary to agreement, as Lewison indicates, must be that parties covenant not to pre-
vent the object of the agreement from being achieved. Explanations based on business
efficacy, or necessity, or reasonableness, only complicate the position and prolong ar-
gument. It would be extraordinary if parties had to write an anti-prevention clause into
every contract.

One might reconstruct the MvD rule accordingly at this stage; which would achieve high-
level coherence and reflect actual outcomes: -

… the construction of the [perhaps any] contract is that each agrees to do all that
is necessary to be done on his part for the carrying out of that thing, and not to
do anything to prevent or delay the performing of any part of the contract,
though there may be no express words to that effect.

REASONABLE ENDEAVOURS, DILIGENCE/FACILITATION

When action by one party is necessary to facilitate or enable the performance by the
other Courts will infer duties to take such action, and will, moreover, detail the duties
through requirements which ensure that such actions are carried out timeously or oth-
erwise reasonably. The Courts do not limit duties to the absolutely necessary and often
require parties to do things which are reasonable or reasonably necessary.

[268] and Lord Blackburn – at [269] despite remarking at [270] that “the natural con-
clusion here is that the reasonable expectation of the parties was that Holdings should
be bound by an obligation not to take active steps to prevent that thing being done”.

31
Keating, paraphrasing Lord Simon in Luxor (Eastbourne) v Cooper29, says that: -

the employer impliedly agrees to do everything that is necessary on his part to

bring about completion of the contract. 30

Where cash is to be paid, money must be given at a time to allow it to be counted.31

John Stannard lists cases in which a receiver of goods must be given enough time and
the right facilities to inspect them; otherwise there will be neither tender nor deliv-
ery.32 In Croninger v Crocker the New York Court found that “little doubt that time
should be given the tenderee for such examination before sunset and by daylight”.33
The principle is ancient; in 1597, in Withers v Drew, a distinction was drawn, showing
attention to context, between matters requiring personal attendance (such as pay-
ment of rent) and those not; “that things done in the night, where personal attend-
ance of another is not necessary, are good”. 34What is reasonable changes over time;
for example, in Proudfoot v Montefiorean agent was held obliged to use the novel
“electric telegraph”. 35

29 Luxor (Eastbourne) Ltd v Cooper at 39.

30 Stephen Furst and others (eds), Keating on Construction Contracts (Sweet &
Maxwell 2006) at 3-052.

31 Wade’s Case (1601) 5 Co Rep 114A.

32 John E. Stannard, Delay in the Performance of Contractual Obligations (OUP 2007)

at 4.07-13.

33 Croninger v. Crocker 62 N Y 158.

34 Withers v Drew (1597) 78 ER 913. See also Oakdown Ltd v Bernstein & Co (1984) 49
P & CR 282; the Court dismissing as “ridiculous” an argument that posting cash
through a letter box at midnight on Good Friday was tender.

35 Proudfoot v Montefiore (1867) LR 2 QB 511, 8 B & S 510 (QB) Cockburn CJ at 519.

32
The best developed law in these cases is to be found in engineering and construction
contracting36. Vinelott J, citing the MvD rule, implied a term into the 1963 JCT form,
which requires significant interaction, that: -

the building owner would do all things necessary to enable the contractor to
carry out the work … the Courts have not gone beyond the implication of a
duty to co-operate whenever it is reasonably necessary.37

Such contracts will usually be interpreted to include obligations that site must be
handed over in a reasonable time38 (possibly immediately39) . A contractor must be per-
mitted to carry out the whole of the work and variation clauses cannot be used to trans-
fer work to a lower-price contractor; this will be a repudiatory breach.40 Parties who
interfere with the activity of a certifier breach their duty to cooperate; Lord Thankerton
observing that it was “almost unnecessary” to cite precedent for this principle and the
House of Lords agreeing with this “construction”.41

36 See for detailed treatment - Hudson (n12) at 3-127 and Michael Sergeant and Max
Wieliczko, Construction Contract Variations (Informa Law 2014).

37 Merton London Borough Council v Stanley Hugh Leach Limited (1985) 32 BLR 51 at
200 in (1986) 2 Const. L.J. 189. At 123 Peden (n7) says that implication was unneces-
sary, and that construction of the architect’s obligations would procure the same re-
sult.

38 Arterial Drainage Co v Rathangan Drainage Board (1880) 6 LR Ir 513, Alfred A.

Hudson and I. N. Duncan Wallace, Hudson's Building and Engineering Contracts (11th
edn, Sweet & Maxwell 1995) at 4.133-4.146 citing Roberts - “there must be an implied
term that the site will be handed over to the contractor within a reasonable time”.
Stannard (n32) at 5.90-91.

39 Freeman v Hensler (1900) JP 260.

40 Hudson (n12) at 3-151.

41 See Sergeant and Wieliczko (n36) at 10-058 and Panamena Europea Navigacion
(Compania Ltda) v Frederick Leyland & Co Ltd (J Russell & Co) [1947] AC 428 at 435.

33
Where a shipbuilder financed the build of a yacht by a loan repayable on demand from
the buyer, loan repayments intended to facilitate repayment, Longmore LJ observed
that: -

the builder only earns a stage payment when the buyer's representative signs a
certificate that the relevant stage or milestone has been achieved. If the relevant
milestone has in fact been reached, the buyer must so certify as part of his im-
plied obligation to co-operate …42

Should an employer become aware that a certifier is not acting fairly and impartially he
must intervene or he will be in breach.43

In the US there are some contracting contexts where Courts will infer obligations on
employers to use best endeavours in coordination of contractors.44

In shipping cases obligations to act reasonably to facilitate the other’s performance have
been long inferred - perhaps most clearly in Harris v Best where Lord Esher illustrated
practical cooperation, answering the question “What is the obligation created by the
agreement “to be loaded?””: -

Loading is a joint act …Each is to do his own part of the work, and to do whatever
is reasonable to enable the other to do his part ... the shipper has to bring the
cargo alongside so as to enable the shipowner to load the ship within the time
stipulated … and to lift that cargo to the rail of the ship. It is then the duty of the
shipowner to be ready to take such cargo on board and to stow it…. What is a

42 Swallowfalls (n27) at [32].

43 Cantrell v Wright and Fuller Ltd [2003] EWCA Civ 1565.

44 H. E. Crook Co., Inc. v. United States 270 US 4 (1926) (Supreme Court) cited in
Hudson and Wallace, Hudson 1970 (n38) at 1.189.

34
reasonable course of action for both parties? The shipper … must act reasona-
bly and bring the cargo alongside in sufficient time to enable the shipowner to
do his part ….45

Scrutton describes these as common law obligations.46 The shipowner must also give
notice of readiness to load. 47 JF Burrows describes this as part of the Court’s task to
“apportion out the required acts according to who is better positioned to do them”.48

Performance of a contract may require an import or export licence. In numerous cases

the Courts have determined which party should obtain such licences49 and have inferred
obligations on parties to ensure that each has the necessary information to make the
necessary applications.50 Best endeavours obligations, or a duty to take “all reasonable
steps” have been inferred where an export licence is required to make the transaction
work.51 Where a party is entitled to a bill of lading the bill must be delivered “forthwith”

45 Harris v Best (n4) at 78.

46 Henry Bernard Eder and Sir Thomas Edward Scrutton, Scrutton on Charterparties
and Bills of Lading (Sweet & Maxwell 2011) - 9-064.

47 Stanton v Austin (1872) LR 7 CP 651 (Common Pleas).

48 Burrows (n5) at 403.

49 Kyprianou v Cyprus Textiles Ltd [1958] 2 Lloyds Rep 60.

50 Chitty (n6) at 13-014.

51 Société d'Avances Commerciales (London) Ltd v A Besse & Co (London) Ltd [1952] 1
Lloyd's Rep 242, [1952] 1 TLR 644 (QBD) sellers J at 249 upholding the umpire’s deci-
sion using those words. See also Re Anglo Russian Merchant Traders & John Batt
[1917] 2 KB 679 (AC) and see Taylor & Co v Landauer & Co [1940] 4 All ER 335, 85 Sol
Jo 119 (KBD) “steps necessary” at 341.

35
or as soon as it can conveniently be delivered.52 In an Australian case, a purchase “sub-
ject to finance” was read as requiring reasonable efforts to obtain finance.53 That obli-
gation appears to have been construed rather than implied.54

In international trade payment may be secured through documentary credits which

guarantee payment by a bank, on production of “conforming” documents such as bills
of lading and/or invoices. In Garcia v Page & Co Limited, Porter J held as a matter of
construction (Morris LJ referring to “true construction”) that: -

the buyer must have such time as is needed by a person of reasonable diligence
to get that credit established. 55

This goes beyond strict necessity. The seller could ship without the credit and sue for
the price (not always a practical proposition where the buyer is based overseas) but the
absence of the credit relieves a seller of its obligations.56 As Todd observes the
“advantages ... are mutual. The seller [obtains] sure knowledge he will be paid …The
buyer can use a credit to raise funds.” 57 Denning LJ ruled; in Pavia & Co v Thurmann-
Neilson, without using implied-in-fact language: -

52 Barber v Taylor (1839) 5 Meeson Welsby 527 (Exchequer).

53 Meehan v Jones (1982) 149 CLR 571, .

54 A. F. Mason, ‘Contract, Good Faith and Equitable Standards in Fair Dealing' (2000)
116 LQR 66 at 74-75 says “I considered that there was an obligation on the purchaser
to make reasonable efforts”.

55 Garcia v Page & Co Ltd (n2) at 392 approved in M. G. Bridge and J. P. Benjamin,
Benjamin's Sale of Goods (Sweet & Maxwell 2014) at 12-084.

56 Trans Trust S.P.R.L. v Danubian Trading Co. [1951 T 507], [1952] 2 QB 297 (AC) Den-
ning LJ at 306. See AJ Bateson, ‘The duty to cooperate' (1960) JBL 187 at 189. See also
Nichimen Corporation v. Gatoil Overseas Inc 1987 2 Lloyd's Rep 46.

57 Paul Todd, Bills of Lading and Bankers' Documentary Credits (Lloyds of London Press
1998) at 22. See also Jack Ali Malek and others, Jack: Documentary Credits (Tottel
2009) at 1.2.

36
… the seller is entitled, before he ships the goods, to be assured that, on ship-
ment, he will get paid.58
He subsequently modified this to “the buyer must provide the letter of credit within a
reasonable time before the first date for shipment. “59

In 1973 Manchester United bought the Scots striker Ted MacDougall from Bournemouth
with a proviso that on his scoring 20 goals the final £25,000 instalment of the £200,000
fee (then a Third Division record) would become payable. They subsequently appointed
a new manager, Tommy Docherty, whose plans did not include McDougall, who seldom
played and was sold at the end of the season. The 20-goal target was not reached and
the £25,000 not paid. On appeal, the first instance finding that there had been a breach
of an implied term was upheld and the £25,000 determined to be due: -

Manchester United were bound to afford Mr. MacDougall a reasonable oppor-

tunity of scoring 20 goals.60

Other impresarios have received the same treatment; Romilly MR found, construing an
agreement by reviewing its purpose, background, and nature that an actor must: -

have an opportunity of shewing what his abilities were before a London audi-
ence.61

58 Pavia & Co v Thurmann Nielsen [1952] 1 Lloyds Rep 153 at 157. At first instance
McNair J observed that otherwise “the contract simply will not work”.

59 Sinason-Teicher Inter-American Grain Corpn v Oilcakes & Oilseeds Trading Co Ltd

[1954] 3 All ER 468 at 472.

60 Bournemouth & Boscombe Football Club Ltd V Manchester United Football Club Ltd
1974 B No 1531 (AC). At 66 Edwin Peel and Sir G. H. Treitel, Treitel on the Law of
Contract, vol 13th (Sweet & Maxwell 2011), refers to the case as one of prevention but
it seems to require positive cooperation.

61 Fechter v. Montgomery (1863) 23 Beav 22; (1863) 55 ER 274 at 276. See Kelly v. Bat-
tershell [1949] 2 All ER 830.

37
As we can see the Courts use a mixture of mechanisms for inferring the duty or its con-
tent. In some, the matter is resolved by construction; in others by gap-filling. One might
reconstruct the MvD rule at this stage; which would also achieve high-level coherence
and reflect actual outcomes: -

… the construction of the contract is that each agrees to do all that is reasonably
necessary, using reasonable diligence, to be done on his part for the carrying out
of that thing, and not to do anything to prevent or delay the performing of any
part of the contract, though there may be no express words to that effect

DEFECTS AND RIGHTS TO CURE

In general, there is no right to cure a breach in English Law. 62 A seller may be able to
cure a defect before expiry of the time for performance63 but that right might be lost
where confidence has evaporated. 64 The law is complex; for example, a right to cure
defects will probably be implied, either in-fact or as an incident of the type of contract,65
in bespoke software contracts, or, possibly, construed; based on market practice. 66
Staughton J recognized that, as an incident of the type of contract, there will likely be
some defects in the delivered software and that the supplier should be given time to
cure those defects – the inevitable modifications and tests required in such contracts
were something that a supplier should have both the right and the duty to carry

62 Clegg v Andersson [2003] All ER (D)and Buckland v Bournemouth University Higher

Education Corporation [2010] All ER (D) 299.

63 Borrowman, Phillips, & Co. v. Free & Hollis (1878) 4 QBD 500 and see Vanessa Mak,
‘The Seller’s Right to Cure Defective Performance—a Reappraisal' (2007) LMCLQ 409 .

64 Bridge and Benjamin at 12-032-033. See also Maple Flock Co Ltd v Universal
Furniture Products (Wembley) Ltd [1934] 1 KB 148.

65 Saphena Computing Limited v Allied Collection Agencies Limited [1995] FSR 616,
Anglo Group plc v Winther Brown & Co. Ltd [2000] EWHC Technology 127 (TCC).

66 Eurodynamic Systems Plc v General Automation Ltd unreported.

38
out.67Where such a right exists it is ineluctable that one party must enable the other to
carry out repairs; by, for example, providing access to an IT system or a building or a
defective part.

Sergeant notes that where defects are relatively minor there will be no right to termi-
nate. 68 Defects before completion, which become apparent during performance, if
“genuinely temporary” defects may be classified as “temporary disconformities” but
where these cannot be easily remedied they may be regarded as breaches. Termination
for such breaches might be premature especially if it remained possible to remedy the
defect, or where remedy would be inexpensive.69 Cairns J ruled in one case that defects
which would cost £174 to rectify were not minor in the context of a £560 contract. 70
Arguably, such technicalities serve only to promote uncertainty.

Andrew Burrows considers that the duty to mitigate may “override an intention to
cure”.71 Where there is an express right of an employer to require that a contractor re-
turns to cure defects, should the employer then appoint an alternate, recovery will be
limited to consequential loss and the cost which the defaulting contractor would have
incurred.72

The position is clearer in Scotland; Lady Cosgrove ruling: -

67 Saphena Computing Limited v Allied Collection Agencies Limited (n65). See also
Eurodynamics (n66). The principle probably does not apply to systems sold as tried
and tested; SAM Business Systems Ltd v Hedley & Co [2002] EWHC 2733.

68 Sergeant and Wieliczko (n36) at 4.17.

69 Hudson (n12) at 4-074-075.

70 Bolton v Mahadeva [1972] 1 WLR 1009, and see Hoenig v Isaacs [1952] 2 All ER 176
(the full price should not be withheld for minor defects).

71 A. S. Burrows, Remedies for Torts and Breach of Contract (3 edn, OUP 2004) at 223.

72 See eg Pearce and High Ltd v Baxter and Baxter [1999] EWCA Civ 789 and
Woodlands Oak Ltd v Conwell & Anor [2011] EWCA Civ 254.

39
it is a basic principle of the law of contract that if one party is in breach, the
innocent party is not entitled to treat the contract as rescinded without giving
the other party an opportunity to remedy the breach.73

Roy Goode expresses regret that Sale of Goods legislation does not provide such
rights.74Given that all standard engineering and construction forms of contract provide
for defect rectification rights (as does GC/Works1 and the CiOB form), it is arguable that
this is market practice. Arguably a right to cure, along the lines of Lady Cosgrove’s Judg-
ment, is what parties reasonably expect.

One might reconstruct the MvD rule accordingly at this stage; which would also achieve
high-level coherence and reflect actual outcomes: -

… the construction of the contract is that each agrees to do all that is reasonably
necessary, using reasonable diligence, to be done on his part for the carrying out
of that thing, and not to do anything to prevent or delay the performing of any
part of the contract, and to provide a reasonable opportunity to the other to
cure defects, though there may be no express words to that effect

COMMUNICATION OR CONSTRUCTIVE ENGAGEMENT

Communication is critical to the successful performance of symbiotic contracts. In such

contracts, sedulous attention to detail and seamless performance requires that parties
engage constructively and effectively to communicate, clarify details of the contract
(like time and place of delivery), organize access, provide information such as drawings,
tackle problems, and correct actual or potential misunderstandings. Courts will infer ex-

73 Strathclyde Regional Council v Border Engineering Contractors Ltd 1997 SCLR 100;
at 104.

74 Royston Miles Goode and Ewan McKendrick, Commercial Law, vol 4th (LexisNexis
2009) at 364.

40
press duties to communicate on parties who hold or must create the information re-
quired by a counterparty to enable it to perform and provide incentives to communicate
by refusing remedies where communication might have perfected a contract.

In AV Pound Limited v MW Hardy Limited (AV Pound), the sellers possessed the infor-
mation required for an export licence and, on that basis, by construction, the House of
Lords decided that the seller had the duty to obtain the licence. Viscount Simonds (who
had said that this was implied by construction), also observed that a buyer must assist
in obtaining the licence and: -

co-operate by telling him the destination of the contract goods and otherwise as
may be reasonable.75

In a similar case Goddard CJ dealt with this as a matter of construction , saying:-

it clearly was the duty of the buyers to co-operate with the seller in this case: it
was their duty to supply the information … It was quite obvious that the only
people who could supply that information were the buyers. 76

Making a complex construction contract work requires communication and planning.

Diplock J said that the time for providing instructions, information or drawings is that: -

which is reasonable having regard to the point of view of [the engineer] and his
staff and the point of view of the [employer], as well as the point of view of the
contractors.77

75 A V Pound Ltd v M W Hardy Inc [1956] 1 All ER 639 (HL) at 648. Peden (n7) says that
this was construction – at 33-34. See also Quick Switch Ltd v Shining Star Super
Seafood Ltd [2011] HKEC 232; a Fraternity Association failed to obtain a mah-jong
gaming licence but showed that the landlord had failed to provide essential infor-
mation.

76 Kyprianou (n49) at 64-65.

77 Neodox Ltd v Swinton and Pendlebury Borough Council (1958) 5 BLR 34 QBD at 42;
as cited in City Inn Ltd v Shepherd Construction Ltd [2007] CSOH 190 (OH)) and Wells v
Army & Navy Co-operative Society (1902) Hudson BC Vol 2. In Consarc Design Ltd v

41
The law is of long standing – see Holme v Guppy (1838)78 and Roberts v The Bury Im-
provement Commissioners (1870).79 Hudson notes that failure to provide drawings and
information in time is “probably the commonest cause of claims by contractors”. 80
In JH Ritchie v Lloyd Limited (Ritchie), an agricultural harrow broke down, being replaced
with a loaned second-hand item. It was repaired. Lord Hope described the many at-
tempts made to find out what had caused the problem, concluding that no-one: -

… would reveal what the nature of the problem was or what had been done to
the harrow to repair it. All he was told was that it had been repaired to what was
described as “factory gate specification”. Mr Ritchie then asked for an engineer's
report on the harrow. This too was refused.

…. the Respondents were under an implied obligation to provide the Appellants

with the information that Mr Ritchie asked for. …81

Citing AV Pound, Hugh Collins asserts: -

At most, the courts have been prepared to imply a duty to disclose information
where that information is exclusively in the possession of one party and, without
it, the other party cannot perform a central obligation under the contract.82

There are, however, cases in which a misunderstanding or an error has resulted in the
destruction of a contract and in which a Court has subsequently settled liability on the

Hutch Investments Ltd (2003) 19 Const LJ 91 (QBD (T&CC)) HHJ Bowsher referred to
“full and coordinated” information.

78 Holme v Guppy (1838) 150 ER 1195.

79Roberts v The Bury Improvement Commissioners (1870) LR 5 CP 310 (Exchequer).

80 Hudson (n12) at 2.130.

81 J & H Ritchie Ltd v Lloyd Ltd [2007] UKHL 9; [2007] 1 WLR 670 at [19].

82 Hugh Collins, ‘Implied Duty to Give Information during Performance of Contracts'

(1992) 55 MLR 556 at 561.

42
basis of a failure to communicate. These cases could also be characterised as right to
cure cases.

Owing to a misunderstanding of the position by the seller in Mona Oil v Rhodesian Rail-
ways (Mona Oil),83 which could have been resolved easily through either party making
further enquiries, a seller did not deliver 75 oil tanks. The seller could obtain payment
on receipt of signed confirmation by T&Co, the buyer’s agent, that the goods were at
the buyer’s disposal. Once that had been effectuated Mona Oil approached T&Co. T&Co
demurred, apparently requiring written instructions from Rhodesia Railways; which
were subsequently received but not communicated to Mona Oil. From Devlin J’s Judg-
ment, saying that the buyer’s desire to do business “evaporated” after a meeting there
may have been some dispute. I have been unable to disinter the trial transcript despite
many searches. Devlin J’s much quoted, almost regretful, peroration says: -

… every business contract depends for its smooth working on co-operation, but
in the ordinary business contract, and apart, of course, from express terms, the
law can enforce co-operation only in a limited degree—to the extent that is nec-
essary to make the contract workable. For any higher degree of co-operation,
the parties must rely on the desire that both of them usually have that the busi-
ness should get done.84

Mona Oil remains a difficult case. It would have been easy for T&Co to communicate
with the seller to remove the misunderstanding, which would have made the contract
work. This is not true vice versa, because T&Co was the party in possession of the rele-
vant information. Devlin J added that: -

the removal of misunderstanding is quite beyond the reach of implied contrac-

tual obligation.85

83 Mona Oil (n3).

84 Ibid at 1018.

85 Ibid.

43
In Peter Dumenil & Co v James Ruddin Ltd (Dumenil), Jenkins LJ put paid to that notion.
A warehouseman, asked for 25 cases of skinned rabbits, advised that he had “GPL”
rabbits but no “Gaythorn”; notwithstanding that they are the same. Jenkins LJ said,
using the marvellous Old English language of duty: -

it behoved them, before they jumped to the conclusion of repudiation, to take

the simple and reasonable step, which any business man would take, of going
to the defendants and saying:

“What has happened about our rabbits? We are told by the Crown
Wharf Cold Stores that none of them are there.”

As soon as they said that the whole matter would have been explained at
once.86
Bateson says that the failure of the buyer to make enquiries “led to the failure of his
claim for repudiation”.87

In AE Lindsay & Co Ltd v Cook a seller repudiated on an error by the buyer in calculating
a credit. Reflecting on how easy it would have been to communicate the error to the
buyer Pilcher J, perhaps wryly, said: -

Businessmen … do stand on their rights. It would have been quite competent for
Colimpex to have cabled the plaintiffs and said: "You must open credit for a
larger sum…." There was no real reason why Mr. Burgess should not have been
able to estimate with considerable exactitude the sum for which he ought to
have opened credit; he might, moreover, have inquired, but he did not.88

86 Peter Dumenil & Co. Ltd. v James Ruddin Ld [1953] 1 WLR 815 (AC) at 824.

87 Bateson (n53) at 187.

88 A. E. Lindsay & Co Ltd v Cook [1953] 1 Lloyd's Rep 328 (QBD) at 333.

44
In this case, the party making the error was left with the consequences because he
could have double-checked. It seems unlikely that AE Lindsay would be followed to-
day. In a rising market case, Tradax Export SA v Dorada Compania Naviera SA (Tradax)
a charter was determined on the charterer’s mistakenly paying too little. Bingham J
said: -

None of the relevant witnesses in this case had any hesitation in agreeing that
the ordinary reaction of an owner who is tendered too little hire is to point out
the deficiency to the charterer in no uncertain terms … I have no doubt that the
owners knew that the charterers believed they had paid the right amount. It was
their duty, acting honestly and responsibly, to disclose their own view to the
charterers.89

More recently Tradax has found support from Proudman J in Process Components Ltd v
Kason Kek-Gardner Ltd who said that it was: -

… obvious that Mr Tunnicliffe knew that a mistake had been made and that it
would be unfair and unconscionable to ignore the terms of the Licence Agree-
ment in circumstances where Mr Tunnicliffe was surprised by the terms of the
draft KGL Sale Agreement but said nothing about them.90

These two cases are estoppel by convention cases but seem not quite to fit the normal
requirements for estoppel which are too complex91 to be dealt with in detail in this the-
sis. I rely on the brief description in Wilken: -

89 Tradax Export S.A. v. Dorada Compania Naviera S.A. (The "Lutetian") [1982] 2
Lloyd's Rep 140 at 157. In Starbev GP Ltd v Interbrew Central European Holdings BV
[2014] EWHC 1311 (Comm) - a failure to disclose the existence of a dispute might cre-
ate an estoppel and Raffeisen Zentralbank Osterreich AG v. Royal Bank of Scotland
[2011] 1 Lloyd's Rep 123. The question may not arise again after the Appeal Court’s
decision that timeous payment is not a condition in Spar Shipping AS v Grand China
Logistics Holding (Group) Co Ltd [2016] EWCA Civ 982.

90 Process Components Ltd v Kason Kek-Gardner Ltd [2016] EWHC 2198 (Ch) at 132.

91 Mitchell, Bridging the Gap describes it as “nebulous” at 100 and “useful” at 264-5.

45
Silence will probably only give rise to …estoppel where there is a duty to disclose
... [the representation must be] clear and unequivocal.92

Hugh Collins, unimpressed by Mona Oil, says: -

older cases have stifled the development of a duty to disclose information during
the performance of the contract .93

In later work, he asserts that the case reflects the view that to do differently would be

in conflict with a more basic right of every individual to go about his business as
he pleases, even where the exercise of that right obstructs successful perfor-
mance of existing contracts.94

Mona Oil is not cited in recent editions of Schmitthoff’s Export Trade,95 is never cited in
trade documentation cases, and some near contemporaneous cases such as Kyprianou
v Cyprus Textiles Ltd96 suggest that it would not be followed today.

Jonathan Morgan approves of Mona Oil (without explaining what the “higher duty”
might have meant) seemingly because Lord Devlin has limited the scope of cooperation
in contract: -

Some great commercial judges have displayed a more convincing grasp of the
role of extra-legal sanctions in curbing opportunism. Devlin J refused to imply a
term requiring co-operation …

92 Sean Wilken, The Law of Waiver, Variation and Estoppel (OUP 2012) at 7.40.

93 Collins, ‘Implied Duty to Give Information during Performance of Contracts’ (n82).

94 Hugh Collins, The Law of Contract (CUP 2008) at 337.

95 Clive M. Schmitthoff and others, Schmitthoff's Export Trade (12th edn, Sweet and
Maxwell 2011).

96 Kyprianou (n49).

46
The fact that that co-operative spirit had ‘evaporated’ was ‘unfortunate’ for the
plaintiffs, but the law of contract would not imply a term to assist their plight.
Devlin J clearly saw that, despite its vital importance, co-operation is … properly
a matter for ... extra-legal relations. 97

The Judgment refers to misunderstanding; not to opportunism. It appears from Devlin J

that the behaviour of Mr Chamberlain, of T&Co, whose willingness to cooperate had
“evaporated”, caused the problem but Devlin J would not accept that Chamberlain was
under any duty to inform Mona Oil that he had received instruction. He says, in terms,
that the law will: -

… enforce co-operation only in a limited degree—to the extent that is necessary

to make the contract workable.98

Where the US Government withheld vital information, the Court held that the Govern-
ment “could not properly let them [suppliers] flounder”.99 In an interesting case Coulson
J, citing several duty to warn authorities, said: -

It would be absurd if, say, JP knew or ought reasonably to have known that
foam concrete was an inappropriate environment for their GRP pipe, but had
no obligation to pass such information on to Murphy, simply because the con-
tract had been made before JP found out about the use of foam concrete.100
In Mannai Investment Co Ltd v Eagle Star Assurance Co Ltd (Mannai), with similarities
to the above cases, the Court would not allow one party to take advantage of a minor
and obvious error. A tenant purported to determine a lease on the 12 th January 1994

97 Morgan at 144.

98 Mona Oil [n3] at 1018.

99 Helene Curtis Industries, Inc. v The United States 312 F2d 774 (United States Court
of Claims).

100 J Murphy & Sons Limited v Johnston Precast Limited [2008] EWHC 3024 (TCC) at
[129].

47
under a lease providing for determination on notice on the “third anniversary of the
term commencement date” - 13th January 1994. 101 The House of Lords refused to al-
low the landlord to take advantage of a “latent ambiguity”. Lord Steyn says that the
Judgment caused Chancery practitioners to “hoist a black flag over Lincoln’s Inn”. 102
There are unexpressed echoes of the above “mistake” cases in that the “reasonable
recipient” of the notice could easily have double-checked the intention of the depart-
ing lessee. It would have been better for the House of Lords to use the same language
as that deployed by Jenkins LJ in Dumenil by saying that it “behoved” the recipient to
make enquiries. In a similar case Christopher Clarke J said: -

[A] helpful test is whether a reasonable representee would naturally assume

that the true state of facts did not exist and that had it existed, he would have
been informed of it.103

There are other situations in which Courts will insist that communication is a necessary
pre-condition to the finding that a contract has been breached. In a principle of general
application, a tenant cannot sue a landlord for failure to repair demised premises unless
he has given the landlord notice that repair is needed. Bramwell B described the “intro-

101Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, [1997]
3 All ER 352 (House of Lords). See also Doe d. Cox v. Roe (1803) 4 Esp 185 - a tenant
leasing the Bricklayer’s Arms was given notice to quit "the premises … commonly
…known by … The Waterman's Arms." There was no public house in Limehouse called
The Waterman's Arms. The notice was effective; treated as a latent ambiguity. Mannai
was followed in Scotland in Tyco Fire & Integrated Solutions (UK) Limited v Regent
Quay Development Company Limited [2016] CSOH 97 - Lord Tyre ruling at [16] - “I am
satisfied that the reasonable recipient would not have been perplexed in any way by
the error in the letter heading”.

102 Lord Steyn in ‘The Intractable Problem of the Interpretation of Legal Texts’ at 148
in Worthington.

103 Raffeisen Zentralbank Osterreich AG v. Royal Bank of Scotland (n89) at [85].

48
duction and interpolation” of words requiring such notice as “contemplated” and nec-
essary to prevent a “monstrous absurdity” risking a result “preposterous and unreason-
able”.104

Centuries old agency law obligations require an agent to principal to keep the principal
informed of matters which are his concern. 105 A manufacturer seeking a new distributor
has, however, no duty to advise the incumbent.106

A letter of credit is “opened” once the contract between the bank and the buyer has
been made and the letter communicated to the buyer. 107 In other words, it is not
enough to open a credit; it must be communicated to the buyer to allow it to make
appropriate shipping and insurance arrangements.

Where notice requirements are clear, and the contract requires precise adherence
Courts will not usually relieve parties of their obligations.108 In recent construction cases
“draconian” notice/information requirements operating as time-bars have been con-
strued strictly; potentially devastating consequences notwithstanding. 109 These ex-
press duties to communicate clearly and unequivocally are intended to prevent ambush
tactics by enforcing a known process of communication, notice and dispute resolution.

104 Makin v Watkinson (1870) LR 6 Ex 25 (Exchequer) at 28, Torrens v. Walker [1906] 2

Ch 166 . See Burrows (n5) at 404.

105 Peter Watts, F. M. B. Reynolds and William Bowstead (eds), Bowstead and
Reynolds on Agency (20th edn, Sweet & Maxwell 2014) at 6.021 at 196. See York
Buildings Co v Mackenzie (1795) 8 Bro Parl Cas 42, 3 ER 432 (HL).

106 Ilkerler Otomotive Sanayai v Perkins Engines Company Ltd [2015] EWHC 2006
(Comm).

107 Bunge Corpn v Vegetable Vitamin Foods (Pte) Ltd [1985] 1 Lloyd's Rep 613 .

108 Hoe International Limited v Martha Andersen and Sir James Aykroyd [2016] CSOH
33.

109 At [24] in Severfield (UK) Ltd v Duro Felguera UK Ltd [2015] EWHC 3352 (TCC) Van
Oord UK Limited v Allseas UK Limited [2015] EWHC 3074 (TCC) .

49
The limits of a duty to communicate depend on the obligations under the contract and
in a case where professionals carried no site supervision responsibility the duty to warn
was severely curtailed in a “sad case” with terrible consequences for a house-owner.110

In a high-profile City case, Colman J refused to imply terms which went beyond known
market practice. It’s an odd case which should appeal to relational theorists because it
uses trade practice and context in which the brutal dog-eat-dog ethos of the City pre-
vailed. The parties were syndicated lenders to Yorkshire Food Group which encountered
financial difficulties, and the lending was placed by the banks into 'work-out'. On the
evidence, it was considered good practice for co-workout banks to disclose what those
concerned with the work-out personally considered material information, to the effect
that no further disclosure was required.111

In some cases, the duty, or the incentive arises from construction, in other cases from
implication. One might reconstruct the MvD rule accordingly at this stage; which would
also achieve high-level coherence and reflect actual outcomes: -

… the construction of the contract is that each agrees to do all that is reasonably
necessary, using reasonable diligence, to be done on his part for the carrying out
of that thing, to provide a reasonable opportunity to the other to cure defects,
to provide such information as is necessary to ensure that the contract can be
performed, to draw attention to obvious errors made by the other party, and
not to do anything to prevent or delay the performing of any part of the con-
tract, though there may be no express words to that effect

ACTIVE COOPERATION /ACCEPTING REASONABLE SOLUTIONS

By active cooperation I mean that the parties are required to engage constructively in-
ter-se, take positive, proactive steps, find ways around problems, fill gaps, clarify details

110 Goldswain v Beltec [2015] EWHC 556 (TCC) .

111 National Westminster Bank plc v Rabobank Nederland [2007] EWHC 1056 (Comm).

50
and make the contract work. Lord Blackburn’s conception merely requires parties to
take steps to effectuate the other’s performance but does not envisage the need for
concessions or agreement.

For example, a music hall artist, one Victoria Vesta, and a promoter were in dispute
about performance dates. Eady LJ ruled that the contract meant that the parties should
act reasonably in making efforts to agree dates.112 In Hillas v Arcos, where the contract
was unclear, construing a long, complex clause dealing with description and quantities,
Lord Wright ruled that: -

in contracts for future performance over a period, the parties may not be able
nor may they desire to specify many matters of detail, but leave them to be ad-
justed in the working out of the contract.113

The question is one of degree and context and dependent on how much of the contract
the Court might have to write and whether the wording or the context indicates an
“agreement to agree” (no contract ensues) or have left “matters to be adjusted” (the
Courts will help them do that).114Interestingly Hugh Collins claims that the result “flies
in the face of formal legal rationality” because the contract lacked an object and a price,
saying that the House of Lords balanced documentation against expectation.115 How-
ever, the House of Lords applied easily available formulae from the agreement and pre-
vious dealings rather than any balancing.

Where disagreements arose over crude oil handling fees between an incumbent con-
tractor and a new refinery owner; Rix LJ said: -

112 Terry v Moss's Empires (1915) 32 TLR 92.

113 Hillas v Arcos at 504.

114 Teekay Tankers Ltd v STX Offshore & Shipbuilding Co Ltd [2017] EWHC 253
(Comm).

115 Collins, Regulating at 190.

51
There is no evidence that the resolution of a reasonable fee would cause any
difficulty at all …these parties …. had managed to agree a handling fee through-
out the best part of 20 years …116.

In iSoft v Misys in which a contract provided for the sale of a business on its “fair market
value” the Court of Appeal found that Hillas v Arcos did not apply; Carnwath LJ agreeing
with the trial Judge that the Court was being asked to “construct a complete contract
from scratch”.117

In Jet2.com Ltd v Blackpool Airport Ltd the parties agreed to “co-operate together and
use their best endeavours to promote Jet2.com's low cost services from BA and BAL will
use all reasonable endeavours to provide a cost base that will facilitate Jet2.com's low
cost pricing”. Moore-Bick LJ found the first leg enforceable: -

…. the promotion of Jet2's business did extend to keeping the airport open to
accommodate flights outside normal hours, subject to any right it might have to
protect its own financial interests. …

But not the second: -

… an obligation to use all reasonable endeavours to provide a cost base that will
facilitate some essential element of another person's business seems to me to
pose greater problems, because it is much more difficult to identify its con-
tent.118

An obligation to establish a two-aircraft operation at an airport and to operate the air-

craft by flying them commercially was upheld despite no detail of the number of flights

116 Mamidoil-Jetoil Greek Petroleum Co SA v Okta Crude Oil Refinery AD [2001] EWCA
Civ 406 at [14]. See also Teekay (n114).

117 iSoft Group plc v Misys Holdings Ltd [2002] All ER (D) 217 (Oct) at [27].

118 Jet2.com Ltd v Blackpool Airport Ltd [2012] EWCA Civ 417 [2012] 1 CLC 605 at [31].

52
required or other detail being expressed.119 In a distributorship dispute the Court would
not imply a term of active cooperation that minimum purchase requirements would be
fulfilled as too vague.120

There is little doubt that a contractual requirement to undertake “friendly discussions”

or negotiate in good faith is enforceable; Lord Ackner’s notorious repugnance notwith-
standing.121 Longmore LJ ruled that to declare unenforceable a clause forming part of a
“complex agreement”, requiring parties to negotiate “legal content”, would “defeat the
reasonable expectations of honest men” and be a “strong thing”.122 Where the contract
included provisions requiring negotiation in good faith and engagement in mediation
before arbitrating Allsop J, drawing an analogy with modern civil procedure, construed
them to oblige parties to: -

exercise a degree of co-operation to isolate issues for trial that are genuinely in
dispute and to resolve them as speedily and efficiently as possible.123

Teare J, ruled that an obligation to seek to resolve a dispute using “friendly discussions”,
meant that parties must undertake honest and genuine discussions: -

119 See also Durham Tees Valley Airport Ltd v BMI Baby Ltd [2010] EWCA Civ 485,
[2011] 1 All ER (Comm) 731 . Catherine Mitchell, Bridging the Gap (n91) refers to the
result as enforcing, “in an oblique way, an obligation to be co-operative” at 257.

120 James E McCabe Ltd v Scottish Courage Ltd [2006] EWHC 538 (Comm) . It might
also have conflicted with an express term since prices were agreed in the contract.

121 Walford v. Miles [1992] 2 AC 128.

122 Petromec Inc v Petroleo Brasileiro SA Petrobras [2005] EWCA Civ 891 at [121]. See
also Colin Reese QC refusing to allow parties to “thwart” an obligation to make reason-
able endeavours to agree a pain/gain sharing provision in Alstom Signalling Ltd v Jarvis
Facilities Ltd [2004] EWHC 1232 (TCC) at [61].

123 United Group Rail Services Ltd. v Rail Corporation NSW [2009] NSWCA 1707 at
[70]-[71].

53
Where a party clearly fails to honour such standards of conduct judges and com-
mercial arbitrators will have no particular difficulty in recognising and identifying
such failures. 124
The limits of Court tolerance of negotiating tactics can be found when deals are revoked
for economic duress.125 However, “no single factor is determinative”.126 In one case the
defendant refused to make further deliveries unless Carillion agreed to the terms of a
settlement agreement. The Court struck the agreement down for duress.127 This adds
weight to Teare J’s assertion that the Courts can spot improper conduct.

Courts can force parties into deal-making in quasi-contractual situations. In somewhat

specialised situations parties may agree that one will buy land intending that they will
split it later; the calculation being that they will be worse off if both bid. If the successful
bidder then rats Courts will impose a Pallant v Morgan equity and order the parties to
try to reach a deal, failing which the Court will do that for them. 128The exact juridical
basis of this “equity” is unclear but at least one author treats it as an agency concept.129

124 Emirates Trading Agency LLC v Prime Mineral Exports Private Ltd [2014] EWHC
2104 (Comm) at [53]. See also Willmott Dixon Housing Ltd v Newlon Housing Trust
[2013] EWHC 798 (TCC); Vivian Ramsey QC ruling that provisions requiring cooperation
extended to solicitors managing disputes between the parties and communicating ef-
fectively.

125 Nelson Enonchong, Duress, Undue Influence and Unconscionable Dealing (2nd
edn, Sweet & Maxwell 2012); the elements are illegitimate pressure or a threat; that
the innocent party had no practical choice but to enter into the agreement; and that
the pressure or threat had been a significant inducement.

126 Ibid at 79. Lord Mance at 638 in Pao On v Lau Yiu Long [1980] AC 614, [1979] 3 All
ER 65 (PC).

127 Carillion Construction Ltd v Felix (UK) Ltd [2000] All ER (D) 1696. See also Atlas Ex-
press Ltd v Kafco (Importers and Distributors) Ltd [1989] QB 833, [1989] 1 All ER 641 .

128 Pallant v Morgan [1953] Ch 43. See also Banner Homes Plc v Luff Developments
Ltd [2000] Ch 372, CA.

129 Watts, Reynolds and Bowstead (n105) at 6-110.

54
Discussing modern forms of contract, recognizing that change is “heavily planned for”
and that parties must be free to disagree, Zoe Ollerenshaw proposes content for express
duties to negotiate in good faith which include that parties: -130

• commence negotiation
• enter negotiation with an open mind not intending to not agree
• do not ignore the other side’s suggestions
• consider suggestions in the spirit of cooperation and mutuality
• disclose required information
• if withdrawing to tell the other party why, allow a response
• not to withdraw if that would be reasonably unacceptable to the other party131

In one case, which gives similar guidance, showing that elements of this proposal are
practical, the ADR Handbook was referred to by Briggs J, who said that it advised parties
faced with ADR requests but who were reluctant to use ADR that “constructive engage-
ment” was the right response. Parties should not ignore an ADR offer, respond
promptly, giving clear and full reasons why ADR is not appropriate, raising with the op-
posing party any shortage of information or evidence, together with consideration of
how to overcome the shortage, and not closing off ADR.132

In Yam Seng, Leggatt J said that the distributor: -

was arguably entitled to expect that it would be kept informed of ITC's best es-
timates of when products would be available to sell and would be told of any
material change in this information without having to ask.133

130 ‘Managing Change in Uncertain Times’ in DiMatteo and others at 217-218.

131 Victor Goldberg Readings in the Economics of Contract Law (CUP 1989) at 18-19
indicates that economic incentives will take care of matters, whereas sophisticated
parties appear to consider solid terms necessary.

132 PGF II SA v OMFS Co 1 Ltd [2013] EWCA Civ 1288 at [30].

133 Yam Seng at [143].

55
In the context of an IT system contract in which special needs, or detailed requirements
tend to emerge during contract execution, Judge Toulmin QC said: -

It is well understood that the design and installation of a computer system re-
quires the active co-operation of both parties … The duty of co-operation in my
view extends to the customer accepting where possible reasonable solutions to
problems that have arisen. In the case of unimportant or relatively unim-
portant items that have been promised and cannot be supplied each party
must act reasonably, consistent, of course, with its rights.134

One commentator says that this seems “to be a code of reasonable behaviour for the
parties to a systems contract rather than a statement of the unexpressed intentions of
the parties”.135 The duty was clearly an incident of the contract type, either implied in
law or emerging through construction.

In Medirest 136 the relationship between an NHS Trust and its facilities management
contractor fell apart over the calculation of deductions for service failures by the Trust.
The Court of Appeal appeared to reverse modern interpretation trends by making a very
narrow interpretation of a cooperation clause and inventing new canons of
construction. Clause 3.5 of the contract provided that the parties will: -

… co-operate with each other in good faith and will take all reasonable action as
is necessary for the efficient transmission of information and instructions and to
enable the Trust … to derive the full benefit of the Contract.

134 Anglo Group (n65) at [127]. Approved in Yam Seng – see below.

135 Euan Cameron, ‘Major Cases' (2000) 14 IRLCT 259 at 264.

136 Compass Group UK and Ireland Ltd (t/a Medirest) v Mid Essex Hospital Services
NHS Trust [2012] EWHC 781 (QB) (n137).

56
The Court described this, in an unnecessary discourtesy to the draughtsman, as a
“jumble of different statements, set out in an incoherent order” (Lord Steyn describes
such commentary as “tiresome”137); deciding that: -

The obligation to co-operate in good faith is not a general one which qualifies or
reinforces all of the obligations on the parties in all situations where they
interact. [it] is specifically focused upon the two purposes stated in the second
half of that sentence.138

The reasoning appears to be founded on two startling, and acontextual, canons of

construction. 139 One is that had the parties intended the clause to apply generally “they
would have stated this in a stand alone sentence with a full stop at the end.”140The other
is that “a general and potentially open-ended obligation to "co-operate" or "act in good
faith" should not be taken to cover the “same ground as other, more specific, provisions,
lest it cut across those more specific provisions …”. Catherine Mitchell comments that
the result of the construction is that “the good faith obligation is emptied of any
substantive content”. 141 One could say the same of the cooperation obligation.
Cranston J had described the context: -

“… the duty to cooperate necessarily required the parties to work together

constantly, at all levels of the relationship, otherwise performance of the
contract would inevitably be impaired.

137 Steyn at 439.

138 Mid Essex Hospital Services NHS Trust v Compass Group UK and Ireland Ltd (t/a
Medirest) [2013] EWCA Civ 200 at [106].

139 Jan van Dunné, ‘On a Clear Day, You Can See the Continent' (2015) 31 ConstLJ 3 at
14; context is “lost out of sight” by the Appeal Court.

140 The Trust’s submission in Mid Essex Hospital Services NHS Trust v Compass Group
UK and Ireland Ltd (t/a Medirest) (n136) at para [103]. See Morgan (n96) at 62 quoting
Oliver Williamson at 62 that it is easy to draft a cooperation clause…. showing the dan-
ger of prediction; (“especially about the future” – Niels Bohr).

141 Mitchell, Bridging the Gap (n91) at 133.

57
The duty … necessarily encompassed the duty to work together to resolve the
problems which would almost certainly occur from time to time in a long-term
contract of this nature”142

It is a very similar comment to that of Judge Toulmin. A realistic view of cooperation

clauses was taken by HHJ Humphrey Lloyd when he said that: -

people who have agreed to proceed on the basis of mutual co-operation and
trust are hardly likely at the same time to adopt a rigid attitude to contract
formation.143

Morgan J dealt with an express good faith obligation that parties, in all matters would
“act with the utmost good faith towards one another and will act reasonably … at all
times” as imposing: -

a contractual obligation to observe reasonable commercial standards of fair

dealing.144

This is a good answer to Lewison LJ’s inability to understand “in what sense the unilat-
eral decision by the Trust to award SFPs or to assert a right to levy Deductions … is some-
thing that requires co-operation at all”.145The wording of GC/Works 1, the most com-
mon contract standard used for Government works, which provides that parties “shall
deal fairly, in good faith and in mutual co-operation with one another…”, seems to be
designed to cut across “specific” provisions. 146Would it be construed purposively, as

142 Medirest (n134) at [27]. A similar duty to that in Anglo Group (n65).

143 Birse Construction Ltd v St David Ltd [1999] BLR 194.

144 Berkeley Community Villages Ltd v Pullen [2007] 3 EGLR 101 at 113.

145 Medirest (n134) at 146.

146 For this and many other examples of similar drafting see Richard Cockram, Manual
of Construction Agreements (Jordan Publishing 2016) at A3; “all three [I Chem E] forms
include mutual obligations to co-operate and to deal with each other fairly, openly and
in good faith…”. See Edwards-Stuart J, construing a stand-alone clause, 44.4.1, requir-

58
Morgan J might, or in a very narrow, technical manner as in the Court of Appeal in Medir-
est?

Zoe Ollerensaw, saying that English Law currently “demonstrates a conflicting and am-
bivalent approach to good faith”, describes Hillas v Arcos as: -

recognising a more co-operative approach to contracting147.

It is hard to determine just where the line is drawn between Judges declining to write a
contract and determining that there are objective criteria by which they can perfect a
deal. In Hillas v Arcos, for example delivery dates and quantities per delivery are plainly
left to be agreed, whereas in Teekay the Court would not give effect to a similar provi-
sion.148

Active cooperation terms encourage cooperation between the parties to clarify matters
(such as price or delivery) and to attempt to solve problems, fix defects, and resolve
disputes. Finally, and despite Medirest, one might reconstruct the MvD rule accordingly
at this stage which would achieve high-level coherence and reflect many outcomes: -

… the construction of the contract is that each agrees to cooperate actively, work
together, seek and accept reasonable solutions to problems that inevitably
arise, to do all that is reasonably necessary, using reasonable diligence, to be
done on his part for the carrying out of that thing, to provide a reasonable oppor-
tunity to the other to cure defects, to provide such information as is necessary
to ensure that the contract can be performed, to draw attention to obvious er-
rors made by the other party, and not to do anything to prevent or delay the

ing the parties to “deal fairly, in good faith and in mutual co-operation with one an-
other ...“applying this only to the rest of clause 44 in Portsmouth City Council v Ensign
Highways Ltd [2015] EWHC 1969 (TCC) at [91]-[101].

147 Zoe Ollerenshaw ‘Managing Change in Uncertain Times’ in DiMatteo and others
(n130).

148 Teekay (n114) - delivery dates were to “be mutually agreed”.148

59
performing of any part of the contract, though there may be no express words to
that effect.

CONTROL OF CONTRACTUAL DECISION MAKING

In the course of execution of complex, symbiotic contracts, it usually comes to pass that
a decision is made or required to be made by one party under “extremely common”
provisions.149 Many such decisions are made under powers granted to one party to en-
sure that there is a mechanism in place to facilitate decisions which can be envisaged as
a matter of prediction but not with particularity. One finds such decision-making powers
examined by the Courts in multifarious situations (see Appendix A to this Chapter).

Other than in the sense used by Professor Collins that “performance according to the
terms of the contract” constitutes cooperation,150 it can be said that not all decisions
described come into the category of decisions which enable or effectuate performance
by the other party. Decisions which are required to enable or facilitate the other party’s
execution of its obligations include: -

• Decisions regarding the effects of events affecting progress such as variations,

delays, defects, or force majeure. In Sutcliffe v Thakrah151 Lord Reid described
the decisions to be made by an architect under the RIBA standard contract: -

… whether the contractor should be reimbursed for loss under clause 11

(variation), clause 24 (disturbance) or clause 34 (antiquities), whether he
should be allowed extra time (clause 23); or when work ought reasonably to

149 Lady Hale at [18] in Braganza v BP Shipping Ltd (The "British Unity") [2015] UKSC
17. “Commonplace particularly in relational contracts” - Paul Finn in ’Fiduciary and
Good Faith Obligations under Long Term Contracts’ in Kanaga Dharmananda (ed) Long
Term Contracts (The Federation Press 2013) at 149.

150 Collins, Contract Law (n93) at 329.

151 Sutcliffe v Thackrah (n13) at 737 (AC).

60
have been completed (clause 22). … he has to decide whether work is defec-
tive. 152

Such decisions are necessary to allow a contractor to plan toward a contractual

completion date and allocate resources accordingly. Sometimes information is
required from the Contractor to allow such decisions to be made.153
• Valuation of work carried out; necessary to allow a contractor to submit invoices
and be paid.154
• Decisions relating to quality of work.155
• Approval of documents such as Quality Plans, or weld set-up procedures. Net-
work Rail requires Contractors to submit: -
information pertaining to the methods of construction …. which the Con-
tractor proposes to adopt or use and, if requested … such calculations of
stresses, strains and deflections that will arise in the Works ….156
• Approval of management teams or senior personnel. The CiOB form requires ap-
proval for replacement of the contractor’s named senior person.

152 See also Neodox Ltd v Swinton and Pendlebury Borough Council (n77).

153 See Balfour Beatty Civil Engineering Ltd v Docklands Light Railway Ltd 49 ConLR 1 .
The generality is described by The Hon Justice Carmel McClure for long term contracts:
in ’Long Term Contracts: Principles for Determining Content’ in Dharmananda (n149)
at 117.

154 See Hudson (n12) generally at Chapter 4.

155 Bluewater Energy Services BV v Mercon Steel Structures BV [2014] EWHC 2132
(TCC).

156Network Rail, standard suite of contracts (2016)http://www.net-

workrail.co.uk/browse%20documents/standardsuiteofcontracts/docu-
ments/nr11%20mf1%20(rev%205)%20v3%204(tp).pdf.

61
• Decisions to vary the contract. The CiOB form allows for changes to numbers of
personnel performing the contract (Article 6), additions to or omissions from
services or changes to working hours (Article 8). 157

2.7.1 GENERAL PRINCIPLES

The Supreme Court has recently concluded that Lord Greene’s two-limb test from Asso-
ciated Provincial Picture Houses Ltd v Wednesbury Corporation158 “usually” applies to
contractual decision making; Lady Hale SCJ recapitulating that test in Braganza: -

The first limb focusses on the decision-making process – whether the right mat-
ters have been taken into account … The second focusses upon its outcome –
whether even though the right things have been taken into account, the result
is so outrageous that no reasonable decision-maker could have reached it. 159

Neither limb creates onerous controls160and the circumstances in which a Court will in-
terfere are “extremely limited”.161 Richard Hooley says that the limitation on such use
of discretion is one of “subjective honesty or good faith” and, “at the lower end of the

157 Chartered Institute of Building, CIoB's Facilities Management Contract (John Wiley
2015).

158 Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB

223,[1947] 2 All ER 680.

159 Braganza (n149) at [24].

160 Sergeant and Wieliczko (n36) refer to the Wednesbury test as a “relatively low
standard” at 315. Ewan McKendrick in ‘Good Faith in the Performance of a Contract in
English Law’ in Larry DiMatteo and Martin Hogg (eds), Comparative Contract Law:
British and American Perspectives (OUP 2016) at 200 describes it “not an onerous
standard …”.

161 Brooke J at [62] in Ludgate Insurance Company Limited -v- Citibank NA [1998]
EWCA Civ 66, [1998] Lloyds Reports IR 221.

62
scale”.162 To show how limited the controls are Dyson LJ, in Nash v Paragon Finance plc
(Nash), had to reach for a breathtakingly unlikely scenario to illustrate caprice: -

where the lender decided to raise the rate of interest because its manager did
not like the colour of the borrower's hair.163

Arden LJ provided a more realistic example in Lymington Marina Ltd v Macnamara (Lym-
ington): -

Accordingly, it would not be enough that the proposed sub-licensee, say, has in
the past lived outside the United Kingdom…164

Explaining the policy of the Courts to the exercise of such powers Lady Hale said, in a
passage “redolent” of implication-in-law: -165

…the party who is charged with making decisions which affect the rights of both
parties to the contract has a clear conflict of interest. … The courts have there-
fore sought to ensure that such contractual powers are not abused. They have
done so by implying a term as to the manner in which such powers may be ex-
ercised, a term which may vary according to the terms of the contract and the
context in which the decision-making power is given.166

162 Conclusion to Richard Hooley, ‘Controlling Contractual Discretion' (2013) 72 CLJ

65.

163 Nash v Paragon Finance Plc [2001] EWCA Civ 1466 at [31].

164 Lymington Marina Ltd v Macnamara [2007] All ER (D) 38 (Mar) at [28].

165 Wayne Courtney, ‘Reasonableness in Contractual Decision-making' (2015) 131

LQR 552 at 555.

166 Braganza (n149) at [18]. Rix LJ said in Socimer International Bank Ltd (in
liquidation) v Standard Bank London Ltd [2008] EWCA Civ 116 at [61] that “the concern
is that the power should not be abused”.

63
This is not new law; despite Dr Morgan’s claim that its vitality springs from “youthful
exuberance”.167 In 1837 a Court ruled against a lessor who “capriciously” withheld ap-
proval of repairs to be performed to his approval.168 In 1861 Wightman J rejected an
insurance company’s pleading that a term permitting the request of such evidence as
they “think necessary” allowed capricious requests; saying that this contravened “the
proper and reasonable construction to be given to this clause”.169

When Courts examine such decisions, there are four common outcomes: -

• If a decision-maker purports to exercise an “absolute contractual right” Courts

may decide that no control is necessary.

• A control may be imposed that discretion must not be exercised in an arbitrary,

capricious or irrational manner.

• Certifiers may be required to take decisions fairly and impartially.

• The interests of the other party must be considered

2.7.2 DECISIONS TO EXERCISE ABSOLUTE CONTRACTUAL RIGHTS

In this sub-chapter, I explore how the Courts deal with so-called binary decisions or de-
cisions to exercise absolute contractual rights. The treatment is variable and illogical.
In a fixed-term contract for the provision of catering and ancillary services, an NHS
Trust was empowered to award “service failure points” and adjust payments accord-
ingly. The Court of Appeal declined to apply any limitation to the making of such de-
ductions, Jackson LJ saying: -

167 Jonathan Morgan, ‘Resisting Judicial Review Of Discretionary Contractual Powers'

(2015) LMCLQ 484 at 484.

168 Dallman v King (1837) 132 ER 729.

169 Braunstein v The Accidental Death Insurance Company (1861) 121 ER 904 at 909.

64
The discretion …in the present case is very different from the discretion which
existed in the authorities discussed above……… [it] …. simply permits the Trust
to decide whether or not to exercise an absolute contractual right.

There is no justification for implying … a term that the Trust will not act in an
arbitrary, irrational or capricious manner. If the Trust awards more than the
correct number of service failure points or deducts more than the correct
amount … that is a breach of the express provisions….170

These two paragraphs are at odds. If the right is “absolute” that appears, by definition,
to mean that it cannot be impugned by the Court. The second paragraph, however, says
clearly that an incorrect deduction would be a breach of contract. The Medirest ap-
proach has become known as “binary” and has been criticized on that basis.171 It ap-
pears to be inconsistent with other cases. Under a loan agreement further advances
were to be made at the lender’s “sole discretion”, Aikens J ruling that this decision: -

must be exercised in good faith and must not be exercised irrationally, capri-
ciously or arbitrarily.172

Lady Arden has provided an overview of Lymington,173 “an unusual case”, 174 in which
the holder of a 98-year license for a marina berth wished to sub-license to his broth-

170 Medirest (n136) at [91-92].

171 Emmanuel Sheppard, ‘Good Faith in the Aftermath of Yam Seng' (2015) 7 JIBFL
407 says “it is not clear how coherent or useful this dichotomy … is" at 409.

172 McKay v Centurion Credit Resources [2012] EWCA Civ 1941 at [17]. But see CTN
Cash and Carry Ltd v Gallaher Ltd [1994] 4 All ER 714 in which a similar discretion was
held to be absolute.

173 Lymington (n164).

174 Arden at 205-6.

65
ers. The license provided that permission to sub-license was in the owner’s (LML) ‘ab-
solute discretion’. She says that she has “some difficulty” with the decision in Medirest.
175 In Lymington, she noted LML’s “fears”: -

that sub-licensees would be casual users of berths in the marina and therefore
would be much less likely to make use of the repair facilities than long-term us-
ers. LML also has a concern that the sub-licensees may not fit into the ethos of
the marina, and that this would discourage annual licence holders, who are at-
tracted by the social atmosphere of the marina.176

The second of LML’s concerns may be a tolerably polite expression of a “No riff-raff”
proviso177 but they provide a fair encapsulation of the purpose of the approval re-
quirement. In holding that LML’s ability to withhold approval was limited, Arden LJ said
that the grounds must: -

… arise out of his proposed use of the marina. ………if the proposed sub-licen-
see were known to have avoided payment of mooring fees in other marinas,
this might suggest that the sub-licensee would avoid payment of his debts for
goods and services .... This might … afford a good ground for refusing ap-
proval.178

It seems entirely legitimate that LML would want a busy marina, both for social and
business reasons. However, had the parties wished to impose limits on LML’s approval

175 Mid Essex Hospital Services NHS Trust v Compass Group UK and Ireland Ltd (t/a
Medirest) (n136).

176 Lymington (n164) at [7].

177 From Basil’s advertisement for the Gourmet Night in Fawlty Towers.

178 Lymington (n164) at [28].

66
rights, there are established means of doing so.179 In International Drilling Fluids Ltd v
Louisville Investments (Uxbridge) Ltd Balcombe LJ provided a good résumé of the law
when a lease expressly provides that consent to an assignment will not be “unreasona-
bly withheld”. The first proposition that he “deduces” from the extensive authorities
quoted is: -
The purpose of a covenant against assignment without the consent of the land-
lord ….is to protect the lessor from having his premises used or occupied in an
undesirable way, or by an undesirable tenant or assignee.180
At first instance, in Medirest, Cranston J reviewed Clause 5.8: -

…the purpose of the Trust's power …was to curb performance failure not, for
example, to generate discounts on service payments to Medirest.181

In other words, this is a power to manage the contract, providing a remedy in circum-
stances where damage would be almost impossible to prove and, thereby, an incen-
tive for Medirest to perform fully. It would be difficult, even impossible, to recover
over £43,000 in damages (or, indeed, anything at all) for the bare fact of finding a
spoon wedging open a fire door.

Where service point deduction was on a sliding scale Mr Justice Edward-Stuart implied
that the client (PCC) must: -

179 Jonathan Morgan, ‘Against Judicial Review of Discretionary Contractual Powers'

(2008) LMCLQ 230 at 239 argues exactly this point – “It should be for the parties to
state so expressly if such judicial control is desired.”

180 International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd [1986] 1 Ch
513. See Cudmore v. Petro-Canada Inc. 1986 Carswell BC 93 where such a covenant
meant that a landlord must not “refuse his consent arbitrarily or unreasonably”.

181 Medirest (n134) at [43].

67
… act honestly and on proper grounds and not in a manner that is arbitrary, ir-
rational or capricious .182

It is hard to see the difference between a decision to deduct or not deduct points and a
decision to deduct three points or four.183

The case has, in fact, become somewhat notorious184, due to what Cranston J de-
scribed as the “absurd” nature and the “cavalier” calculations underpinning them, of
some of the deductions; which included: -

• Box of out of date ketchup sachets found in cupboard -£46,320;

• Failure to sign off a cleaning schedule -£71,055;
• No temperature on refrigeration display -£ 94,830;
• Individual butter sachets with no use-by date in refrigerator- £94,830.

For each deduction, a decision must be made whether Medirest is in breach; a serious
decision because multiple breaches entitled Mid-Essex to terminate. The next decision
is whether the breach is Minor, Medium or Major; attracting deductions of £5, £15
and £30 respectively. Following from a decision, say, that the appearance of the box of
ketchup sachets in a fridge could be ascribed to performance failure by Medirest, a
Major failure, a further decision that each individual sachet was a breach and that the
breach was not singular; each day that the box was in the fridge was an independent
breach attracting a separate deduction. It is hard to see these as decisions to exercise
an absolute contractual right. They precede and inform the exercise of a right.

The Court of Appeal simply failed to consider the possibility of examining the underly-
ing, limb one, rationale for the deductions. Despite specific approval of Socimer it is

182 Ensign (n146) at [112].

183 Sheppard (n171) at 409 cites binary cases where the opposite conclusion was
reached.

184 Dunné (n139) describes it as a “running gag” at 11.

68
not clear whether the Supreme Court in Braganza intended that even binary decisions
like those in Medirest should be subject to control.185

Neither Lymington nor Medirest seem to deal with true cases of absolute rights. The
Courts may, in each case, examine the rationale behind the decision made. There are
rare examples of absolute rights. The Courts will not imply limitations into termination
at will clauses, 186 although they may consider the reasonable expectations of parties
in assessment of compensation.187 The Privy Council has explained this; saying that
“the very nature of such a power is that its exercise does not have to be justified”.188
This is what an absolute contractual right is. It may not be impugned. Other such rights
may be the right to issue a valid variation under an express power; a variation clause
may only be used “only for a purpose for which the power to vary was intended”.189
There are other circumstances in which a Court will not interfere, absent fraud, with
the exercise of a contractual right. One such is the calling of on-demand bonds. An-
other is in Conclusive Evidence Clauses where a lender may certify that certain monies
are due and insist on payment of those monies on certification. In such cases, how-
ever, overpayments are recoverable later. 190 In Canada, the Courts may control deci-
sions on contract renewal even where renewal is at one party’s “sole discretion”. 191

185 (n166 see Braganza at [22] and [102]. Neil Andrews, Contract Rules (1st edn,
Intersentia 2016) says, at Rule 104, that Medirest “goes against the grain”.
186 TSG Building Services PLC -v- South Anglia Housing Ltd [2013] 1151 (TCC) despite
the existence of a clause saying that they “shall work together and individually in the
spirit of trust, fairness and mutual co-operation”. See also Petroleo Brasileiro SA v Ene
Kos 1 Ltd [2012] UKSC 17and Monk v Largo Foods Ltd [2016] EWHC 1837 (Comm).

187 Willmott Dixon Partnership Ltd v London Borough of Hammersmith and Fulham
[2014] EWHC 3191 (TCC).

188 Reda v Flag Ltd [2002] UKPC 38 at [42].

189 Abbey Developments v PP Brickwork Ltd [2003] EWHC 1987 (TCC) at [50].

190 Sandra Booysen, ‘"Pay Now - Argue Later": Conclusive Evidence Clauses in
Commercial Loan Contracts' (2014) JBL 31.

191 Data & Scientific Inc. v. Oracle Corp 2015 ONSC 4178. Contrast Ilkerler(n106).

69
2.7.3 COMMERCIAL CONTRACTS

In Nash Dyson LJ, implied a term to “give effect to the reasonable expectation of the
parties” that rates of interest would not be set dishonestly, for an improper purpose,
capriciously or arbitrarily; -

If asked at the time of the making of the agreements whether it accepted that
the discretion to fix rates of interest could be exercised dishonestly, for an im-
proper purpose, capriciously or arbitrarily, I have no doubt that the claimant
would have said “of course not”.192

In Socimer International Bank (in liquidation) v Standard Bank London Ltd (Socimer) Rix
J provided detail on limb two saying that decision-making powers were limited: -

… as a matter of necessary implication, by concepts of honesty, good faith, and

genuineness, and the need for the absence of arbitrariness, capriciousness,
perversity and irrationality.193

In Gan Insurance v Tai Ping Insurance, the scope of an inelegantly expressed power to
approve settlements was disputed - “No settlement and/or compromise shall be made
and liability admitted without the prior approval of Reinsurers”. 194In the Court of Ap-
peal Mance LJ, observing that the purpose of the sub-clause was the protection of the
reinsurer which was “directly exposed to loss”195, and that control by the Court “de-
pends on the circumstances” held that the limits were: -

192 Nash v Paragon(n163) at [36].

193 Socimer (n166) at [66].

194 Gan Insurance v Tai Ping Insurance [2001] EWCA Civ 1047 [2001] 2 All ER (Com)
299.

195 Ibid at [64].

70
… is along the lines that the reinsurer will not withhold approval arbitrarily, or ….
will not do so in circumstances so extreme that no reasonable company in its
position could possibly withhold approval.196

Other terms which have been used to describe expected behaviour in decision making
under so-called discretionary powers include a requirement of “genuineness”197, that it
should not be “so outrageous in its defiance of reason”.198

2.7.4 CONSTRUCTION CONTRACTS

In construction and engineering settings manifold powers are usually delegated to an

independent professional acting on behalf of the client as an agent.199 These powers
allow clients to manage the contract, sometimes in circumstances where, without such
provisions, contractors can walk away, such as the power to award an extension of
time and compensate the contractor following acts of prevention. They also allow a
Contractor to manage the work, by, for example, ensuring that the contractual time
for completion is clear, (if not wholly agreed by the Contractor – the usual situation),
which will allow an appropriate allocation of resources and cash flow planning.

Although such decisions are subject to re-examination by Judges or arbitrators,200 the

law holds that the role of certifiers or approvers, notwithstanding that the client’s in-
terests are their primary responsibility, is to act in a fair and impartial manner.201 In a

196 Ibid at [73] and [76].

197 Bluewater Energy Services BV v Mercon Steel Structures BV (n155).

198 Ludgate Insurance Company Limited -v- Citibank NA (n161) at [35].

199 Hudson (n12) at 2-076 “a Certifier, is merely concerned …to decide matters such
as value, quality of work or extension of time as part of an administrative function ….
the Certifier is to be regarded as acting as agent….”.

200 Modern Engineering v Gilbert-Ash Northern [1974] AC 689.

201 See generally Hudson (n12) Chapter 4.

71
leading case on this point, Sutcliffe v Thackrah, Lord Reid said that the contract is
made: -

on the understanding that … the architect will act in a fair and unbiased man-
ner and it must therefore be implicit in the owner's contract with the architect
that he shall … reach such decisions fairly, holding the balance between his cli-
ent and the contractor.202

In Balfour Beatty Civil Engineering Ltd v Docklands Light Railway Ltd, where the certi-
fier was an employee, Sir Thomas Bingham MR agreed with Vivian Ramsey QC, making
no reference to implication, that: -

..the employer was not only bound to act honestly but also bound by contract
to act fairly and reasonably, even where no such obligation was expressed in
the contract.203

Having noted that valuation is not an exact exercise Hobhouse J said in Secretary of
State for Transport v Birse-Farr Joint Venture that the purpose of the exercise is to: -

202 Sutcliffe v Thackrah (n13) at 737. Lord Morris said that the architect must be “fair
and honest”, “he is not employed…to be unfair to the contractor” at 740-741 and Lord
Salmon that the architect “must act fairly and impartially” at 759.

203 Balfour Beatty Civil Engineering Ltd v Docklands Light Railway Ltd (n153) at 10-11.
Interestingly Ramsey J held in Bluewater Energy Services BV v Mercon Steel Structures
BV (n112) that a clause which requires that Mercon “continuously proceed with action
satisfactory to BLUEWATER to remedy such default” is not required to be construed by
reference to an objective standard. …. there is a limitation on … Bluewater … as a deci-
sion maker. That … is … to concepts of honesty, good faith, and genuineness, and the
need for the absence of arbitrariness, capriciousness, perversity and irrationality. At
10.85 Sergeant and Wieliczko (n36) note that this does not mean that the level of the
valuation must be reasonable.

72
provide a fair system of monthly progress payments…204

This is also not new law. In 1901 Sir AL Smith MR, commenting that a final payment is
“not a mere matter of arithmetic” said this of the architect: -

he owed a duty to the builder as well as to the owner … which was to hold the
scales fairly and to decide impartially between them the amount which the
builder was entitled to be paid by the owner.205

Mr Recorder Toulson QC referred to the position of the architect as “quasi-arbitral”

ruling that when taking termination decisions, the architect should act fairly; noting
that the Courts are used to applying such a standard but what this must mean is the
when certifying that the bar for operating termination rights has been reached the Ar-
chitect must act fairly; the Employer taking the termination decision.206 Even in a noto-
riously difficult environment, such as construction contracting207 neither Courts nor
contracting parties appear to have difficulty with such standards.

2.7.5 TAKING THE INTERESTS OF THE OTHER PARTY INTO ACCOUNT

There are rarer cases where it has been held that the exercise of discretion must be
balanced with the interests of the other party. This is more usual in employment con-
tracts but, in The Product Star, Leggatt J ruled that an owner’s discretion to allow or
disallow a vessel to proceed to a particular port had to be used “honestly and fairly in

204 Secretary of State for Transport v Birse-Farr Joint Venture 1993 62 BLR 36 at 53

205 Chambers v Goldthorpe [1901] 1 KB 624 at 973. See also Sutcliffe v Thackrah (n13).
See Hudson and Wallace, Hudson's 11th (n38) at 6-022-6-035 and Sergeant and
Wieliczko (n36) at 10.88 - Wednesbury principles should be applied by certifiers to-
gether with Sutcliffe duties.

206 John Barker Construction Ltd v London Portman Hotel Ltd 83 Build LR 35 at 45E.

207 Stella Rimmington, former Director General of MI5, in her autobiography, Open
Secret (2002): '...the Thames House Refurbishment was fraught with difficulties. It was
clear that dealing with the building industry was just as tricky as dealing with the KGB.’

73
the interests of all the parties”.208In IBM UK Holdings Ltd v Dalgleish Warren J held, as-
sessing an employer's exercise of his discretion, that the reasonable expectations of
the members are of central importance.209 Acting contrary to those reasonable expec-
tations, in the absence of a “compelling business justification”, is a strong indication
that an employer has breached the Imperial duty. 210

Where a bank was obliged to act in a commercially reasonable manner the Court
found the bank might still elevate its own interests over those of the other party.211

2.7.6 CONCLUSION

Decision-making powers are sometimes circumscribed by analysing the purpose of the

Clause, sometimes by reference to fairness and impartiality, occasionally by requiring
the decision-maker to take the interests of the other into account. The mechanism
varies, sometimes implied-in-fact, sometimes construed, sometimes (perhaps post-
Braganza, the norm) by implication-in-law. In subchapter 2.8 I will examine the legal
basis in more detail. I have more than considerable sympathy with Lord Reed’s confes-
sion: -

… I am not sure that I understand …. the statement that there should be “an
absence of arbitrariness, of capriciousness or of reasoning so outrageous in its

208 Abu Dhabi National Tanker Co v Product Star Shipping Ltd, The Product Star (No 2)
[1993] 1 Lloyd's Rep 397, (1992) Times, 29 December.

209 IBM UK Holdings Ltd v Dalgleish [2014] EWHC 980 . See also White v Reflecting
Road Studs Ltd [1991] IRLR 331, [1991] ICR 733.

210 Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd [1991] 1 WLR 589 –
Browne-Wilkinson VC at 597 approving this formulation - “an employer would not,
without reasonable and proper cause, exercise a power vested in it under a pension
scheme in a manner calculated or likely to destroy or seriously damage the relation-
ship of trust and confidence …” .

211 Barclays Bank Plc v Unicredit Bank AG [2014] EWCA civ 302.

74
defiance of logic as to be perverse”, but that the court is not referring to “a de-
cision lying beyond the furthest reaches of objective reasonableness”; or how
that test is related to the causal connection between the purpose and the con-
duct.212

If these esoteric concepts cause Lord Reed some pause for thought it seems highly likely
that an experienced commercial player will find them incomprehensible. Dr Morgan
says that “it is quite impossible to define a “capricious” or “thoroughly unreasonable”
decision in the abstract” and that seems to be fair comment.213It is possible to rebalance
the interpretation of such provisions, looking less to a default expressed in hard to fol-
low, negative, terms, and more to purpose, and context-based, considerations. Com-
mercial people might find a positive duty to act fairly, even impartially (or, perhaps, tak-
ing the interests of the other party into account), respecting the purpose of the decision-
making provision and the reasonable expectations of each party, easy to understand. In
Chapter 3, the answers to Vignette 2 indicate that wide considerations, the interests of
all parties, should be taken into account in making the decision I faced them with. Ap-
plying this to, for example, Nash v Paragon Finance plc it is clear that Paragon was logi-
cally correct to argue that Mrs Nash was free to go and hunt down another lender. She
wasn’t trapped with Paragon and could redeem the mortgage and re-mortgage else-
where. In that sense, the reining in of Paragon’s discretion was not necessary but must
derive from appreciation of the purpose of the clause. Lord Dyson asked himself what
would have happened had the parties considered whether interest rates could be al-
tered “dishonestly, for an improper purpose, capriciously or arbitrarily”, reaching the
obvious conclusion; “of course not”.214

Lord Hodge has observed: -

212 Hayes v Willoughby [2013] UKSC 17 (n176) at [28].

213 Morgan, ‘Against Judicial Review of Discretionary Contractual Powers’ (n133) at

236.

214 Nash v Paragon (n163) at [36].

75
The combination of literal and purposive elements achieves results which, I sug-
gest, are in accordance with the reasonable expectations of honest business
people.215

A better starting point would be a consideration of generic decision-making processes.

If a decision-maker wishes to raise interest rates, to refuse to approve an insurance
settlement, to issue a variation or to deduct monies for performance failure, it is obvi-
ous that the first activity of the decision-maker is to consider the power available. The
Courts should advise decision-makers to consider that power. Decision-makers should
be advised to ensure that in their decision-making they give serious consideration to
the underlying purpose of the power which one might think of in terms of the expecta-
tions of the parties.216 Ineluctably, this will have the effect that only relevant matters
and genuine considerations are taken into account; giving effect, in comprehensible
terms, to limb one of Wednesbury. Lady Hale emphasises in Braganza that con-
sistency with “contractual purpose” is part of the term implied.217For example in Esso
v Addison in which Esso held the right to adjust the amounts payable/receivable (mar-
gins, fees and allowances) by licensees of its retail outlets, Tuckey LJ said: -

The question is whether the adjustments …. were based on a genuine examina-

tion by Esso of the commercial factors affecting its retailing business in general
and a rational response to the conclusions it reached.218

215 In ‘Can Judges use Business Common Sense in Interpreting Contracts?’ in

DiMatteo and Hogg (n158) at 279.

216 Collins, Contract Law - A “limitation….… inferred to protect the reasonable expec-
tation of the subject of the power” at 340.

217 Braganza (n149) at [30].

218 Esso v Addison [2004] EWCA Civ 1470 at [36] quoting the trial Judge, Moore-Bick
J.]. See also See Bridge LJ in Shell UK Ltd v Lostock Garage Ltd [1977] 1 All ER 481,
[1976] 1 WLR 1187 – at 495 (All ER) ‘I decline to accept that the difficulty of defining
with precision what term is to be implied in this case is an insuperable obstacle to the
implication of any term limiting Shell's freedom to discriminate. I am content…to take

76
The similarity to the first limb of Wednesbury is obvious.

For verification, decision-makers should analyse the decision they propose to make, ask-
ing themselves whether it is rational, or, in some contexts, fair. It will be hard to take a
capricious decision taking only relevant matters into account. Then they should imple-
ment the decision. In complex, interactive contracts, they must then manage the after-
math by engaging with the other party in working out the ramifications of the decision,
and resolving disputes caused by it.

Power is normally conferred on the party best placed to make decisions. Regarding in-
terest rates a bank is clearly the better party to hold the power, a lessor better placed
to determine whether work undertaken to her property is satisfactory, a client to ap-
point an independent professional to manage a complex contract. This intrinsically indi-
cates that power is not conferred on an absolute basis but to ensure that a mechanism
exists to manage a changing world; for example, necessary changes to prices, or time,
or valuation or payment.

The questions which arise from the cases discussed are

• Why are decisions taken under construction/engineering contracts treated dif-

ferently? The requirement of fairness and impartiality may be implied-in-law as
an incident of a construction/engineering contract; Jonathan Morgan for sug-
gested this explanation. Another, preferable, possibility is that it is a construc-
tion based on the commercial expectations of parties to such contracts.
• Is this really a duty to cooperate? How does it enable performance? Cooperation
comes in in that certain decisions must be made to allow others to perform (ex-
amples above include extension of time and payment decisions).

Although Lady Hale provides a plausible explanation for the imposition of controls I sug-
gest that one could write an MvD clause, anchoring it in construction, as I discuss in

as the test of the degree of discrimination prohibited by the implied term whether it is
such as to render Lostock's commercial operation of their petrol sales business imprac-
ticable.’

77
subchapter 2.8 below. This obviates policy making and explains decision-making powers
thus: -

Where in a written contract one party is charged with making decisions which af-
fect the rights of both parties, the construction of the contract is that such deci-
sions will be made taking into account relevant matters and genuine commercial
factors and in accordance with the contractual purpose for which the power to
make decisions has been conferred, [acting honestly, fairly and impartially]
though there be no express words to that effect.

THE APPARATUS OF CONTRACT INTERPRETATION

In the cases analysed in this Chapter, judicial descriptions of the origin of the duty to
cooperate seem somewhat heterogenous. 219 They include “implied engagement”, 220
“implied contract”,221 a “positive rule”,222 the “construction of the contract”,223 “impli-
cation of a duty to cooperate”,224 “implied obligation”,225 “obligation to cooperate”,226
“do whatever is reasonable”,227 “natural implication”,228 “the duty of co-operation”,229

219 See Collins, Contract Law (n93) at 244 - bases for implication can operate simulta-
neously and cumulatively.

220 Stirling v Maitland (n8) at 1047.

221 Quilpué (Barque) Ltd v Brown (n15).

222 Southern Foundries (1926) Ltd v Shirlaw (n13) Lord Atkin at 717, cited with ap-
proval by Lewison (n7) at 6-11.

223 Mackay v Dick (n10).

224 Merton London Borough Council v Stanley Hugh Leach Limited (n37).

225 Swallowfalls (n27). Ritchie (n81).

226 Brookfield Construction Ltd v Foster & Partners Ltd [2009] EWHC 307 (TCC).

227 Harris v Best (n4).

228 Ritchie (n81).

229 Anglo Group (n65).

78
“implied contractual obligation”, 230 “duty …to disclose..”, 231 “implied understand-
ing”, 232 “ordinary and well-known principles”, 233 “law implies an agreement” , 234 “it
must mean”,235 “by implication of law, an obligation to co-operate”,236 “implicit in the
parties understanding”,237 “necessary implication upon a proper construction”,238 “in-
evitable inference”,239 ”a general rule applicable to every contract “,240 rule of construc-
tion,241 “implicit in the contract”,242“a general principle of construction”,243 “implicit in
the contract”.244In one case Mason J uses “ implied obligation” citing Mackay v Dick, a
”rule of construction”, then refers that it is “easy to imply a duty to cooperate”.245

230 Mona Oil (n3).

231 The Lutetian (n89).

232 Lister v Romford Ice & Cold Storage Co [1957] 1 All ER 125.

233 Hick v Raymond & Reid [1893] AC 22 .

234 Postlethwaite v. Freeland 5 App Cas 599.

235 Hargreaves Transport v Lynch [1969] 1 All ER 455 .

236 Martin Grant & Co Ltd v Sir Lindsay Parkinson & Co Ltd 3 ConLR 12.

237 Bristol Groundschool Ltd v Intelligent Data Capture [2014] EWHC 2145 (Ch).

238 Hart v McDonald (1910) CLR 417.

239 Nissho Iwai Petroleum Co Inc v Cargill International SA [1993] 1 Lloyd's Rep 80.

240 Butt v MacDonald (n1).

241 Commonwealth Bank of Australia v Barker [2014] HCA 32.

242 Wmc Resources Limited -V- Leighton Contractors Pty Ltd [1999] WASCA 10
Hargreaves Transport v Lynch (n235).

243 Park v Brothers (2005) 222 ALR 421.

244 Sutcliffe v Thackrah (n13).

245 Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty [1979]
HCA 51.

79
Perhaps this should not surprise us. Lewison says that the phrase “implied term” is used
“in a wide variety of senses”;246 contrasting with Elisabeth Peden who refers to “judicial
sloppiness”. 247 The OED defines implicit, implied and imply as “implied though not
plainly expressed, naturally or necessarily involved in… capable of being inferred from
something else; necessarily intended though not expressed; or to involve or comprise
as a necessary logical consequence”. Judges use imply and variants in disparate ways
depending on context; adding words (implied-in-fact), ascribing meaning inferentially
(where there is an inevitable inference), incorporating custom, usage, or practice, and
attributing incidents to particular types of contract (implied-in-law).248

2.8.1 THE PROCESS OF JUDICIAL INTERPRETATION OF CONTRACTS

To assist the “lazy reader” Sir Kim Lewison249 suggests turning to Mance LJ’s summary
of the judicial task in interpreting contracts: -

… to construe the documents in a manner which effects the mutual intention of

these commercial parties, against the background of the transaction as a whole,
looking for the meaning which the language used …. would convey to a reason-
able person, having all the background knowledge which would reasonably have
been available to the parties to the relevant documents, but excluding previous
negotiations and evidence of subjective intent.250

In an illuminating article on how Courts approach this task, Lord Grabiner suggests that
the natural starting point is the reading of the texts251 after which “in many cases”

246 Lewison (n7) at 6-01.

247 Peden (n7) at 125.

248 Richard Austen-Baker, Implied Terms in English Contract Law (Edward Elgar 2011)
at 1.12.

249 Lewison (n7) at 3.

250 Rank Enterprises Ltd v Gerard [2000] 1 All ER (Comm) 449.

251 Lord Grabiner, ‘The Iterative Process of Contractual Interpretation' (2012) 128
LQR 41 at 45 citing, Neuberger LJ in Re Sigma Finance Corp [2008] EWCA Civ 1303, and

80
Courts should then examine the factual background252 noting that there is limited
room for this when the words are clear.253 Proceeding with caution Courts may then
consider whether a term should be added to the contract to make it work or for policy
reasons. This process is not serial, but an iterative process involving checking back and
forward between rival meanings and, Lord Neuberger indicates, Judges may use differ-
ent starting points.254 Lewison describes a 'continuous spectrum', at one end of which:
-
the court is doing no more than logical corollary of a term expressly agreed ...
Towards the middle the Court is making explicit that which is implicit ... at the
other end the court is filling gaps ...255

In simple terms, the first two processes are undertaken to discover what the parties
have agreed; the third is to import obligations which they would have agreed or for
policy reasons.

I deal with the process as a four-fold, sequential, process. Judges first read the words
and may reach conclusions on that basis. They may go on to consider background and
reach conclusions based on the words and background. I use the term “construction” to
describe these activities, reflecting Lord Neuberger’s opinion that “construing the words

Multi-Link Leisure Developments Ltd v North Lanarkshire Council [2010] UKSC 47;
[2011] 1 All ER 175 SC where Lord Hope said Lord Hope at [11]: “the court's task is to
ascertain the intention of the parties by examining the words they used and giving
them their ordinary meaning in their contractual context. It must start with what it is
given by the parties ...”. “iterative” is described as “modish” by Gerard McMeel ‘
Foucault’s Pendulum: Text, Context and Good Faith in Contract Law' (2017) CLP at 6.

252 Grabiner (n251) at 46 where he also uses the term “factual matrix”. Lewison (n7)
says “background” is more “fashionable” at 3-17.

253 Grabiner (n251) at 47 quoting Neuberger LJ in Skanska Rashleigh Weatherfoil Ltd v

Somerfield Stores Ltd [2006] EWCA Civ 1732 at [21]-[22].

254 Lord Neuberger, ‘‘Judge not, that ye be not judged’: judging judicial decision-mak-
ing’ at [10].

255 Lewison (n7) at 5-01.

81
used and implying additional words are different processes governed by different
rules”.256 Once they reach the end of this process they may consider whether the con-
tract has gaps to be filled. If so they then consider first whether the gap must be filled
to provide business efficacy or should be filled, for policy based reasons. I refer to this
activity as gap-filling because in construction activity a Court may have to add words to
the express words where custom or trade practice, for example, explain or supplement
the express terms. I adopt the theoretical perspective that words have public meanings
and only public meanings; as Langille and Ripstein put it; “any intended departure from
the ordinary requires some signal…”. 257

Lord Carnwath says that sequence has “little practical significance: -

Lord Neuberger … prefers a sequential approach: first interpretation, then impli-

cation. … both processes are parts of the exercise of “determining the scope and
meaning of the contract”. 258

It is, however, difficult to work out how one might determine that there is a gap in a
contract without first getting around to reading it.

2.8.2 READING THE WORDS

As Lewison says, the primary material is the document, Burrows emphasising that there
is a “rebuttable presumption” that the written terms are the only terms.259 The process
must start by a consideration of the language used.260 In 1555 Staunford J ruled that
“Every part of the deed ought to be compared with the other and one entire sense made

256 Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey)
Limited [2015] UKSC 72 Neuberger SCJ at [26]. See also Arnold v Britton [2015] UKSC
36 at [77] using iterative.

257 Brian Langille and Arthur Ripstein, ‘Strictly Speaking - it Went Without Saying'
(1996) 2 Legal Theory 63 at 79. See Stephen A Smith, Contract Theory (OUP 1993) at
273 “a purely private language is an impossibility”.

258 Marks and Spencer v Paribas (n256) at [68].

259 A. S. Burrows, A Restatement of the English Law of Contract (OUP 2016) at 80.

260 Lewison (n7) at 3-01.

82
thereof.” 261 It is not, however, trite to note that “expressed intention is a relatively
narrow concept”.262

A Court may conclude, from the words, that certain activities are joint or require con-
currence.263 It may conclude that an “inevitable inference” arises that the contract re-
quired, for example, that a telephone call be answered in a reasonable time. 264 Hob-
house J uses this language to support his ruling that an eight-second failure to answer
a phone call, resulting in the delayed declaration of a cargo in a falling market was a
breach of the implied term of prevention. Elisabeth Peden criticises this on the basis
that none of the implied-in-fact tests were used265; elsewhere acknowledging that im-
ply may mean “infer or construe”. 266
In Startup v MacDonald, where bulk goods had been tendered during the hours of
darkness, Rolfe B asks; “as the attendance of the other is necessary … to complete the
act……what is the true meaning of the contract?”; concluding that a “reasonable op-
portunity”267 of inspection must be given to the receiving party. Denman CJ said in the
case that “it seems to me obvious that the lateness of the hour may make a tender un-
reasonable”.268 In Hargreaves Transport v Lynch the Court of Appeal described an obli-
gation to “take all reasonable steps by way of attempting to get not only the outline
planning permission” as “implicit” and Lord Denning said that it was required “… to

261 Throgmorton v Tracey (1555) 2 Dyer 124a, 1 Plowd 145 .

262 J. W. Carter and Wayne Courtney, ‘Unexpressed Intention and Contract

Construction' (2016) OJLS 326 in Introduction.

263Mackay v Dick (n10), Harris v Best (n4).

264 Nissho Iwai Petroleum Co Inc v Cargill International SA(n239).

265 Peden (n7) at 126.

266 Ibid at 122.

267 Startup v Macdonald at 1042.

268 Ibid at 1043.

83
make [the condition] work sensibly”; language which indicates construction.269 Peden
describes this as “implication by construction”. 270

In an unusual case where a consultant designer had agreed to provide access to per-
sonnel to allow a full and systematic review of its services, Coulson J held, “on a proper
construction of the contract” that “WST have an overriding obligation to co-oper-
ate”.271
Lord Clarke said in Rainy Sky SA v Kookmin Bank: -

If there are two possible constructions, the court is entitled to prefer the con-
struction which is consistent with business common sense and reject the
other.272
Coulson J has said that the job of the Judge is to give effect to the intention of the parties
“however inelegantly expressed”273 and Lord Steyn once observed that the: -

standard of the reasonable commercial person is hostile to technical

interpretations and undue emphasis on niceties of language.274

A Court may also conclude that that the natural meaning of the words is subject to fo-
rensic examination, Lord Reid saying of termination of an “elaborate” distribution
agreement: -

269 Hargreaves Transport v Lynch (n235) Russell LJ at 459.

270 Peden (n7) at 32-33.

271 Brookfield Construction Ltd v Foster & Partners Ltd (n226) at [69].See also Hudson-
(n12) personnel could not feign ignorance to avoid answering questions in the review.

272 Rainy Sky SA and others v Kookmin Bank [2011] UKSC 50; [2011] 1 WLR 2900 at
[21] and [23]. Lord Hodge in Wood v Capita Insurance Services Limited [2017] UKSC 24
says of rival meanings “the court can reach a view as to which construction is more
consistent with business common sense” at [10].

273 Fitzroy Robinson Ltd v Mentmore Towers Ltd [2009] EWHC 1552 (TCC) at [65].

274 Mannai (n101) at 372 in All ER.

84
if Schuler's contention is right, failure to make even one visit entitle them to
terminate the contract …. This is so unreasonable that it must make me search
for some other possible meaning of the contract. If none can be found then
Wickman must suffer the consequences. But only if that is the only possible in-
terpretation.275

Lord Reid does not refer to business common sense but that is the best explanation for
his somewhat radical view. Ewan McKendrick refers to this case in a discussion on how
one draws the line between commercial construction (permissible) and rewriting (im-
permissible).276

2.8.3 READING THE WORDS AND EXAMINING THE MATRIX

Lord Hoffmann describes the matrix as material “reasonably available to the parties …in-
cluding”: -

absolutely anything which would have affected the way in which the language
of the document would have been understood by a reasonable man.277
Lord Hoffmann reached his conclusion in this case by examining the background and
analysing and comparing consequences of each of the argued-for interpretations.278
Lord Goff referred to Lord Hoffman’s “construction” of the scheme words. Lord Steyn

275 Schuler (L) AG v Wickman Machine Tool Sales Ltd [1974] AC 235, [1973] 2 All ER 39
(HL) at 251.

276 ‘The Interpretation of Contracts; Lord Hoffmann’s Restatement’ in Worthington

(n102) at 160-161.

277 Investors at 912-913. See Langille and Ripstein (n257) at 81 “what another party
means really is fixed by what others reasonably take him or her to mean”.

278 Investors (n277) at 912.

85
not empanelled, Lord Lloyd felt able to refer to “slovenly” drafting in his “construction”;
also bringing in the background.279

Hale LJJ described the context in Rice v Great Yarmouth Borough Council as “long run-
ning” and “for public services”.280 Using “common sense” “in the context of a contract
intended to last for four years, involving substantial investment or at least substantial
undertaking of financial obligations by one party and involving a myriad of obligations
of differing importance and varying frequency”,281 where GYBC had the power to termi-
nate the contract for “any” breach she interpreted that as any breach which amounted
to a repudiation. Michael Bridge describes this result as “a cloak for the suppression of
substantive unfairness”;282 a fair comment since there was little room for adducing a
second meaning to a clear term. One can compare this to the Schuler case above283 and
see that in two very similar cases senior Judges reach similar conclusions with different
logic. Perhaps one might consider Lord Reid’s reference to a failure to undertake one
visit out of “thousands” contracted for to be background. Both appear to be directed at
a commercial common-sense meaning.

Lord Warrington included methods of producing whale-oil as facts relevant to the

question of construction in one case.284Matrix material such as trade usage, custom or

279 Ibid at [899].

280 Rice (t/a Garden Guardian) v Great Yarmouth Borough Council [2000] All ER (D)
902 (AC) at [36].

281 Ibid at [18]

282 ‘Freedom to Exercise Contractual Rights of Termination’ at 99 in Louise Gullifer

and Stefan Vogenauer (eds), English and European Perspectives on Contract and
Commercial Law, : Essays in Honour of Hugh Beale (Hart 2014).

283 Schuler (L) AG v Wickman Machine Tool Sales Ltd (n275).

284 Hvalfangerselskapet Polaris A/S v Unilever Ltd (1933) 26 Lloyds LRep 29.

86
trade practice, usually proved by evidence285, and the opinions of “market men”286,
may explain the bargain, and are sometimes referred to as implied terms.287 As Lord
Wilberforce explained that to understand the background to a commercial contract: -

the court should know the commercial purpose of the contract and this in turn
presupposes knowledge of the genesis of the transaction, the background, the
context, the market in which the parties are operating …288

Replying to criticism of the “background” principle Gerard McMeel notes that Judges
are “not averse to striking out inadmissible or irrelevant material”289 and Arden LJ has
indicated that case management powers are sufficient to control extraneous material.
290

285 See Gibson v Small (1853) 4 HLC 353 Parke B - “… the custom of trade, which is a
matter of evidence, may be used to annex incidents to all written contracts …. upon
the presumption that the parties have contracted with reference to such usage” at
397.

286 See Steyn J in Stratton v Dorintal Insurance [1987] 1 Lloyds Rep 482.

287 Chitty (n6) 14-021 citing Gibson v Small (n285).

288 Reardon Smith Line Ltd v Hansen-Tangen; The Diana Prosperity [1976] 2 Lloyd's
LRep 621 at 624, referred to in Neil Andrews, ‘Interpretation Of Contracts And
“Commercial Common Sense”: Do Not Overplay This Useful Criterion' (2017) 76 CLJ 36
as one of six manifestations of commercial common-sense used by the judiciary; oth-
ers including “trade practices and market assumptions”.

289 In ‘Overview: the Principles and Policies of Contractual Construction’ in A. S.

Burrows and Edwin Peel (eds), Contract Terms (OUP 2007) at 33.

290 Static Control Components v Egan [2004] EWCA 392. See also NLA Group Ltd v
Bowers [1999] 1 Lloyds Rep 109; in a case involving a short point of construction
Counsel tried to call five witnesses, subpoena two more and provide expert evidence,
which Timothy Walker J described as “wholly unreasonable” at 111 awarding some
costs on an indemnity basis. Cited by McKendrick in ‘The Interpretation of Contracts;
Lord Hoffmann’s Restatement’ at 161 Worthington (n102).

87
Estate agents must keep clients informed of “significant” market events. This was de-
scribed as being based on an “implied term”, although Judge Heppel QC, rooted his
reasoning in the nature of the agent/vendor relationship.291

The background in Anglo Group plc v Winther Brown & Co Limited was a complex IT
design and install contract. Toulmin J “implied” an active cooperation term as a standard
for such contracts, without using implied-in-fact tests. Active cooperation included de-
tailed communication obligations.292

There is some evidence that the Courts take the commercial expectations of “sophisti-
cated” parties to be that Courts should not interfere readily with the language that they
have used; and that this results from an examination of the background; Jonathan
Sumption observing in a recent lecture that the “more precise the words used and the
more elaborate the drafting, the less likely it is that the surrounding circumstances will
add anything useful”. 293 In Marks and Spencer plc v Paribas Securities Services Trust
Company (Jersey) Limited Lord Neuberger construed the contract against the commer-
cial background: -

The fact that the Lease was negotiated against the background of a clear, general
(and correct) understanding that rent payable in advance was not apportionable
in time, raises a real problem for the argument that a term can be implied …294

291 John D. Wood & Co. (Residential & Agricultural) Limited v Knatchbull - [2002]
EWHC 2822 (QB).

292 Anglo Group (n65) at 128.

293 Jonathan Sumption, ‘A Question of Taste: The Supreme Court and the
Interpretation of Contracts’ (Harris Society Annual Lecture 2017) at 9. Leggatt J de-
ploys the reverse argument in Yam Seng (n133) at [161] where he uses the “skeletal”
nature of the agreement to justify implying a term.

294 Marks and Spencer v Paribas (n256) at [50]. See also J Toomey Motors Limited v
Chevrolet UK Limited [2017] EWHC 276 (Comm).

88
Similarly, in Rosserlane Consultants Limited v Credit Suisse International, despite finding
the bank’s conduct “reprehensible” Peter Smith J described a “lengthy and carefully-
drafted contract” drafted by experienced international lawyers finding that the contract
was: -

… a commercial contract between sophisticated investors and the Bank. It is not a

matter for consumer protection.295

Paul Finn says that “Judges commonly seem to regard the parties to commercial con-
tracts as well-advised leviathans”; going on to say that for the most part neither is
true.296 Baird, however, says that in long-term contracts: -

The stakes are large, and the parties are all professionals. They have an incentive
to spell things out and to get it right. We can depend on them to expend consid-
erable energy overcoming their cognitive biases.297

In Braganza Lord Hodge said that BP should be scrutinized like a public authority: -

A large company such as BP is in a position to support its officials with legal and
other advisory services and should be able to face such scrutiny.298

Refusing to imply a term of good faith Mrs Justice Andrews described a party as “an
astute and sophisticated businessman … capable of making an educated and informed
decision on hedging””.299

295 Rosserlane Consultants Ltd v Credit Suisse International [2015] EWHC 384 (Ch).

296 ‘Fiduciary and Good Faith Obligations under Long Term Contracts’ in
Dharmananda (n149) at 137.

297 Douglas G. Baird, ‘Self-Interest and Cooperation in Long-Term Contracts' (1990)

19 JLS 583 at 594.

298 Braganza (n149).

299 Greenclose Ltd v National Westminster Bank [2014] EWHC 1156 (Ch) at [150].

89
In many decision-making cases Judges say that control of discretion is linked to the pur-
pose of the clause. This infers that the context is the purpose300 which would allow us
to drive principles through construction rather than policy or implying-in-fact. Paul Finn
quotes Sir Anthony Mason suggesting a justification for judicial interference in a 1993
lecture: -

…the court will interpret the power as not extending to …action [which] exceeds
what is necessary for the protection of the party’s legitimate interests.301

In Equitable Life, Steyn LJ ruled that discretion could not be used to defeat the main
purpose of the contract302, Dyson J held in Nash that interest rates could not be revised
for an “improper purpose”303 and Aikens LJ decided that a particular clause could “not
be used so as to subvert the basis of the contract…”. 304 In Hayes v Willoughby Lord
Sumption said: -

the law's object is also to limit the decision-maker to some relevant contractual
purpose.305

In one example, Rix LJ, reviewing a complex financial transaction, concluding that the
structure of the transaction was designed to keep the lender was free from risk, allowed

300 Worthington (n102) Hugh Collins in ‘Objectivity and Committed Contextualism in

Interpretation’ at 205 – “purpose is a technique for constructing the understanding of
a reasonable promisee”.

301 ‘Fiduciary and Good Faith Obligations under Long Term Contracts’ in
Dharmananda (n149) at 150.

302 Equitable Life Assurance Society v Hyman [2000] 3 All ER 961 at 971, [2002] 1 AC
408.

303 Nash v Paragon (n163) at [36], also saying “a contract where one party truly found
himself subject to the whim of the other would be a commercial and practical absurd-
ity”.

304 McKay v Centurion Credit Resources (n170) at [18].

305 Hayes v Willoughby (n212) at [14].

90
the lender an “entirely proper regard for any danger to itself”, while applying normal
limitations on the decision; which was in the lender’s “sole and absolute discretion”.306

A contextual approach may lead a Court to conclude that the parties meant what they
said. New words suggested by an officious paralegal would have been greeted with
“don’t be silly; we know what we are doing”?307

Robert Bradgate argues that where contractors can be said to know the legal rules or in
settings in which where legal advice is routinely taken (eg; property transactions) the
legal rule should be taken to be the expectation. Otherwise doctrine should align with
commercial expectation or practice.308

2.8.4 READING THE WORDS, EXAMINING THE MATRIX AND GAP-FILLING

This strictly constrained309 activity, usually called implication-in-fact, described by Lord

Clarke as “intrusive” and a “more ambitious undertaking” involves the “interpolation”
of terms to fill gaps and make the contract work.310 As Lord Neuberger, in Marks and
Spencer plc v BNP Paribas Securities Service Trust Company (Jersey) Ltd has ruled, in a
majority, but not uncontroversial Judgment311, a term will only be implied in a “very

306 WestLB AG v Nomura Bank International Plc [2012] EWCA Civ 495 at [60].

307 Morgan, Minimalism (n96) at 233 - the relevant context for these contracts is for-
malism.

308 ‘Contracts, Contract Law and Reasonable Expectations’ at 689 in Worthington

(n102).

309 Bingham MR in Philips Electronique Grand Public SA v British Sky Broadcasting Ltd
[1995] EMLR 472 uses “strict constraints”.

310 Mediterranean Salvage & Towage Ltd v Seamar Trading & Commerce Inc [2009]
EWCA Civ 531 at 18.

311 See Joanna McCunn, ‘Belize It or Not: Implied Contract Terms in Marks and
Spencer v BNP Paribas' (2016) 79 MLR; Edwin Peel, ‘Terms Implied in Fact' (2016) 132
LQR 531.

91
clear case”312, once a gap has been identified, if it is fair and the parties would have
agreed it313, one of the tests of business necessity or obviousness are satisfied314, and
the business efficacy test satisfied; meaning that the contract would lack commercial or
practical coherence in its absence.315 Lord Carnwath remarks that it is a “useful disci-
pline” that Judges remember: -

that the object remains to discover what the parties have agreed or (in Lady
Hale's words) “must have intended” to agree.316

David Ibbetson, analysing the history of implied-in-fact terms, describes the claim that
they effect party intention as a “façade” which “did not necessarily affect the answer”.
317

An “implied obligation” in Ritchie allowed the farmer to “make a properly informed

choice”.318 In the Judgments, the background that the harrow was a complex piece of
power operated agricultural machinery was noted, as was the fact that it would not be
obvious to a farmer that the repair had been successful, and that the information re-
quested was of the sort that “every buyer would seek for his own protection”. Counsel
for Lloyd accepted that the refusal to supply the information was not sensible commer-
cial practice; inferring that that the reverse was. One could envisage a Judgment which

312 Marks and Spencer v Paribas (n256) at [50].

313 Necessary but not sufficient conditions - Lord Neuberger in ibid at [21].

314 Ibid at [21].

315 Ibid at [21].

316 Ibid at [69]. Morgan J said, at first instance, that there is danger in in detaching the
phrase “necessary to give business efficacy” from the basic process of construction of
the instrument; at [23].

317 D. J. Ibbetson, A Historical Introduction to the Law of Obligations (OUP 1999) at

224-225. See also Austen-Baker (n248) describing implication as a judicial technique
allowing Courts to discover interpretations “more aligned to its view ….of what is com-
mon sense or fair without ever having to admit to such a heinous thing”; Preface vi.

318 Ritchie (n81) Lord Hope at [19].

92
imported that commercial practice into the contract; as a matter of construction. It
might be the other side of a right to cure.

Implying terms is controversial, as well as “intrusive”. Jonathan Morgan, while accepting

that the rules ensure that adding words is rare in commercial contracting, argues that
the Courts should institute an “austere regime of non-intervention” resisting the temp-
tation to make contracts fair, efficient, or complete319. Taking an extreme case, such as
Crema v Cenkos Securities Limited320, where the parties agreed a fee but not a payment
mechanism one wonders what might replace the power of the Court to fill that gap. It
might be that the background would show that the parties had certain expectations of
timing but if there was no evidence of this or of market practice, what should a Court
do?

2.8.5 READING THE WORDS, EXAMINING THE MATRIX, MAKING POLICY AND GAP-
FILLING

Examining the matrix may provide the Court with information which allows it to deter-
mine whether the contract is one in a “class of contractual relationship”.321 It may then
incorporate classified, “standardised”, terms based on “reasonableness, fairness and
the balancing of competing policy considerations”.322

319 Morgan, Minimalism (n96) at 237-242.

320 Crema v Cenkos Securities Plc [2010] EWCA Civ 1444, [2010] EWHC 461 (Comm).

321 Société Générale v Geys [2012] UKSC 63 Lady Hale at [55]-[56]. See Andrew Phang,
‘The Challenge of Principled Gap-filling' (2014) JBL 261 at 296 surveying how Judges
describe implication-in-law.

322 Crossley v Faithful and Gould [2004] EWCA Civ 293, per Dyson LJ at [36], approved
in Société Générale v Geys (n321) by Lady Hale at [56]. See also Chitty (n6) at 14-004 -
Courts can draw upon a broad range of factors, such as the reasonableness of the
term, its fairness and a range of competing policy considerations, when deciding
whether the proposed term is a necessary incident of the type of contractual relation-
ship in question.

93
Karl Lllewellyn described such terms as enforcing “minimum decencies”. 323Dyson LJ de-
scribed the “necessity” involved in implying them as “somewhat protean”, and that
“some well-established terms could scarcely be said to be essential”. Lord Diplock’s ex-
planation in Lister v Romford Ice and Cold Storage Co that parties to such contracts in
such classes should “study the law” and thereby know the term, is unsatisfactory since
these terms must have an originating case. 324

In Braganza v BP Shipping Ltd (Braganza), for example, Lady Hale explained that the
Courts sought to provide against abuse of decision making powers in contract because
the party charged with making a decision is faced with a “clear conflict of interest”. 325
Leggatt J said of such powers in Product Star that “The essential question is always
whether the relevant power has been abused”.326 Determining whether power has
been abused requires an analysis into the purpose behind the power; surely a con-
struction question and not a policy matter.

The Courts have taken the relevant trade into account for a long time. In Ford v
Cotesworth in 1868 Blackburn J referred to obligations of reasonable diligence being
“implied by law” into charterparties.327 An agent executor must act with “reasonable
despatch”328; Bowstead asserting that this is a more general proposition applicable to

323 Burrows and Peel (n289); Gerard McMeel at 33, a phrase he returns to in McMeel
(n251).

324 Lister v Romford Ice & Cold Storage Co (n239) see Lord Simonds at 134.

325 Braganza (n149) at [18].

326 Product Star (n208) at 404.

327 Ford v Cotesworth (n2).

328 Varden v Parker (1799) 170 ER 505 .

94
many agency relationships.329In each of these cases one could take the trade to be back-
ground.

Andrew Phang describes implied-in-law terms as “far more problematic” than terms im-
plied-in-fact, due to the uncertainty that the existence of the category generates. 330He
argues that it might be better simply to abolish this category altogether and force par-
ties to argue for implied-in-fact terms. I argue for a different approach; that in commer-
cial contracts these terms should emerge through construction; by examination of back-
ground, purpose, and expectation. Once shown by trade or market practice, assump-
tion, or custom/usage a term could become a default, capable of being avoided by clear
language. For example, the evidence in Eurodynamics331 having shown that an oppor-
tunity to repair defects was market practice in IT contracts, there seems no reason why
later IT contracts should not be similarly so construed without the need for further evi-
dence.

2.8.6 CONSTRUCTION CREATES COHERENCE

Professor Carter considers that the duty to cooperate is not an implied term but an in-
cident of commercial construction332; elsewhere describing the language of implication
as “redundant”.333 There is some disagreement amongst eminent commentators. Lew-
ison says that Lord Blackburn’s dictum is a “rule of law”.334 Citing it; Gerard McMeel says
that: -

329 Watts, Reynolds and Bowstead (n105) at 190. See also World Transport Agency,
Ltd. V. Royte (England), Ltd. [1957] Vol 1 Lloyd's Rep 381 (QBD) Jones J at 386 –
“agents have got to behave reasonably and properly and energetically”.

330 Phang (n321) at 295.

331 Eurodynamics (n66).

332 Carter (n7) at 2-027.

333 Wayne Courtney and JW Carter, ‘Implied Terms; What Is the Role of Construc-
tion?' (2014) 31 JCL 151 at 160.

334 Lewison (n7) at 6-08.

95
the duty to cooperate … which might be an aspect of good faith in civil law sys-
tems finds its expression through the familiar vehicle of the implied term. 335

Richard Austen-Baker thinks that this goes too far saying: -

this is not a term implied by law at all. In each and every case it is necessary to
demonstrate that the term is necessary… The rule is too general to be formu-
lated into an implied term in the English tradition.336

There are several reasons for arguing that construction is preferable to gap-filling as a
method of determining the obligations of the parties.

The first is that it can be argued to reflect the “public meaning” of their words. It sets
out the real agreement between the parties, covering meaning of express terms, and
meaning exposed through examining background.

The second is that it requires less evidence, less argument and does not require subjec-
tive assessment of what is necessary or efficacious or reasonable. No argument of what
might happen if the term is not incorporated is necessary, nor is any evidence from wit-
nesses on this point.

The third is that it limits the need for the judiciary to impose policy based meanings to
contracts; the Court should not rescue parties from a bad bargain; which may happen if
a Court can be tempted to fill arguable gaps.337

335 Gerard McMeel The Construction of Contracts Interpretation, Implication, and

Rectification (2011) at 10.29.

336 Austen-Baker (n248) at 77-78.

337 Peel (n57) at 534. And see Rose J in Libyan Investment Authority v Goldman Sachs
International [2016] EWHC 2530 (Ch) - the law will not intervene to save people from
making improvident bargains – quoting Lord Hoffmann in Union Eagle v Golden
Achievement Ltd [1997] 2 All ER 215; the notion that the Court's has unlimited, unfet-
tered, jurisdiction to grant relief from bad consequences of contracts is merely a "be-
guiling heresy”.

96
Finally, it provides coherence and principle, together with a measure of certainty to the
matter. The following table shows that it is currently well-nigh impossible for a party to
predict with certainty the principle on which a duty to cooperate should be pleaded.

97
Table 1 Duty To Cooperate - Interpretive Mechanisms
Case Category Reading the Reading the Reading the Reading the
Words Words and Ex- Words, Examin- Words, Examining
amining the ing the Matrix the Matrix, Making
Matrix and Gap-Filling Policy and Gap-Fill-
ing
Prevention Stirling v F&C Alterna- Cream Holdings
Maitland tive Invest- F&C Alternative
RBS v McCar- ments Investments
thy RBS v McCarthy
Swallowfalls Swallowfalls
Facilitation Luxor v Kyprianou Merton BC v
Cooper Panamena Leach
Croninger v Fechter v Luxor v Cooper
Crocker Montgomery
Harris v Best
Garcia v Page
& Co Limited
Right to cure de- Eurodynamics Anglo Group Anglo Group
fects Anglo Group
Saphena

Communication AV Pound Tradax Ritchie Makin v Watkinson

Dumenil Nat West v Ra- York Buildings Co v
Makin v Wat- bobank Mackenzie
kinson
Kyprianou
Decision-Mak- Nash International Nash Braganza
ing Esso v Addi- Drilling Fluids McKay v
son Lymington Centurion
Sutcliffe v Sutcliffe v Gan v Tai Ping
Thackrah Thackrah Insurance
Balfour
Beatty v
Docklands
Light Railway
Ltd
Active Coopera- Hillas v Arcos Mamidoil- Anglo Group
tion Jetoil
Anglo Group

CONCLUSION

Chitty says: -

98
… the degree of co-operation required is to be determined, not by what is
reasonable, but by the obligations imposed-whether expressly or impliedly
upon each party by the agreement itself, and the surrounding circumstances.
338

In this Chapter I show that this is correct, and that the duty can be described in hierar-
chical terms, from essential coordination to managerial necessity.

I also show that the techniques used by Judges to expose a duty are, if not incoherent,
less than wholly coherent. Construction provides the best basis, and a coherent basis,
for uncovering a duty to cooperate.

The “third way”, in which an extensive, permeating, duty to cooperate can be envisaged
for symbiotic contracts is possible using existing contract law principle. I do not think
that the Medirest approach can survive long; Braganza may have already limited its ap-
plication. I have shown that the case law (perhaps melding the dicta of Cranston J, Lord
Blackburn, Toulmin J, Sir Thomas Bingham MR, Allsop J, and Vaughan Williams J) and
some reconsideration of judicial language, including more emphasis on construction,
demonstrates that this can be achieved and that lays the foundations for a more de-
tailed consideration of the duty in later chapters. Optimism might be found in the fact
that the requirement for a third-party certifier to act fairly and impartially has survived
for more than 100 years, that the law applying to contractual decision making has been
clarified, and that a broader need for communication and problem solving in complex
contracts has been identified and has survived. Pessimism derived from the highly lit-
eral, and, hopefully apotropaic, Medirest Judgment must be tempered by the fact that
it appears to be case-specific.

338 Chitty (n6).

99
100
APPENDIX A TO CHAPTER 2 – TYPICAL CONTRACT DECISION MAKING POWERS

• Settlement approval by a reinsurer.339

• The ability of a mortgage lender to alter mortgage rates.340
• The right of a marina owner to control sub-licensing341or of a landlord to ap-
prove sub-letting.342
• Whether to provide further interim loans.343
• A master’s determination whether a port to which he was ordered to sail was
dangerous.344
• Withdrawal of credit facilities.345
• )peration of contractual machinery providing for deduction of monies in respect
of performance failures.346
• Who might accompany an academic at a disciplinary hearing (the University’s
literal stance being described as “unattractive”).347

339 Gan Insurance v Tai Ping Insurance (n150).

340 Nash v Paragon (n163).

341 Lymington (n164).

342 International Drilling Fluids Ltd v Louisville Investments (Uxbridge) Ltd (n134).

343 McKay v Centurion Credit Resources (n170).See also Greenclose Ltd v National
Westminster Bank (n285) and Barclays Bank Plc v Unicredit Bank AG (n168).

344 Product Star (n208)

345 CTN Cash and Carry Ltd v Gallaher Ltd (n172).

346 Medirest (n136). Ensign (n146).

347 Stevens v University Of Birmingham [2015] EWHC 2300 (QB).

101
• Operating termination machinery, whether “for convenience” or otherwise.348
• Installation of sales monitoring equipment in pubs.349
• The CioB contract clause 9.3 provides that where an addition, omission, or other
is required by the Client the parties shall use “all reasonable endeavours” to
agree the effect of the change failing which the Client shall make a reasonable
determination of the effect on the Annual Fee. This is a fairly typical change
control mechanism.

348 Petroleo Brasileiro SA v Ene Kos 1 Ltd (n128), TSG Building Services PLC -v- South
Anglia Housing Ltd and Ilkerler (n106). In Canada there may be limitations (based on
good faith) – see Burquitlam Care Society v Fraser Health Authority, 2015 BCSC 1343.

349 Ludgate Insurance Company Limited -v- Citibank NA (n161).

102
Chapter 3 EMPIRICAL RESEARCH- SURVEY AND RESULTS

The research question asks whether a properly defined and circumscribed duty to co-
operate can and should be incorporated into symbiotic contracts. In Chapter 2 I ana-
lysed many cases where cooperation is in issue, finding that the law can be messy and
some divergence in judicial opinion as to what makes a contract work. It may be that
there is also difference in judicial and commercial opinion as to what is necessary to
make a contract work. To understand whether this is so I elected to undertake a real-
world survey of people engaged in the management of symbiotic and other contracts.

A survey is a way of telling “the most convincing story….in realist terms”.1 This survey
elicits expert opinion, from experienced contract management professionals, on the
role played by cooperation in the management and success of contracts, especially sym-
biotic contracts. It is largely qualitative work, based on analysis of expert opinion. It pro-
vides a reliable guide to the objectively reasonable expectations of commercial players
in symbiotic contract environments. The results show that respondents overwhelmingly
consider cooperation to be important or mission critical. They define cooperation as
high-level active cooperation and constructive engagement. This finding is tested
against real-world case studies, based on adjudicated situations, in which respondents
are invited to give their reaction to cases in which cooperation was arguably a better
modus operandi.

I seek to establish whether there is sufficient congruence between their views and the
legal principles described in Chapter 2 to assist in drafting a duty to cooperate at a level

1 Robson at 242-243.

103
of abstraction similar to that in Hadley v Baxendale or Donoghue v Stevenson.2 I will
consider, for example, whether players are likely to lean more towards Cranston J who
thought that cooperation meant “the parties work together constantly at all levels of
the relationship … to resolve the problems… ”3or Lewison LJ who was so baffled by the
concept of cooperation where one party was empowered to make deductions he said
that he could not see “ in what sense the unilateral decision … is something that requires
co-operation at all”.4

I obtained four hundred and eighty-one survey responses which included twenty-seven
interviews. From a mini-workshop in Rome in May 2016, I obtained twenty-two re-
sponses. As expected I received substantial comment in answers to open questions.

Table 2 Survey Responses in Numbers

Question No of No of No of words
respondents comments (circa)
Tell me what you enjoy about managing 475 475 16000
contracts
What does success mean in the out- 472 472 21600
come of a contract? How does contract
management contribute to success?
George Reynolds vignette 418 225 13800
Blackmail vignette 454 134 8700
Ketchup vignette 360 109 6200
How do you achieve cooperation? 404 404 15500
What other contract provisions drive 104 104 3600
cooperation?
Other definitions of cooperation 23 23 860
Rome workshop 22 21 650
1946 82810
44 per com-
ment

2 Hadley v Baxendale (1854) 23 LJ Ex 179, 9 Exch 341, Donoghue v Stevenson [1932]

UKHL 100.
3Compass Group UK and Ireland Ltd (t/a Medirest) v Mid Essex Hospital Services NHS
Trust [2012] EWHC 781 at [27].

4 Mid Essex Hospital Services NHS Trust v Compass Group UK and Ireland Ltd (t/a
Medirest) [2013] EWCA Civ 200 at [146].

104
Around 5000 handwritten words were taken down in interviews

The story emerges through contextual analysis rather than number crunching. Contracts
are about words and context. They are messy, and subjective; meaning emerges from
both the words and the performance. Neither the high conceptual level of “working to-
gether towards the same end” nor any individual interaction will yield a complete story.
Opinions gathered illuminate content and context for real-world cooperation-in-action.
Contracts professionals are accustomed to expressing opinions in writing on diverse
subjects. Variation in opinion is not easy to set out in numerical form; but it can be re-
duced to major themes.

Survey results are tested against other empirical studies which ask similar questions.
This, together with analysis of the data for coherence, tends to show that I can be con-
fident that the data is robust and credible. The original features of the survey are that it
provides significantly more detail, at working level, of how contracts are made to work,
how cooperation is achieved in practice and that respondents are experienced profes-
sionals drawn from a wide variety of backgrounds. Disputes should be managed, and
problems overcome by dialogue. There is a clear rejection of tit-for-tat as a management
tactic; interesting on many levels. Cooperative interaction is the key theme permeating
responses. That is how problems are solved, relationships built, contracts successfully
performed.

METHODS

105
I selected experienced contract managers (to whom I refer as “real people” to differen-
tiate them from avatars such as students) who can be expected to understand in broad
terms the relevant background5 to symbiotic contracts, in possession of some underly-
ing commercial common sense6 and who could also be described as reasonable parties,
reasonable readers or the notional reasonable people referred to by Lord Neuberger.7 I
elicit from the “lived experience”8 of this powerful, creative elite a sense of what busi-
ness necessity and commercial coherence 9 means, in the management of symbiotic
contracts.

The survey has three core components; open questions, closed/multiple-choice ques-
tions/vignettes (including open questions on three vignettes) and demographic ques-
tion. It took around thirty minutes to complete. Interviews took around one hour each.

I have avoided the use of game “x-phi” experiments. Ultimatum Games, Prisoner’s Di-
lemma games, variant trolleyology (a British invention I call tramification) all suffer from
the disadvantage that real world application is not possible. Experiments should be
transferable and test real-world hypotheses.10Edmonds observes: -

In the real world we are not constrained by having just two options, X and Y: we
have a multitude of options, and our choices are entangled in complex duties

5 Lord Hoffmann’s phrase in A-G of Belize v Belize Telecom Ltd [2009] UKPC 10 at [16].
6See Andrews, ‘Interpretation Of Contracts And “Commercial Common Sense”: Do Not
Overplay This Useful Criterion’ reviewing the use of “common sense” by Judges.
7 In Marks and Spencer v Paribas at [21].

8 Svend Brinkmann, Understanding Qualitative Research: Qualitative Interviewing

(OUP/USA 2013) at 47 quotes Marshall and Rossman – “qualitative interviews …. lend
themselves most naturally to the study of individual lived experience”.
9Lord Neuberger in Marks and Spencer v Paribas (n7) at [21] refers to practical or
commercial coherence being a requirement of an implied term.

10 See Russell Korobkin, ‘Empirical Scholarship in Contract Law: Possibilities and

Pitfalls' (2002) U IllLRev 1033 especially at 1052 and Dennis Patterson, ‘The Limits of
Empiricism' (2000) 98 MichLRev 2738.

106
and obligations and motives. In the real world, crucially, there would be no cer-
tainty.11

I drew out threads using thematic coding, recommended by Robson as a realist method
for reporting experience, meaning and reality. This involves generating initial codes,
identifying themes, mapping themes, making comparisons, tabulating, exploring inter-
preting, and summarizing. 12

As between qualitative and quantitative methods, says Martin Davies, the “ethos of a
particular course” may be the deciding factor, qualitative (non-numeric) methods being
arguably “more human” and quantitative (numeric/statistical), more geared toward
contemporary “scientific principles and techniques”. 13 Quantitative and qualitative
methods are each valid; I am not of the quantophreniac14persuasion nor do I believe
that: -

...soft data are weak unstable impressible squashy and sensual…….. softies and
ninnies who carry it out have too much of a soft spot for counter-argument... 15

11 David Edmonds, Would You Kill the Fat Man? (Princeton UP 2013) at 100.

12 Robson (n1) 474-476.

13 Martin Davies, Doing a Successful Research Project: Using Qualitative or

Quantitative Methods (Palgrave Macmillan 2007). See Professor Ian Parker’s slides at
the end of this subchapter describing the rationales for mixed methods.

14 Robert Dingwall, ‘Quantophrenia is Back in Town’ http://wwwsocialsciencespace-

com/2014/05/quantophrenia-is-back-in-town/ - the term coined by Pitrim Sorokin for
the “cult founded on the belief that quantification is the most, or indeed the only,
valid form of knowledge”.

15 Gherardi S and BA Turner, ‘Real Men Don't Collect Soft Data' (1987) 13 Quaderno.
A parody.

107
Miles and Huberman advise that qualitative researchers should be familiar with the set-
ting, utilise a multidisciplinary approach, be able to draw people out and possess good
investigative skills. 16 Herbert Blumer said this to Norman Wiley on fieldwork: -

it's like being a good, investigative reporter, ... Really digging into things….no
fixed field-work techniques. Use any technique you can …. Find out how people
organize their worlds and how they fit actions together.17

Denzin and Lincoln say that qualitative work is multimethod, there is “no single inter-
pretive truth”, it is not “value-free”, that it involves an “interpretive, naturalistic ap-
proach”18: -

attempting to make sense …of phenomena in terms of the meaning people

bring to them…product is a complex, dense, reflective, collagelike creation.19

Alvesson says that critical management researchers with an interpretive slant place
the social paradigm of organisation “in a wider cultural, economic and political con-
text”, trying to display a unified way of life shedding light on contradictions and com-

16 Matthew B. Miles and A. M. Huberman, Qualitative Data Analysis: an Expanded

Sourcebook, vol 2nd (Sage 1994) at 38.

17 Bruce L. Berg, Qualitative Research Methods for the Social Sciences (7th edn, Ally &
Bacon 2009). Herbert Blumer’s fundamental view was that contextual understanding
of human action is intrinsic to valid social research (Wikipedia quote).

18 Norman K. Denzin and Yvonna S. Lincoln, Collecting and Interpreting Qualitative

Materials (Sage 1998) at 30.

19 Ibid at 3-4.

108
plexities. Normative researchers use a grand narrative in a search for regularity and de-
sire to make the world a better place. 20 Those with a critical method will try to un-
cover how constructs of reality favour certain interests and seek reformation and
should have a “feeling for organizational context, the nature of management work”.21

Table 3 Denzin and Lincoln's Interpretive Paradigms

Denzin and Lincoln

Interpretive Paradigms
(Omits feminist, ethnic and Marxist lines)
Paradigm is “the net” containing the researcher’s premises

Paradigm/The- Criteria Form of Theory Type of Narra- Paradigm Assump-

ory tion tions
Positivist/postpos- Internal, external va- Logical-deductive, Scientific report Realist and critical realist
itivist lidity scientific, ontology and objective
grounded epistemology, rely on
experimental and quasi
experimental, survey …

Constructivist Trustworthiness, cred- Substantive-formal Interpretive Relativist ontology (mul-

ibility, transferability, case-studies, tiple realities), subjectiv-
(replacing validity) ethnographic fic- ist epistemology
confirmability tion (knower and subject cre-
(replacing reliability) ate understandings),
naturalistic procedures

Cultural studies Cultural practices, Social criticism Cultural theory Multifocused, human-
praxis, social texts, as criticism istic stresses lived expe-
subjectivities rience, structural stress-
ing the determinants,
say race class gender, of
experience

My paradigm is fundamentally Denzin-Lincoln constructivist, with lived experience, crit-

ical-realist, normative and cultural investigatory elements. It is not easy to pigeon-hole
the survey. I use grand narrative, a contextual style, based on the investigation of natu-
ral or quasi-natural settings, placed into the dual contexts of legal and business worlds,

20 Mats Alvesson and Stanley Deetz, Doing Critical Management Research (Sage 2000)
at 32.

21 Ibid at 1 & 16.

109
illuminating the effect of changing commercial conditions on the expectations of com-
mercial actors and the consequent desirable development of legal principle.22

3.1.1 RESPONDENT SAMPLE AND DEMOGRAPHICS

The survey’s credibility is greatly enhanced by using real people, experienced in the dis-
cipline, facing them with questions about their reality. Eisenberg and Miller analysed
choice of law clauses in public merger filings and, analysing this statistically, claimed the
data showed a marked tendency to choose the laws of Delaware and New York, and
that a desire for formalism underlay that “flight”.23 Juliet Kostritsky, using qualitative
methods, including interviews, asked practising lawyers to explain their choice of law in
three hundred and forty-three agreements. She found that formalistic law was not the
motivating factor; the reasons behind a particular choice being “too variegated to sup-
port a singular reason for the choice, such as a drive toward formalism”.24

22 A grand narrative or meta-narrative is a description coined by Jean-François

Lyotard, Geoffrey Bennington and Brian Massumi, The Postmodern Condition : a
Report on Knowledge (Manchester University Press 1984) of commentary which sees
events as interconnected, and attempts to make sense of the interconnections.

23 Theodore Eisenberg and Geoffrey P. Miller, ‘The Flight to New York' (2009) 30
Cardozo LRev 1475. Morgan, Minimalism agrees with their analysis – at 185-186. I
used to advise against New York Law due to the impossibility of contracting out of
gross negligence liability – see Red Sea Tankers Ltd v Papachristidis (The Hellespont Ar-
dent) [1997] 2 Lloyd's Rep 547 (QBD).

24 Juliet P Kostritsky, ‘Context Matters--What Lawyers Say About Choice of Law

Decisions in Merger Agreements' (2014) 13 DePaul Business and Commercial Law
Journal 211 ibidat 248. Reviewing over 1,000,000 contracts, Sarath Sanga, ‘Choice of
Law: An Empirical Analysis' (2014) 11 JELS 894 explains the “flight” by possible net-
work or lock-in effects; see the abstract. A study by London School of International Ar-
bitration, 2010 International Arbitration Survey (2010) where corporate counsel ex-
plained their rationale for choice of law clauses concluded that the “most important
factor is the perceived neutrality and impartiality of the legal system, (66%), followed
by the appropriateness of the law for the type of contract (60%) and familiarity with
and experience of the particular law (58%)”. The authors conducted 136 surveys and
67 interviews,

110
After conducting an experiment using military officers asked to make a counter-terror-
ism decision Mintz replicated it using student avatars. Whereas over one-third of stu-
dents recommended doing nothing, over 90% of military officers recommended doing
something.25 Mintz concludes: -
It is unrealistic to expect students to play the role of elites in political science and
international relations experiments… as the groups are very different in their so-
ciodemographic characteristics, expertise, level of professional responsibility,
and other significant factors.26

Non-random samples are typical in such studies.27 Evocatively, Miles and Huberman
observe: -

social processes have a logic and a coherence that random sampling can reduce
to uninterpretable sawdust28

25 Alex Mintz, Steven B. Redd and Arnold Vedlitz, ‘Can We Generalize from Student
Experiments to the Real World in Political Science, Military Affairs, and International
Relations?' (2006) 50 The Journal of Conflict Resolution 757 in abstract.

26 Ibid at 771.

27 Richard N. Landers and Tara S. Behrend, ‘An Inconvenient Truth: Arbitrary Distinc-
tions Between Organizational, Mechanical Turk, and Other Convenience Samples'
(2015) 8 Industrial and Organizational Psychology 142 – “virtually all samples used in I-
O psychology are convenience”. Alan Bryman, Social Research Methods, vol 4th (OUP
2012) at 191 – “may be typical in management and business studies”.

28 Miles and Huberman (n16) at 27. See Berg (n17) at 8-”If humans are studied in a
symbolically reduced , aggregated fashion”… conclusions may “fail to fit reality”.

111
A random sample, using a defined population, selecting a representative sample, is not
practically possible for contract managers.29 Commercial enterprises are generally una-
ble or unwilling to provide population data to researchers.30 As Robson notes: -

The exigencies of carrying out real world studies can mean that the requirements
for representative sampling are very difficult, if not impossible, to fulfil.31

From experience, I know that an oil and gas supermajor might have ten thousand people
managing contracts. The University of Leicester provided fifty-four names for my survey
and that list is not inclusive (I double checked this with one respondent).

I took a realist and judgemental approach to finding the right people. Denzin and Lin-
coln recommend that the qualitative researcher thinks purposively and conceptually
about sampling.32 Professor Mandy Burton advises that “opportunistic approaches and
the use of personal contacts can be valuable”.33Berg recommends finding an “appro-
priate” population describing the use of special expertise or knowledge in finding it as
“judgemental” or “purposive”.34

In such a sample, the researcher’s judgment is the leading selection criteria. 35I spent
more than thirty years working in global commercial contracting environments, in

29 Bryman (n28) at 166-170.

30 Robson (n1) at 276.

31 Ibid at 276. Alvesson and Deetz (n20) at 192.

32 Denzin and Lincoln (n18) at 204.

33 Mandy Burton in ‘Doing Empirical Research’ in Dawn Watkins and Mandy Burton
(eds), Research Methods in Law (Taylor and Francis 2013) at 59. She also says that
there “may be a large element of luck involved” at 60.

34 Berg (n17) at 49-51. See Earl R. Babbie, Survey Research Methods (2 edn,
Wadsworth Publishing 1990) at 97-98 and at 99 - researchers should find ways of pro-
curing a sample representing the population they intend to learn about.

35 Robson (n1) at 275.

112
shipbuilding, oil industry fabrication, power and energy, defence and marine contract-
ing, nuclear fuel reprocessing, industrial energy and compression, baggage handling,
automated warehousing, oil and gas, and compressor and gas and steam turbine man-
ufacture. I have been a Principal Consultant in general and capital contracting, a Com-
pany Secretary, a Commercial Manager, Vice President, General Counsel in blue chip
organisations including Shell, ALSTOM, GEC, Siemens, NEI and British Shipbuilders. In
an earlier existence, I was a Six Sigma Green Belt, a process analysis expert. The maxim
“speak with data” became my mantra.36I deploy “special knowledge or expertise …”. I
am qualified to use my own judgement. 37

Landers claims that most arguments against non-random samples: -

are based on neither empirical evidence nor a compelling theoretical model of

validity or generalizability. Instead, they more typically rely on myth, intuition,
and tradition.38

I located potential respondents from; -

• Linked-In and Facebook files. My business card collection. 39 I weeded these

groups selecting those with contract management experience. From approxi-
mately eleven hundred requests, I received around three hundred and fifty re-
sponses.
• The University of Leicester identified fifty-four. I sent invitations to twenty-two,
ten responded - the closest I have to an identified population, and a random
sample.
• Linked In groups - resulting in around twenty responses.

36 https://kaizeninstituteindia.wordpress.com/2014/01/02/speak-with-data/.

37 Berg (n17) at 50-51.

38 Landers and Behrend (n27) at 143.

39 This includes 1500+ contacts on Linked-In, 200+ Facebook contacts and around 300
for whom I have business cards.

113
• A local head-hunter who worked with me when I was expanding my commercial
team in Leicester, located three senior people for interview.
• Opportunism – I was in a hotel in Amsterdam when a fire alarm went off at 0230.
The evacuation was very badly managed. I complained directly to the General
Manager, who requested a meeting with me so that she could work out what
had happened. I asked for help with my survey – her maintenance manager com-
pleted it.
• I appealed to several companies in which I own shares – five responded.
• The Academy of Experts lists twenty-five experts whose expertise includes con-
tract management. I received twelve responses.
• I asked some respondents to identify people I don’t know. This “snowball”
method resulted in fifty-sixty responses.
• I asked for listeners to an Ask the Expert40 seminar, (I was the expert), to re-
spond. Around six did so.41

My four hundred and eighty-one respondents constitute a variegated, heterogeneous

sample; having in common experience of contracting, more specifically, of complex
contracting. Their backgrounds and experience are extremely diverse. This is a cross-
business, global sample with profound, wide-ranging experience and background in-
cluding a former CEO of a FTSE company, a former Executive Vice President of an oil
supermajor (a Vice President too), partners in City Law firms, the IT manager of an in-
ternet gambling company, managers in a University estates department, a psychedelic
music festival organiser, a commercial executive in warship building, facilities manag-
ers, gas turbine salespeople, outsourcing specialists, IT consultants, project managers,
credit card managers, housing managers, traffic management specialists, industrial

40 Run by the International Association for Contract and Commercial Management.

41 I don’t have the sampling problems experienced by Richard T. Wright and Scott H.
Decker, Burglars on the Job: Streetlife and Residential Break-ins (Northeasttern UP
1996) (worth reading as a read) - they needed active burglars and hired one “Street
Daddy," a wheelchair-bound former thief with a solid street reputation who provided
105 burglars - 75% without convictions. Offering an Italian dinner improved results.
They paid for interviews resulting in “pimping” -informants taking a cut of the fee.

114
electrical contractors, geologists, engineers, lawyers, finance executives, procurement
professionals and architects.
They make the world go around. They build and maintain LNG plants, aircraft carriers,
highways, track and trains, power stations (big and small), student housing, baggage
handling facilities and nuclear fuelling machinery, they run petrol stations, hotels, and
the cafes in many offices, they decommission nuclear plants. One has been in the Pan-
ama Canal widening project. Another cut her teeth on site at Hinckley B nuclear power
station. The type of contracts they manage can be described as symbiotic or complex,
requiring planning and communication, and close cooperation.

I selected twenty-seven people for interview, five of whom were follow ups. The selec-
tion was, generally, of very senior, very experienced people. Among them were a former
FTSE 250 CEO, a former FTSE Finance Director, a partner in a big six consultancy firm, a
Director of a listed outsourcing company, two partners in a City law firm, one project
manager in Duisburg, a defrocked British Ambassador (now in the electricity business),
and a former Executive Vice President of an oil supermajor. Without specific intent, alt-
hough this seems to have support, my interviews were generally conducted on neutral
territory.42

Table 4 Location of Interviews

At Home In Office At Party In Coffee Skype In Pub

Shop
9 9 1 2 1 3

Responses came from at least one hundred and forty-nine companies with at least one
response and a maximum of eighty.

42 Alvesson and Deetz (n20) at 195 – “managers are more open and free when inter-
viewed outside their offices”.

115
Responses came from far and wide.

Figure 3 Participant Location

To provide a framework for analysis, I collected demographic data to enable comparison

between subsamples to determine robustness and consistency of the data: -

Figure 4 Participant Gender

18.9% Female, 80% male, I other - 4 pre-

fer not to say.

116
Figure 5 Participants By Profession

This refers to primary professional expertise. In many cases participants have multiple
capabilities. Many project managers, for example, begin life as engineers.

117
Figure 6 Participants by Industry

118
Figure 7 Participants by our Relationship

I “coded” my relationship with participants to allay concern that the sample might be
biased due to my extensive use of contacts.

119
Figure 8 Legal Culture

China

Civil or Continental Law

Common Law - England and

Commonwealth
Common Law - US

Emerging Jurisdiction - Former

Soviet Union for example
Mixed - Scots , Phillipines for
example
Other

120
Figure 9 Experience/Longevity

Less experienced respondents might be

more inclined to manage in “tell” mode
and use formal contractual mechanisms
more than those with significant experi-
ence; as people gain experience they may
become more, or less, cooperative in
their outlook

121
Figure 10 Participants by Portfolio

It may be that per-

ceptions or atti-
tudes change with
higher portfolio
values.

122
Figure 11 Participants by Seniority

This might
show that as
people move
up the greasy
pole they be-
come more, or
less, coopera-
tive in their
outlook

See Appendices for further explanation of variables.

3.1.2 SURVEY AND INTERVIEW DESIGN

Brinkman notes that “the most general rule across paradigmatic differences is; Describe
what you have done and why”.43I elected to collect data by interviews and using an
online survey, asking the same questions in each setting.

Survey design took into account multiple requirements: -

• I seek lived experience. Questions, especially case studies, were realistic, based
on real-life cases.
• I am in conversation with an elite. The survey reflected this is in complexity and
the use of open questions.
• Multiple choice questions provide quantitative data which in turn allow analysis
of consistency between answers.
• Collection of demographic data allows analysis by sub-group to determine con-
sistency of responses and facilitates some generalisation.

43 Brinkmann (n8) – at 83.

123
• In early discussions, trials and pilots it became clear that I should ensure that
initial questions were open with case studies and demographic questions follow-
ing.44 This encouraged dialogue and the elicitation of opinion. The strength of an
online survey is global reach and the ability to collect large numbers of re-
sponses.
• The availability of online survey tools, easy to distribute by email or social media
made an online survey an easy option despite the risk, realised, that vast
amounts of data would be returned for analysis.
• Some questions bore similarity to questions asked by other empirical research-
ers. This also allowed comparison and strengthened generalising claims. 45

It is important to get questions right and ensure that there are no credible alternative
explanations for phenomena experienced. For example, Jonathan Morgan, relying on
an experiment carried out on 94 Midwestern University students presented with iter-
ated “Prisoner’s Dilemmas” (described in more detail in subchapter 5.2.6 below); ap-
parently showing trust increasing with repeated interaction says: -

attempting to enforce vague obligations of trust and cooperation will not only
be difficult and expensive, but may be counterproductive. 46

44 This advice was of a severely practical nature; respondents would complete demo-
graphic questions to avoid wasting the work already performed on open and closed
questions; which not be true vice-versa.

45 The Bristol Online Survey tool (www.onlinesurveys.ac.uk/) made realising my de-

sign easy.

46 Morgan, Minimalism (n23) at 69, the claim deriving from Deepak Malhotra and J.
Keith Murnighan, ‘The Effects of Contracts on Interpersonal Trust' (2002) 47 Adminis-
trative Science Quarterly 534. Deakin, Lane and Wilkinson in Jonathan Michie and S. F.
Deakin (eds), Contracts, Co-operation, and Competition: Studies in Economics, Man-
agement, and Law (OUP 1997) at Chapter 5, Contract Law, Trust Relations, and Incen-
tives for Co-operation: A Comparative Study, show, using an empirical survey, that
these results may be hard to replicate in the real world.

124
In laboratory conditions, the ninety-four students were then offered a “contract”. On
acceptance, they were informed, electronically, that “the computer would automati-
cally enforce it”. 47

At that point trust apparently decreased. The chief problem with this and similar exper-
iments is the assumption that one can transcribe experimental results from trials involv-
ing students to the real world. As Robson notes, this is dangerous.48 My survey shows
that experience may change perspective, so the use of inexperienced avatars reveals
little except the reaction of inexperienced avatars.

The second problem is that the researchers appear not to have appreciated the nature
of the enforcement advice. I double-checked by asking some of my contacts to consider
the short case study below. I received 105 responses and 170 comments.

Table 5 Do Contracts Reduce Trust?

You are negotiating a contract and the negotiations are proceeding normally. Things seem
to be reaching the point at which you can both sign. At a late stage in the negotiations
your counterparty says to you - “we will enforce this contract”.

What do you make of this? How do you react?

Reaction No Comment

I feel threatened/ 26 I would show and express my astonishment

I am suspicious /
The word ‘enforce’ implies a battle ahead, it’s very ‘them
trust is damaged
and us’

I would consider that to be slightly hostile and to a certain

34
Have I missed degree combative behavior.
something On a positive note – this is a good thing because the coun-
terparty intends to honour the terms; On a negative note
– there will be a lot of contract management required if the
intention is to adhere strictly to the contract

47 Malhotra and Murnighan (n46).

48 Robson (n1) at 4. And see Mintz, Redd and Vedlitz (n25).

125
I would ask what 35 Depends on the tone
they meant
That would freak me out a bit

I would definitely ask the other party what they meant.

Definitely would not just ignore.

I wouldn’t sign un- 14 just raises that sense of chronic unease that we Con-
til I have clarifica- tracts folks have about our counterparts
tion
it is a very odd thing to say (maybe they are French and
their English is not that good?)

I would take this as a warning to tread carefully when

seeking any further concessions or compromises

why? budget or pressure constraint, dirty trick to get

some more advantage, other?)

I’m relaxed; this is 45 clients say all kinds of stern and ominous things during a
normal negotiation. Serious businesspeople know that what
counts is building a solid relationship and delivering as
promised

good, so will we

he is testing our resolve

It’s aggressive or 15 Slightly aggressive … I'd probably just let them know that
irritating we will too.

Aggressive gets an aggressive response

this is huffing to inhabit a dominant position.

I would make sure that my side was very diligent during

the contract to ensure that our actions were well docu-
mented

My respondents are hard-bitten contract professionals; not ingénues. My short survey

shows that the “enforce” language may provoke a reduction in trust or other reaction
that casts serious doubt on the claim that entering into a formal contract reduces trust.

126
The blatant reference to enforcement arouses suspicion and creates a negative reac-
tion. I cannot pretend that the sample is random. For my purpose, that does not matter.
I demonstrate an alternative, plausible, explanation for the so-called reduction in trust.

Context matters. It is important to try to place people into contexts they may under-
stand. In one Prisoner’s Dilemma experiment the game was called the Cooperation
Game for half the participants and the Wall Street Game for the others. Those playing
the Wall Street Game were "dramatically" less likely to cooperate. Commenting, Jesse
Prinz, concludes that strategies adjust in “dramatic ways based on culturally meaningful
contexts”.49 There are no meaningful contexts for students when it comes to making
commercial decisions.

Analysing responses to a questionnaire designed “to explore the circumstances when

financial incentives can overcome the moral scruples of contractual parties about
breaching the contract….”, Tess Wilkinson-Ryan asserts that it: -

is intended to be closely analogous to a real-world contracts context, but there

are limits to that analogy. The stakes were real but very low; there was no legal
framework in which parties were negotiating and operating; there were no rep-
utation costs, transactions costs, or even social costs to breach.50
It might have been easier to list the respects in which a real-world analogy existed. Other
studies show, for example, that placing posters with eyes on them on the wall during x-
phi experiments varies participant behaviour. 51 This strengthens the case for asking
questions designed from real-life case studies and seeking the reaction of experienced
managers to them.

49 Jesse J. Prinz, Beyond Human Nature (1st edn, Allen Lane 2012) at 313-314.

50 Tess Wilkinson-Ryan, ‘Incentives to Breach' (2015) ALER 290.

51 Daniel Nettle, ‘The Watching Eyes Effect in the Dictator Game' (2013) 34 Evolution
and Human Behavior – abstract.

127
Interviews work best as conversations, in which the interviewer listens carefully, rather
than as question and answer sessions.52 Allowing online respondents to offer up their
opinions in open questions was intended, as far as possible, to replicate the interviews.
I reviewed Sue and Ritter on the desirability of interviews; see table called “Is a face to
face interview appropriate, necessary, or possible?” in Appendices. Questions were
double checked against checklists provided in the literature- shown in the table, “Face
to Face Interview Decisions”, in the Appendices.

The strength of interviewing is flexibility and the ability to steer conversations. Good
interviews allow the interviewee to do most of the talking. Extracting rich, refined, con-
sidered data from very senior participants would be difficult using an online survey. As
Dr Jennifer Fleetwood observed, in the qualitative training I undertook, an interview is
“easy to do badly and hard to do well”. 53 Managing an elite elite, a super group, re-
quired patience and expertise on my part together with a degree of flexibility. Control
was not possible with this group but my background, as a peer, enabled me to identify
with them, understand their responses, and steer them in the desired direction.54

In interviews and online I asked two open opening questions, asking respondents what
they enjoyed about managing contracts and what success meant. I expected this to pro-
vide a guide to expert commercial opinion on commercial coherence or business effi-
cacy in generating advice on how these complex contracts work, and are managed, in

52 See Robson (n1) at 281.

53 I like her advice on methodology (in an email) – “I’d say that most academics
(whether they will admit it or not) learn on the job. I think trialling with students, and
then with ex-colleagues will be sufficient. Have confidence - there is no such thing as a
perfect interview. In my experience interviews are all different, so even if your guide is
fantastic, it will not do the magic in all circumstances and with all respondents. All you
can do is your best, and see what happens!”

54 Rebecca E. Klatch, ‘The Methodological Problems of Studying a Politically Resistant

Community' (1988) 1 Studies in Qualitative Sociology 73 suggests that young female
interviewers may have more success with elites. I’m a 62-year-old male. I disagree. A
peer, an expert, is more likely to be successful. Alvesson and Deetz (n20) suggest that I
am correct at 195.

128
practice. This definition would be at a relatively high level of abstraction, necessarily so
because the question is very wide.

I followed open questions with four vignettes, case studies, developed from difficult and
controversial cases covered in the thesis. 55 The thread that runs through the vignettes
is uncooperative behaviour and the thread of the questions is how to deter it.

It was important to ask questions that were not too general. For example, in 2005
Vogenauer and Weatherill surveyed one hundred and seventy-five enterprises in eight
countries.56 They found that respondents wanted law that enabled trade (87%), is pre-
dictable (79%), fair (78%), flexible (61%), or prescriptive 39% This is useful, but is an
example of survey data which worried Adams and Brownsword; showing expectations
shared only at a “very high level of generality”.57

In vignettes, I asked respondents to assess “standard” current options and for advice on
how the law and the contract could support them. I expected that a majority would
identify communication and governance to create cooperation as important but that
legal remedies such as fast-track dispute resolution would be considered extremely use-
ful. I expected enforcement and threat based remedies to be considered helpful but
insufficient. In my vignettes fast-track binding adjudication would almost certainly deter
some of the behaviour if a duty to cooperate formed part of the contract.

I considered other vignettes; for example, the Coombes case where a manager had re-
ferred to his Secretary as a “bitch”. In informal trials; I detected very strong emotional

55 On vignettes see Christiane Atzmüller and Peter M. Steiner, ‘Experimental Vignette

Studies in Survey Research' (2010) 6 Methodology: European Journal of Research
Methods for the Behavioral and Social Sciences 128.

56 In their own Chapter 7 ‘The European Community’s Competence to Pursue the Har-
monisation of Contract Law—an Empirical Contribution to the Debate’ in Stefan
Vogenauer and Stephen Weatherill (eds), The Harmonisation of European Contract
Law: Implications for European Private Laws, Business and Legal Practice, vol 1 (Hart
2006) at 137.

57 Adams and Brownsword at 326.

129
recoil from this and decided against it.58 I also considered Horkulak v. Cantor Fitzgerald
International but decided that the use of very strong language would deter respond-
ents.59 Case studies were part quantitative, with scaled responses, usually using discrete
variables and part qualitative, allowing respondents to offer alternative solutions or
other comment.

After that I asked respondents to rate the importance of cooperation and to tell me
what cooperation means and entails and how one achieves it. The purpose of these
questions is to determine whether cooperation is considered necessary by my respond-
ents, to allow me to assert that cooperation is necessary to business efficacy or com-
mercial coherence in these complex contracts and, in defining cooperation, whether I
can find analogies or authority which would allow me to put forward a transcendent
concept of cooperation.

The survey was trialled using neutrals, unconnected with the research, with one highly
experienced manager (a fellow student), my partner at home, and a former colleague,
then adjusted and piloted (a dummy run approximating to the real thing), with one sen-
ior sociologist, my supervisor, a former colleague and another experienced fellow stu-
dent.60

3.1.3 VARIABLES AND VARIANCE

58 Isle of White Tourist Board v Coombes [1976] IRLR 413, EAT.

59 Horkulak v. Cantor Fitzgerald International [2004] EWCA Civ 1287. The Judgment
records one incident in which a manager, Mr Amaitis, after a presentation, shouted:
“get this shit out of here”, “it will never fucking work”, “it would never corner the fuck-
ing market”. Stronger language is also recorded.

60 Robson (n1) at 264-265.

130
Robson stresses that explanation and interpretation depend on the incorporation of
variables and subsequent analysis of correlation from which one may tell the most con-
vincing story “in realist terms, what mechanisms are operating in what context”.61 Den-
zin coined the term “triangulation”, (comparison), for carrying out studies in different
locations, using multiple theories, multiple researchers, multiple data technologies, dif-
ferent sources, collection methods, quota samples, age and gender, and data-types to
ascertain how far one might generalise from a non-random sample.62 Berg says that “re-
search literature continues to support Denzin’s recommendation to triangulate”.63

Variables were reduced to graphs and tabulated to describe outliers and major vari-
ance. The table below was produced by visual inspection of the graphical data. In
some cases, it is arguable that there is variance but on a second look the numbers are
too low and variance is in one answer; in those cases, I have tended to say that there is
minimal variance.

Against each question, in the following subchapter, I have copied the relevant line
showing what variance exists. I also provide copies of up to four graphs per question
to illustrate variance in the Appendices. From the snapshot below (the full table can be
found in Appendices) one can see that the data is robust. Around 70% of cells show lit-
tle or no variance (green cells), 8% show variance in one answer (yellow cells). Approx-
imatley 16% of cells are blue; indicating some variance.

Figure 12 Snapshot of Subgroup Variance

61 Ibid at 242 – 243.

62 Miles and Huberman (n16) at 267, Robson (n1) at 158, Denzin and Lincoln (n18) at
199-200.

63 Berg (n17) at 7.

131
132
RATIONALES FOR MIXED METHODS – IAN PARKER

133
SURVEY RESULTS
3.2.1 OPEN QUESTIONS – ENJOYMENT AND SUCCESS

To provide a framework for the survey and to persuade participants to consider issues
in the round I opened the survey with open questions asking what respondents enjoy
about managing contracts and what success means.64 Allowing them space and time to
expatiate was intended to provide insight into their general thinking about contracts
and contract management. I hoped to find many volunteering that cooperation of some
kind leads to enjoyment or spells success – saying “win-win”, referring to both parties,
talking about sharing, common goals, teamwork, mutuality, relationships, or partner-
ship. I am trying to establish what it is that makes contracts work; in legalese, what co-
herence or efficacy means. I also wanted to determine whether the opinions of respond-
ents were consistent with those uncovered in other empirical work. The first exercise I
undertook when reviewing the sixteen thousand words and nine hundred and forty-
seven comments made by respondents was to create a rough breakdown to see how
many volunteered cooperation or win-win or partnership or joint enterprise or similar
terms in open answers. Three hundred and nineteen respondents volunteer such an-
swers.

Figure 13 Participant’s Relationalism

64 Robson (n1) at 256 – notes that one’s desire to use open ended questions tends to
diminish with experience.

134
I created a break-
down of partici-
pants who had or
had not (enterprise
centred...) men-
tioned cooperation
in some way in the
opening questions.

I coded comment and tabulated themes and sub-themes; the tables appear below in
this subchapter. 65 Scheurich counsels that coding may mask "intractable uncertain-
ties", that “data reduction techniques” can overlay indeterminacy with our own deter-
minacy, replacing ambiguity with "findings or constructions".66

On opening the survey respondents were confronted with a direct open question
“what do you enjoy about managing contracts?” Their responses could be broken out
into four themes and several sub-themes; the four themes being management, intel-
lectual challenge, meeting people or variety and outcomes/performance. One said: -
Much like you, I enjoyed a good fight in the early part of my career. More re-
cently, I have learned the value of collaboration and am always now seeking to
have the other party working for / with me.
Management, mentioned by two hundred and sixty-six, involves the creation and man-
agement of relationships, negotiation, collaboration and team-building, problem solving
and conflict resolution. Respondents refer to working to the spirit rather than the letter
of the contract, using the contract to “drive a strong relationship”, being “collegiate”
and “achieving common aims”.

Table 6 Management Theme – Enjoying Contract Management

Themes Sub-themes Respondent Com-

ment

65 Created “ordered displays” – Miles and Huberman (n16) at 90.

66 James Joseph Scheurich, Research Method in the Postmodern (Falmer 1997) at 61-
75.

135
Management Creating/man- Stakeholder ensuring you are
266 aging relation- manage- more aligned to the
ships 48 ment 28 spirit of the contract,
rather than the "let-
ter"
I would also want to
complete a Project
leaving the customer
with a positive view
of the Business I rep-
resent
Negotiation 70 Reach mutually ac-
ceptable outcomes
Collaboration Joint enter- Teambuild- Working with a part-
35 prise 14 ing 12 ner to achieve com-
mon aims
Coordina- Create Much like you, I en-
tion of ac- happy work joyed a good fight in
tivities 9 environ- the early part of my
ment 2 career. More re-
cently, I have learned
the value of collabo-
ration and am always
now seeking to have
the other party work-
ing for / with me, in-
stead of fighting me.
Problem solving Managing Avoiding es- If put together and
or conflict reso- changing calation 2 executed properly, it
lution 36 environ- really drives a strong
ment 7 relationship between
the parties

Intellectual challenge, mentioned one hundred and fifty-nine times, is described by one
respondent: -

The enjoyment is orchestrating all these elements to work coherently and

achieve the individual and overarching goals. A bit like getting the pieces of a
jigsaw to fit together. Two analogies for the price of one!

Turning conceptual business needs into hard and soft obligations, dealing with complex-
ity, innovation, wordsmithing, recognising that “no two contracts are alike”, are part of
what respondents enjoy about managing contracts.

136
Table 7 Intellectual Challenge Theme - Enjoying Contract Management

Themes Sub-themes Respondent Com-

ment
Intellectual Turning business Dealing with Learning I enjoy when I see a
challenge needs into a con- complexity about con- Contract stimulates
tract 64 24 tracts or the right behaviour
159 contract law from Contractor.
21
The enjoyment is or-
chestrating all these
elements to work co-
herently and achieve
the individual and
overarching goals. A
bit like getting the
pieces of a jigsaw to fit
together. Two analo-
gies for the price of
one - an orchestra or a
jigsaw!
Creativity Wordsmith- Anticipating No two contracts are
Innovation ing 9 the future 6 alike
33

I found one hundred and nine mentions of meeting people, variety, interaction or cul-
tural learning. They said that contracts are each unique, one that: -

Contracts come to life when people get involved.

Table 8 Meeting People/Variety Theme - Enjoying Contract Management

Themes Sub-themes Respondent Com-

ment
Meeting Variety 36 not every day is the
people same, not every con-
tract is the same, nor
Variety every customer etc
Interaction with Cultural What I enjoyed was
109 people 57 learning 16 the sheer variety of
the work, the oppor-
tunity to meet other
contract professionals

137
whether they be cus-
tomers, suppliers, ad-
visers or colleagues.

Contracts come to life

when people get in-
volved

Outcome or performance was indicated by two hundred and eighty-five comments as

an enjoyable aspect. It is grouped into sub-themes of managing risk, finding “clarity”,
minimising disputes, making the business smoother, creating value and even “making a
difference”. Creation of value, delivery to time and budget also featured in many re-
sponses. One mentioned “the sense of order” contracts bring and others: -

I enjoy building something that will be providing power after I'm dead.

Make the world a better place –progress.

A few, around twenty, said that they don’t enjoy it - “It’s a job”.

Table 9 Outcome/Performance Theme - Enjoying Contract Management

Themes Sub-themes Respondent Com-

ment
Outcomes, Management of Achieving Minimise I like the sense of or-
performance risk 29 clarity 39 disputes 3 der they bring

285 Everyone stays safe

Execution is "fairly
painful".
Make the busi- Beneficial for both
ness possible or parties
smoother 35
The enjoyment comes
from finding the
sweet spot whereby
both (all) parties meet
their objectives to a
large extent.

138
business on the basis
of a contract that one
party is nervous about
from day one is not a
good way to start a
project.
I don’t enjoy it! Pragmatic – There are necessary
Not a lot. It’s a has to be evil to get the job
job. 20 done 6 done

[contracts] are just a

necessary evil
Win/win create Achieve best Deliver to Delivering good out-
value 54 value for my time and comes
Make the world company 41 budget 47
a better place – Make a difference
progress 11
I enjoy building some-
thing that will be
providing power after
I'm dead...

When I see smiles

from recipients I feel
motivated

At first blush this may not seem to educate us as to what a duty to cooperate entails. It
does, however, help in assessing what commercial actors expect of contracts. The few
who admitted to not enjoying it much still referred to contracts as a necessary evil.
Nobody said that they provided a mechanism for punishing the other party, or behav-
ing opportunistically; although a few may have disguised this in making comment
about creating value for their company.

My next question was directed at what success means in contract management. The
main themes which emerged involved contract formation and negotiation, contract ex-
ecution and contract delivery.

Respondents explained contract formation as providing structure (“rules of the

game”), aligning objectives, identifying risks, creating clarity, balancing risk and
reward, and providing a forum for discussing expectations to be discussed

139
openly to allow each organisation to succeed (“establishing a contractual rela-
tionship where each party fully understands the asks, needs and even the future
beyond the paper”). Fairness was mentioned twenty-four times and “win-win”
twenty-one times. Fairness meant different things. In around half the cases it
meant a fair contract, followed closely by meaning it was fairly managed and
then a few thought it meant a fair price (which might be the same as generally
fair).

Table 10 Negotiation and Contract Formation - Success Themes

What is success?
Themes Sub-themes Respondent’s Comment
Contract Providing Aligned ob- The rules of the game
for- structure 35 jectives 27
mation contract should be a checklist which helps
Business the parties decide on their actions
Negotia- needs
tion landed 53
Create rela- Identifying sets the scene for expectations, the
tive certainty the risks 41 framework for delivery and the rules for
or clarity 81 engagement

ensures no unnecessary scope drift or

gold plating
A fair con- Mutual ben- allowing service expectations, delivery,
tract 24 efit. Win- management information and costs to be
win 21 discussed openly and for an understand-
ing between to develop so that both or-
ganisations can succeed.

This ability of CM to see things in a holis-

tic way ensures their effectiveness and
overall success for all
Focus on out- Acceptable balance of risk & reward in the contract-
comes 5 compro- ing experience was properly and fairly re-
mises 32 flected

140
Contract execution contained subthemes of conflict minimisation, consideration and
management of risks, managing the relationship and maintaining a safe working envi-
ronment. Communication was mentioned as one way to ensure good execution (“even
when things have gone wrong”) and the contract described as the “ultimate fallback
when nothing works anymore”. Minimising conflict and maintaining a good working re-
lationship were mentioned one hundred and thirteen times; one respondent saying that
this involves “leading and managing what is not written in the contract” and another
that “management is more important than the contract itself”.

Table 11 Contract Execution - Success Themes

What is success?
Themes Sub-themes Respondent’s Comment
Contract Minimum Vigilance to if done fairly should be the route to
execution conflict 57 opportuni- success but invariably biased towards
ties and risks one party
Fair dealing 14
15
Safety not Risks are I see a contract as the ultimate fallback
compro- managed 23 when nothing works anymore
mised; no-
body hurt; No surprises On balance, contract management is
we all go 4 more important than the contract it-
home. self, i.e. you can manage a bad contract
24 to a good outcome and you can mis-
manage a great contract to a poor out-
come.
Relationship Good work- when you communicate correctly,
Management ing relation- timely and effectively this ensures a
21 ship 45 smooth execution of the project, even
in cases where things have gone wrong.

Leading and managing what is not writ-

ten in the contract

Reputation confirmation

Unsurprisingly, perhaps, under contract delivery the main output was (one hundred and
eighty-seven comments) safe and on-time delivery, to price; “key success factors

141
achieved or bettered”. Win-win or each party being happy was mentioned by one hun-
dred and twenty respondents; one saying, “with all heart-valves and relationships in-
tact”. Future business (“evokes a common focus to achievement and ultimately….
longer term/future working alignment”) was mentioned forty-nine times, which might
be less than relationalists would anticipate. Obtaining “best value” was mentioned by
thirty-four respondents and, although this might mask some opportunism, some made
it clear that this is a mutual concept (“best value outcome for both parties”). One re-
spondent said: -

Success to me means when both …. work mutually together to maximise their

business needs in a harmonise relationship and have mutual respect and trust
for each other

Table 12 Contract Delivery - Success Themes

What is success?
Themes Sub-themes Respondent’s Comment
Contract project deliv- All parties’ key success factors achieved
delivery ered in time, or bettered within a safety first driven
safely, and to culture.
price 187
Win-win, Satisfied That all parties involved are content or
each party customer 37 even better, excited about the out-
happy come.
83
'with all heart valves and relationships
intact'
Obtain best Reputation shepherding the deliverers to improve
value 34 enhanced 5 their understanding of the contract,

Trust en-
hanced 5
Future busi- Another key to success is to implement
ness the contract in the way it is meant to
49 be, not in a word-by-word approach

Lessons Success to me means when both the

learned 5 Operator and the contractor work mu-
tually together to maximise their busi-
Continuous ness needs in a harmonise relationship
improvement and have mutual respect and trust for
9 each other.

142
Here is a selection of interviewees comments; in themes: -

Figure 14 Interviewee Comment - Contract Management

The answers reflect the fact that contract in the real world is multi-dimensional with
delivery and relationships at its heart. Interviewees made nineteen comments on what
they enjoy and thirteen on the meaning of success. They referred to the contract as -
“For planning”; “A governance mechanism”; “A roadmap for successful business”; and
“A management tool”.

Other comment included – “Get it right up front”; “Junk a lot of it to make it work”;
“Working together is success”; “Outcome is more important”.

143
There is a strong focus on management, getting the contract performed, creating
value, and, even in the “intellectual” cadre, a strong focus on converting abstract busi-
ness needs into a contract. The focus is highly practical, desirous of a relationship, clar-
ity, delivery; all in a complex, diverse world.

I expected to be told that outcome/delivery was success. What I also found was clear
emphasis on the joint nature of the contract, and a desire for successful performance
which meant delivery/completion. The contract was not seen as a tool for opportunistic
behaviour; rather as a framework with hard written elements and softer behavioural
elements. The hard elements are a construct within which the parties can fulfil agreed
goals and the softer elements are the how. Each are required for success.

144
3.2.2 VIGNETTE 1 – THE POWER AND THE STORY

This vignette was developed from J & H Ritchie Ltd v Lloyd Ltd.67 I used the case in train-
ing seminars in industry and I was struck by how many commercial/contract/legal play-
ers in the audience would react with a lawsuit rather than picking up the ‘phone.

The case, involving a used harrow, purchased for around £14,000, reached the House of
Lords. Each of the four hundred and nineteen respondents was asked for a reaction.
Four interviewees were presented with this vignette –they wondered just what was go-
ing on: -

67 Ritchie.

145
How much trust do I have? I’m not comfortable.

Escalation and assurance that the problem won’t recur would be enough for me;
I need an absolute guarantee – I think “the things work by magic anyway”.

Why won’t they tell you? They’re hiding something!

First indicate that there may be commercial consequences. In the end escalate
and talk. Keep Boy Scout badges polished – don’t give them any bricks to throw
back.

A great question – I would get an independent assessor in and ask the supplier
to work with me.

Don’t reciprocate; don’t terminate.

Two hundred and twenty-five respondents provided comment. The most common op-
tion was to talk to the supplier or to try to obtain a better understanding of the relation-
ship and what was driving the supplier’s behaviour. Some wondered what the supplier
had to hide, others whether aggressive price negotiation had contributed. Finding an
incentive such as long-term service agreements, removing “fear of claims”, online mon-
itoring services (typical in high-speed rotating machinery contracts), was suggested to
help cut through the problems: -

Firstly sit down with the customer to try and negotiate a suitable outcome.

If the understanding of the report is the goal rather than using the report as ev-
idence to claim some compensation, then there ought to be some compromise.

Ultimately you have to find a working relationship to get through these type of
issues. Life is too short to continue along this stand-off vein!

A discussion can be fruitful for both sides, if this will result in a win-win-situation:
GR needs warranty and the supplier expects comprehension. Both have to co-
operate with each other with different aspects to understand the whole picture.

is there scope for improving communication to find out WHY supplier is behaving
as they are? There may be other reasons why this information is not shared.

146
Holding back payment is a one-off trump card and if Client is reliant on the sup-
plier in the longer term this may make matters worse.

In general, reaction is analytical. Respondents want to understand why the supplier is

behaving like this and want to find a way of getting the report; mainly by discussion and
negotiation. A few respondents thought that threats, like blacklisting, asserting fraud,
or taking service business elsewhere might help. Termination is not regarded as sensi-
ble, or practical. Answers are characterised by a desire to play it straight, get to the heart
of the problem and find a commercial solution. In discussing fast track dispute resolu-
tion one interviewee said that a Judge “should force him to act reasonably”.

I asked more detailed questions to determine what respondents would do next and how
they felt about contractual and legal remedies.

This is the result I expected; with a large majority loath to accept the supplier’s brush-
off. Some respondents maintained that a report would not solve the problem. It might
begin to restore any confidence that had been lost in the machine.

147
User groups are established to allow users to exchange experiences and opinions. They
are usually “by invitation” fora, hosted by the manufacturer. This self-help remedy can
be a threat or an opportunity in that one might find, for example, that the defect is
uncommon and minor or that it is serious and the cause unknown.68 Lawyers are outli-
ers in these answers; apparently much less willing to accept that the user group might
be the best solution.

Of course, this solution only works if there are outstanding bills. In the case of a sophis-
ticated machine such as a gas turbine a manufacturer will usually make serious money,
possibly 90% of their income in the aftermarket so that a threat targeted at future rev-
enue may be effective. The reaction of respondents is fairly consistent across subgroups.
Interestingly, many lawyers see it as impractical.

68 Macaulay, ‘Non-Contractual Relations in Business: A Preliminary Study’ at 64 refers

to “gossip exchanged by purchasing agents and salesmen at meetings … of associa-
tions…”.

148
Overwhelmingly, consistent across sub-groups, commercial players eschew termina-
tion. They want to make the contract work. There is a willingness to use self-help rem-
edies as we can see from 4.2 and 4.3 but in each of those cases the remedy falls short
of termination. Around 40% of those in outsourcing thought termination effective
whereas 100% of finance people thought it too expensive.

This third self-help remedy was also thought to be workable. Females were slightly more
positive about it than males.

The final questions ask respondents to choose between various options designed to
produce a cooperative result by forcing the supplier to act reasonably through sanctions
or mandatory orders.

149
I had hoped that these remedies, which each provide a report, would be popular as they
preserve the contract, and provide the reassurance of a report. There’s little apparent
difference between them bar the possibility that the supplier may not always produce
a full report or that internal reports may be indigestible to the commercial user. Re-
spondents support a remedy furnishing a report which might offer the confidence they
need in this essential piece of machinery. Those working in Oil and Gas majors are less
enthusiastic about fast track processes.

This is another self-help remedy which may depend on the terms of the contract. Clients
often insist on express terms which extend the warranty by the length of time that a
machine is out of action. In this case, one is faced with a machine that does work; albeit
in which the client’s confidence is low or non-existent.

150
Lord Brown described Lloyd’s behaviour as unreasonable.69 Notwithstanding the egre-
gious nature of the refusal (Lord Hamilton referred to a “lack of candour” and Lord
Brown described how Lloyds “adamantly refused to reveal the nature of the problem”)70
respondents show a significant preference for information over termination.

There is a distinct difference in approach by those with a US Common Law background

with many more in this group finding termination to be helpful. Those with lower value
portfolios are also more amenable to termination.

Like other punitive measures this is not viewed as sufficient. It may be helpful, but it will
not solve the problem.

69 Ritchie (n67) at [41].

70 Ibid See Lord Brown at [41] and [43] quoting Lord Hamilton.

151
3.2.3 VIGNETTE 2 – DECIDE OR CONCUR?

This vignette is designed to test decision making when the decision maker seems to have
unlimited discretion. This vignette does not directly deal with an enabling decision. In-
stead I address a fairly typical management decision in which a busy manager has to
decide how to accommodate members of his wider team in a tight location under time
pressure. There were four hundred and ten responses.

There is a danger in this vignette of social acceptability bias; that respondents will give
the “correct” answer. In my opinion it is present in all vignettes but more so in this one
which involves a manager and her/his relationship with people in a more direct way
than the others which are more corporate matters.

I predicted “an overwhelming number to choose answer three in the hypothetical con-
text but in a real situation where there is little time to think I wonder whether that really
reflects what would happen”.

152
In interviews, many respondents asserted that this is the sort of decision they would
take very seriously, chiefly because fairness (“fair and equitable”, “establish commonal-
ity”, “treat each group fairly”) was important. The vulnerable, such as disabled person-
nel or females working late, must be given appropriate consideration.

The creation of team spirit by joint decision making and consultation was vital. One said
– “it’s relationship management”. Of the fourteen interviewees who addressed this
topic one said; “get on with it”. Others insisted that one “make time”, “find time”, “walk
the site”, don’t “apply rules dogmatically”, that it is “critical” that people are happy, in
one case asserting “it’s their home!”, and another that “it’s worth the effort”. The words
felt real. They didn’t appear to be for effect or approval (I detected no social acceptabil-
ity bias). Those with less experience were marginally more likely to allocate based on
company policy. Overwhelmingly even that group prefers consultation to instruction.
Although this does not demonstrate directly that respondents believe that discretion
should be controlled it shows a tendency to self-discipline, elevating the managerial im-
perative of the contract over the levers of power. The widest claim I can make is that it
seems unlikely that commercial actors would object to being required by contract to
take these decisions in a fair and impartial manner.

153
The only reference I can find to empirical work in contractual discretion is Jonathan
Morgan’s assertion of a “documented preference” for leaving control of “abuse” to ex-
tra-legal mechanisms”.71 Dr Morgan describes the objections by “merchants” to Karl
Lllewellyn’s proposed reform of the perfect tender rule in the US72, that they could find
extra-legal methods of dealing with opportunism,73 and extends this to a claim that mer-
chants disapprove Court imposed rules on the use of contractual discretion; saying in
other work that: -

71 Morgan, ‘Resisting Judicial Review Of Discretionary Contractual Powers’ at 488.

72 Zipporah Batshaw Wiseman, ‘The Limits of Vision: Karl Llewellyn and the Merchant
Rules' (1987) 100 HarvLRev 465 at 494.

73 Morgan, ‘Against Judicial Review of Discretionary Contractual Powers’ at 238-239.

154
it is in the highest degree doubtful that sophisticated commercial parties would
want anything to do with it.74

I reviewed various modern forms of construction and engineering contract to determine

whether industry feels the need to step away from judicial control of discretion. I re-
viewed the Joint Contracts Tribunal Standard Form of Building Contract 2005, the LOGIC
Construction Conditions (for North Sea Oil work), the Institution of Civil Engineers Form
of Contract 7th Ed 1999, their New Engineering Contract and their Design and Construct
contract. None contained provisions which tried to water down judicial control.75The
MF/1 form, published by the Institution of Mechanical Engineers, provides specifically
that: -

Wherever …the Engineer is required to exercise his discretion: he shall exercise

such discretion fairly within the terms of the Contract and having regard to all
the circumstances.”

There is no evidence that merchants feel the need to respond to more than 100 years
of judicial control over the activities of certifiers and decision makers.

74 Morgan, ‘Resisting Judicial Review Of Discretionary Contractual Powers’ (n71) at

484.

75 Furst and others at 801-2 - the Architect under the JCT form must act in a fair and
unbiased manner in every function. Noting that clause 2(8) of the ICE form provides
that the Engineer shall act impartially and that this does not appear in the design and
construct form Brian Eggleston, The ICE Design and Construct Contract: a Commentary
(Blackwell Scientific Publications 1994) asserts at 148 that this makes no difference. I
also reviewed a standard form used by an oil super-major – with the same result.

155
3.2.4 VIGNETTE 3 – AN OFFER HE CAN’T REFUSE?

This vignette was developed from Williams v Roffey Bros and Nicholls (Contractors)
Ltd,76 with extreme elements of duress added - and is not an uncommon situation for
business people (as indicated by survey respondents). Roger Halson suggested one of
the possible outcomes. 77

Interviewees were interested, as usual, in why the problem had arisen; some taking a
pragmatic approach: -

This is business.

Sub can only do this once.

76 Williams v Roffey Bros and Nicholls (Contractors) Ltd [1991] 1 QB 1 (AC). I have
twice experienced existential threats in my career.

77 Roger Halson, ‘Opportunism, Economic Duress and Contractual Modifications'

(1991) 107 LQR 649 - the pain sharing possibility was influenced by the suggestion at
677 that the law recognise a contract “modification” if it is “reasonably related to the
impact of unanticipated circumstances upon the performing party”.

156
Done deal – live with it!

Once you’ve paid the money wave goodbye to it.

Others were less relaxed: -

It's an outrage. Try "weasel" words in deal. Contractor has you over a barrel - live
with it!

Like the Greek Government.78

Others had ethical and procedural concern saying, “Corporate governance is an issue”,
and there should be some “Ethical consideration of other bidders”.

And others advised negotiating, “Should be a sensible conversation”, and “If they really
have a major problem”.

There were one hundred and thirty-four comments made by respondents; over forty
commenting that the best solution was renegotiation.

Over thirty questioned the contracting process saying that the client may have created
the mess by poor bid management and market analysis. In that case they had little sym-
pathy. Others differentiated between major players with whom they had no sympathy
and minor players (“I wouldn’t negotiate if it was Schlumberger”): -

A professionally capable client would have recognised at the outset that the of-
fered price was less than the necessary price. It is a poor business entity which -
led by its lowest-cost focussed procurement function - must accept responsibil-
ity for the failure here ……. Business realists now need to take control.

Here's where we really appreciate the need for a proper RFP due diligence activ-
ity.

In real world terms, Fracking Heaven would have tendered this part of the pro-
ject and had several quotes. It follows that Downhole was significantly lower in

78 In The Hague in July 2015.

157
cost than the others and Fracking Heaven should have questioned the costs be-
fore awarding a contract that was much lower than the others. Fracking Heaven
owns a part of the problem.

Accepting a lo-ball bid from a 'weak' contractor is at the Client's risk. As they say:
you get what you pay for.

Many suggested negotiated solutions in which Fracking Heaven would cover the cost of
the job ensuring that Downhole made no profit on it.

But I would want to be reasonable. I want them to recover their costs if it is a

pricing issue.

Others suggested helping with cash flow or procurement to alleviate the financial bur-
den. Many were familiar with such practices and differentiated between deliberate un-
derbidding and errors in bidding.

Other comment included: -

Depends on who it is. If it's a major, they should live with the problem. If we
knew about the under-pricing I may renegotiate. Costs me a fraction of the cost
if the sub goes bust. I might tell them they'd be blacklisted. It's also an ethical
issue. We may have got our subcontractor selection wrong.

Never been a blackmailer therefore unable to comment further.

Both parties need the contract to work!

have frequently paid all or a significant part of the sum demanded as it was in
our interests to do so.

A lot depends on the relation between DG and my business.

prop him up for your project and when that is delivered, cease to support

I would negotiate if there has been a genuine error.

The client should know whether the price is fair but in the end this is business.
Pay up. The sub has abused the position but there is no time to deal with it.

158
Although one can detect fatalism or realism in responses most consider the best ap-
proach to be discussion or negotiation. Context remains one key; it depends on the
cause and it depends on who is making the threat. The project remains worth protect-
ing, even in the face of an existential threat.

Respondents recognise that stonewalling won’t work, with almost no variance between
subgroups. Respondents arguably consider it essential to do something.

Few regard this as practical, considering it likely to lead to delay or cause major prob-
lems. Those with higher portfolios and more experience were less likely to agree that it
is practical. Project managers were most likely to agree that it is practical and lawyers
least likely.

159
This is regarded as a constructive approach and one that will work. Russell Weintraub
finds, in a survey of corporate General Counsel, that, overwhelmingly, a request for
price modification would be considered.79 My respondents observed: -

If there has been an inadvertent under-pricing, sometimes it is best to accept

that a re-negotiated price is needed. …But if the under-pricing appears to have
been tactical or reckless, that is another matter....

vital to try to deal with the problem through a negotiated settlement

A later vignette in Weintraub’s article poses a similar question to mine except that
there is no real fault by the seller who has offered to sell oil at a price which would
now ruin him. Around 35% of Counsel took a “too bad” approach while 60% thought
that performance should be excused, or the price adjusted to give something like a fair
outcome for both.80 One of my respondents said, “keep away from the lawyers” and
one or two others made similarly depressing comments. Likewise, one of Macaulay’s
interviewees claimed that one “can settle any dispute if you keep the lawyers and ac-
countants out of it…”.81

79 Russell J. Weintraub, ‘A Survey of Contract Practice and Policy' (1992) WisLRev 1 at

19.

80 Ibid at 41.

81 Macaulay, ‘Non-Contractual Relations in Business: A Preliminary Study’ (n56) at 61.

160
In the scenario described this might be impractical. I followed up one-hundred-and-
eleven respondents of the three-hundred-and-ten who said that termination would
cause major problems and asked whether, were time available, their answer would be
different. Of sixty-six replies six indicated that they would now terminate (another said;
“as a last resort”). Even in this extreme example respondents baulk at termination.
Many explained their thinking in commercially pragmatic terms (which law and econom-
ics scholars might recognise as transaction cost analysis); that replacing DG might end
up costing more than a negotiated solution.82 One said he’d still negotiate “but only
after first ascertaining the actual reasons for DG’s initial failure”.

Others said: -

Termination is dirty business.... nothing sweet about divorce.

better the devil you know.

This scenario may not be plausible unless the Customer already has another
vendor on standby that is safety onboarded and is familiar with the particular
task. If the sub made an honest error and there is no competitive vendor that
can be engaged in time, I would renegotiate the contract and ensure that the
there is an appropriate sharing of the financial risk. My experience suggests

82 Some respondents quoted in Lisa Bernstein, ‘Beyond Relational Contracts: Social

Capital And Network Governance In Procurement Contracts' (2015) 7 Journal of Legal
Analysis 561 at 570-571 say much the same.

161
that bringing a vendor at such a late time period would drive higher risk in
terms of technical and safety performance without any guarantee of compara-
ble costs.

One of the six said: -

It´s a thin line. The assumption was that getting to another supplier as a “serious
option” includes confidence on cost & timing. If that´s not there, the answer
would be to further negotiate.

Ambivalence best describes the responses to this complex option.83

83 Suggested by a fellow student – Robert Coles.

162
The proportion considering this to be a practical solution is similar, slightly higher, to
that which said the same to 8.3 (paying a major part of the loss).

The next question asks respondents to rate possible solutions for deterring such behav-
iour, although, if the subcontractor is truly on the verge of bankruptcy, little can be done
to deter. Respondents do not feel that repayment provides a practical solution.

A small majority thinks that forcing repayment of some or all of the money might act as
a deterrent.

163
I wonder whether using the prefix “fast-track” might have made this option more at-
tractive. Time may be the factor that makes the option less attractive; especially when
compared to 9.4 below.

This solution is felt to be practical. From a legal perspective any solution involving spe-
cific performance involving complex activities is likely to be difficult to manage. I ex-
pected those from continental legal cultures to be more attracted to specific implement
but that is not borne out by the results.

Many contracts make such provisions, but it is extremely unusual for them to be used.

164
This reflects the basic thrust of much of the comment on this and other vignettes that
negotiation, communication, and problem solving are at the heart of good management
of contracts.

Macaulay found in a survey of ten purchasing people that “They expected to be able to
cancel orders freely subject only to an obligation to pay for the seller’s major ex-
penses”.84 It is not clear what the contract(s) said about this, which is, in effect, recov-
ery of the reliance value, but in my experience, that would be the typical provision in a
purchasing contract in a manufacturing environment.85

The general view expressed by this group reflects the views of those who took part in
Vignette 3; even where the “adjustment” (Macaulay’s term) is created by egregious
behaviour, business-people want to talk it through and avoid invoking the law or ter-
minating. This is consistent with Daintith’s work on long-term iron ore contracts: -
Despite their rigidity and lack of sophistication, iron ore LTCs are, with rare ex-
ceptions, still in place after a very violent shake-up in the industry.86
Daintith posits a reason for his findings as: -

84 Macaulay, ‘Non-Contractual Relations in Business: A Preliminary Study’ (n56) at 61

and Beale and Dugdale (n64) at 53.

85 See also Beale and Dugdale (n84) at 52.

86 Terence Daintith and Gunther Teubner, Contract and Organisation: Legal Analysis
in the Light of Economic and Social Theory (De Gruyter 1986) at 186.

165
The LTC creates a privileged trading relationship… of great importance in times
of difficult markets, of glut or scarcity, … by rendering unambiguous each party’s
claim to remain in business relations with the other.87

That is similar to those respondents who talked to me of the risks of and costs of
change. In the LTC example this would be exacerbated by the fact that in this market
there are relatively few players.

Deakin and Michie find “hardship” clauses, providing for adjustment in the event of an
unforeseen contingency, more prevalent in German contracts; in contrast to a common
British view that they “could be confusing”.88 Oliver Williamson makes a hollow claim
that when purchasing customized material buyers can feel safer since sellers will not
withhold supply which construction experience shows to be falsifiable.89 Indeed, I would
rather expect the opposite; customized stuff will require a longer lead time and the
transaction is more complex than widgetting so the supplier has considerably more lev-
erage. No respondent expressed surprise that a provider of a customised solution would
behave like this. One can see from the survey that more cooperation is required in non-
supply type contracts.

Christine Jolls asserts that: -

commitment to stick with an original contract, even if both parties later want to
modify that contract, may improve contractors' welfare. 90

Nothing any of my respondents said supports that view.

87 Ibid 187-188.

88 Michie and Deakin (n46) at 124.

89 Williamson, The Economic Institutions of Capitalism (n16) at 77.

90 Christine Jolls, ‘Contracts as Bilateral Commitments: A New Perspective on Contract

Modification' (1997) 26 JLS 203.

166
167
3.2.5 VIGNETTE 4 – IS IT ABOUT THE KETCHUP?

Squalid behaviour like this is notoriously part of life in the construction industry. The
vignette closely follows the facts in Medirest.91

Even with the Trust still retaining all the money and refusing to talk the attitude of
commercial players is that one plays a long game, talks, manages. Termination is
deeply unpopular and even minor remedies which make the Trust pay small sums for
behaving badly are considered ineffective. Even when furious with bad behaviour

91 Medirest (n3).

168
(“They don’t give a shit about the contract”) termination is not considered a sensible
way to assuage wrath.

The nine interviewees who addressed this vignette enjoyed it. Many felt that manage-
ment had failed and indicated a need to recognise this and find a way to restart dia-
logue: -

I am pretty pissed off with my account manager – annoyed it wasn’t picked up

earlier

Regain relationship. Recoup losses later

Have a conversation that recognises I have stepped in late

Trust and confidence came up several times: -

Why has trust and confidence evaporated?

Fundamental trust problem

Others wanted to understand why things had happened

Is there another agenda?

Is it about the ketchup? [rhetorical]

It is probably a budget issue

And in reviewing their options opinions varied although most still believed that talking
things out would be best: -

Tiered relationship needed. Carry on and hope

169
Get out with as little damage as possible

Fighting fire with fire will make matters worse/digs deeper trenches

No value in keeping this contract. There is no alignment

Draw line in sand. I’m not prepared to pay a penny

Can be straightened out but not through threats

In Rome, I asked twenty-two participants to write down their reactions. Four would pre-
pare an exit strategy, one would use it immediately. Five mentioned root cause analysis
or understanding the context. One thought that mediation might be the next step and
eight that negotiation was the right approach. Eight wondered whether they could find
a way to resolve the problem through increasing scope and finding a way to help the
Trust with what they assumed to be a budget problem. Seven went into transaction
cost analysis pointing out that both parties would be hurt in any permanent breakdown.
Seven mentioned governance as the way that the contract should deal with this and
four that cooperation should be properly defined. Here is a selection of their observa-
tions: -

Express shock/concern/anger.

Meet in person with opposite number and talk like a human not a contract.

Bring the box of ketchup to the meeting and get a discussion going on the reality
of the situation...do they want to be in the press about this… Ridicule.

One hundred and nine respondents commented on the vignette. A few wondered
whether there was an ethical issue: -

behaviour of Trust management may be a hint for bribery.

Is [this] an attempt to discredit in order to appoint a more favoured contractor?

170
Their behaviour seems to be directed at getting us out without telling us why.
Maybe they can get the services cheaper or someone in the Trust does not like
us. It can be anything, even corruption.

I see a compliance aspect in the comment from Trust's manager.

Others felt that it might be possible to rescue things through good management and
communication: -

This is when key account managers/relationship managers really earn their keep

alignment, team building, and other ways of building a collaborative relationship

right from the beginning, with sponsor level support is needed...

A quick and effective senior dispute resolution/relationship panel is in my expe-

rience very helpful.

The conflict can only get resolved by senior level interventions, …the replace-
ment of most exposed squabblers is necessary.

difficult to get a feel for whether the trust are operating an informal policy of
using the fines as a type of discount scheme or there is somebody in the organi-
zation that has some personal issue with your business…..necessary to find the
decision maker behind this trust policy and work on them. After that I would
want to review if the contract is worthwhile.

find the single person in the Trust responsible for this behaviour and attempt to
address personally.

Adversarial relationships very hard to break and will poison the contract and cost
the supplier.

Outsourcing relationships are often described as marriages where give and take
is required. If one side is obstinate it is only going to end in tears.

file a claim in court or request arbitration. This action will elevate the issue to
the executives of the Trust.

171
bend over backwards to support the customer and work through the areas of
dispute, but when your head touches the floor it's time to reconsider the ap-
proach. Ultimately I would escalate to CEO, even shareholders and ask them if
this is how they expect their company to operate (with a lack of moral fibre) and
driven by a lack of values. If they come back and say Yes - get out as quickly and
as prudently as you can and then sue them!

A few had direct NHS experience; the differences are striking: -

Misguided target-driven NHS contracts along with badly motivated or incapable

managers, are a particular target for my own ire.

I am a NED in a NHS Foundation Trust! Given the values in the UK NHS I doubt if
this situation is UK based.

Experienced this behaviour on a PFI contract with a medical facility. Negotiation

and dialogue worked in the end.

Other comment included this: -

You need to determine what is the knot of the problem, is it an individual unrea-
sonable behaviour, in this case, you negotiate the termination of the bad apple.
If it is a bullying corporate behaviour, then run away.

The value of the business is key here - this may only be a contract for one hospital
but a reputation for being difficult can have a ripple effect on other contracts
and ultimately the bottom line. Need to keep negotiating to improve the situa-
tion. Termination is really a last resort.

unlikely that the Trust's management will back down on a systematic decision to
"kill the contractor".

Reciprocating: -

• was not a viable choice because it included "inflating" invoices

• (in accordance with tit for tat, game theory) may be a temporary solu-
tion if carried out in a controlled manner

172
• Fighting fire with fire not very attractive, stooping to their level

Both parties are failures. 'Everyone end with a black eye' …when we first hear of
anything like this we walk away. The trust can afford to waste money, the sup-
plier cannot.

I would also suggest to install a CCTV system to find out who is smuggling stale
ketchup into my stores.

Few would walk away. Almost all would try to find a way to resolve the issue short of
termination; preferring to manage the issue.

I asked respondents what they would do next ranking answers 1-5 in preference

173
From the responses above, in 11.1-11.3, it is clear that respondents overwhelmingly
wish to make the contract work. Optimism abounds. Although still a minority view ter-
mination is more attractive to those of a continental legal culture than others; it may be
that they are less familiar with such behaviour. Those in contracting/procurement
would be more likely to terminate.

The difference in the attractiveness of 11.5 when compared to 11.4 is that, I suspect, it
keeps players onside, working to the contract, whereas fighting fire with fire can be seen
as behaving just as deplorably as the Trust. Work to rule is a sulking approach but it
might well be very effective especially if the source of the trouble is one manager. Those

174
with less experience and those in one major engineering/infrastructure enterprise ap-
peared to be more favourable to a work to rule approach.

Facilities managers, those in outsourcing and IT were more likely to agree that this
would be very effective, as were project manager and commercial respondents.

A clear preference for fast solutions, whether created by management intervention or

a third party is demonstrated.

Most respondents thought that this might be helpful or effective, but it is hard to see
how this might be translated into contract terminology. I have seen contracts which
allow this. On the only occasion that I have experienced it being used a senior technical
man was removed from the team which caused major progress problems, poisoned the
atmosphere (who’s next?) and resulted in commercial confrontation. Those with a US

175
Common Law background were more likely to think that this might work; the opposite
being true for those with less experience.

My experience is that, unless delay or default is negligent or deliberate, these terms are
rarely used other than as negotiating positions. There are exceptions in the construction
industry and in the automotive industry.

The answer here reflects 11.3 above. Commercial actors prefer to talk, manage, play the
long game. The more experience people have the more they find this idea unhelpful
although there is little variance in seniority. Those of a US Common Law background are
also less likely to find termination helpful.

176
As with 12.5 I suspect that this remedy is seen as a sideshow. Performance will not be
helped by commercial recovery mechanisms. There is a similar result in question 5.5
which asks whether the supplier should pay for time wasted in managing the matter.
This is no surprise – Beale and Dugdale uncovered a reluctance to enforce liquidated
damages clauses in their famous paper.92

3.2.6 GOVERNANCE QUESTIONS

The common feature of the governance questions is that they are focussed on mana-
gerial solutions. 12.3 has a more imperative character and, perhaps for that reason, is
less attractive to respondents. Give and take, compromise, honesty, balance, reciproc-
ity and trust are mentioned by my respondents as is the need to deal with issues early,
not to let them fester. The shadow of the contract “sets the scene” - as a framework
or a checklist. The most popular way forward is early senior level intervention. Simon
Deakin, Christel Lane and Frank Wilkinson wonder whether trust can flourish without
institutional support having observed that: -

Interpersonal trust and cultural norms are essential elements in long-term trading
relationships.93

They found that in their sample Macaulay’s work did not apply in that the “vast
majority” of the 61 firms surveyed did want definite binding legal contracts 94 and that
50% of their sample would deal with a lack of trust by immediate termination of the

92 Beale and Dugdale (n84) at 55 - late delivery is primarily regarded as a commercial

problem solved commercially through negotiation.

93 Michie and Deakin (n46), Chapter 5, Contract Law, Trust Relations, and Incentives
for Co-operation: A Comparative Study, at 134. Andrew Cox, Strategic Procurement in
Construction (Thomas Telford 1998) criticises “simplistic” assumptions that trust alone,
"without effective hierarchy of control", will achieve better outcomes.

94 Michie and Deakin (n46) at 123.

177
relationship.95 That may show a difference to my sample, although I did not explore the
issue of trust, or whether binding contracts are necessary, although one German
interviewee said: -

If you trust someone you do not need a contract but if you don’t trust them no
contract will help you!
One of my respondents says that “Following the contract mechanically doesn’t work”.
Others that the contract is a “governance mechanism” or “a management tool” or
“background”. In Beale and Dugdale’s work one sales manager described the contract,
similarly, as an “umbrella under which we operate”.96And Larson says that “…the day-
to-day operating relationship is not managed by the verbiage contained in a contract”.
97

95 Ibid at 128.

96 Beale and Dugdale at 48.

97 See Debbie Harrison, ‘Is a Long-term Business Relationship an Implied Contract?

Two Views of Relationship Disengagement' (2004) 41 Journal of Management Studies
107.

178
179
3.2.7 NEGOTIATION QUESTIONS

There is a very high level of support for negotiation in the first instance, and for Court
support for negotiated solutions. Arrighetti sees give and take as more typical in Brit-
ain – “less stress was placed on strict contract performance: the attitude could be de-
scribed as one of flexible pragmatism”.98

My respondents asserted that “give and take is what makes the process enjoyable”
and that one should “Give and take”, “Be reasonable”. See also Steven Mccann ob-
serving that the hard elements of the contract are balanced by the need to work to-
gether: -

Only a small percentage of PPP projects in the UK have been subject to penal-
ties applied for under-performance … In practice, penalties may be deferred to
improve working relationships between the partners (or to prevent them from
deteriorating further) or to off-set under-performing services with other ser-
vices rendered (National Audit Office 2009, p.56).99

I will argue later, in Chapters 4 and 5, that the law should support this desire for
negotiated outcomes, not by taking the decisions but by creating legal incentives for
parties to engage in the process of problem-solving; part of active cooperation.

98 Alessandro Arrighetti, ‘Contract Law, Social Norms and Inter-firm Cooperation'

(1997) 21 Cambridge Journal of Economics 171 at 191.

99 Steven McCann, ‘Managing Partnership Relations and Contractual Performance in

the Operating Phase of Public Private Partnership' (2014) 15 International Public Man-
agement Review 111 at 115.

180
181
3.2.8 PUNITIVE MEASURES

None of these “punitive” measures, which all involve some form of financial disad-
vantage to the defaulter, finds significant support. Even 9.1, which probably repre-
sents the law where there is duress, is considered impractical.

Macaulay quotes a survey of Polish managers who talk of the need to use threats “in-
telligently”, saying that penalties work well “as a threat”.100 In the ketchup vignette
(Vignette 4 above) one respondent said: -

I would not actually use [punitive measures] but indicate that I could do. Then
say, that would do harm to both sides, so let's rather focus on establishing an
effective dispute resolution mechanism.

Steven McCann quotes a senior PPP manager saying something similar: -

why would you abate, even if you’re entitled to under the contract? It doesn’t
serve any purpose. You have a right to abate, and…the state has a very big
stick, but you want to use it wisely. If you abate them, it hurts them financially,
but the relationship is important and it’s about give and take.101

This squares with the answers to question 5.5; where the possibility of termination
was viewed more favourably than actually terminating.
Another that: -

100 Jacek Kurczewski and Kazimierz Frieske, ‘Some Problems in the Legal Regulation of
the Activities of Economic Institutions' (1977) 11 Law & Society Review 489 at 497 –
see also Stewart Macaulay, ‘Elegant Models, Empirical Pictures, and the Complexities
of Contract' ibid 507 at 519-520.

101 McCann (n95) at 125.

182
Although "High interest rates to be charged for underpayment of invoices or
overcharging" might seem appealing, my experience is that such charges are
never invoked.

As I note above the reluctance to use punitive provisions is in line with Beale and Dug-
dale who say that “Buyers [did not] seem to be very keen to make use of [liquidated
damages]”.102This is very much in line with my experience, except in the construction
industry. In one example cited by Lisa Bernstein punitive measures were used when
the relationship was deteriorating or when the VP interviewed wanted to get the at-
tention of more senior managers with the wherewithal to solve the problem. 103

102 Beale and Dugdale (n84) at 55. See also Bernstein (n82) at 571-572.

103 Bernstein (n82) at 571.

183
184
3.2.9 TERMINATION

Actual termination, represented in the first, third, and fourth block, carries very little
support. Potential termination, carrying threat, is found to be helpful but insufficient
or unhelpful by a large majority. This underlines the general desire one finds to solve
the problem whilst keeping the contract alive. It may derive force from the fear of the
cost of change; mentioned by a number of my respondents.104 Or it may come from
recognition that a replacement, especially in a commodities transaction, or in a tight
market, may not be much different to the current supplier. One Vignette 3 respondent
observed: -

I’d still negotiate”. Termination is still disruptive for both parties and it’s possible
after negotiation with Downhole that they’re still cheaper, especially taking into
account the cost to change. If after negotiation they’re more expensive, then I’d
go for the next cheapest, time allowing.

104 ibid at 571.

185
186
3.2.10 FAST TRACK DISPUTE RESOLUTION MEASURES
Fast track proceedings with the aim of producing a decision is attractive to many re-
spondents. Similarly, third party expert facilitation attracts serious interest. Enforced
negotiation is not considered useful whereas fast track dispute resolution with specific
performance powers is a popular option. This seems to reflect the interest respondents
show in performance of the contract.

However, the attitude of small businesses to mediation as expressed in the responses

to a consultation on whether there should be a Small Business Commissioner (I imagine
it’s the business that is small) is very mixed with almost half saying that they would not
use mediation. Some of that was due to fear that mediation could be expensive, time
consuming and slow.105

105 A Small Business Commissioner: summary of responses (https://wwwgovuk/gov-

ernment/uploads/system/uploads/attachment_data/file/468368/BIS-15-248-sum-
mary_of_responses-a-small-business-commissionerpdf, 2015).

187
188
3.2.11 SELF-HELP REMEDIES

Accepting that withholding payment is crude, there is a slim majority which considers it
effective and a smaller number who consider it unpleasant but the best option. Explor-
ing matters with other users is also considered effective. Third party intervention and
inspection a practical option. A potential buyout is not a serious possibility. Extending
the warranty period and allowing use of the machine pending resolution of the problem
seems to be another practical method of dealing with the problem. Working to rule,
sulking, making life difficult is more popular than reciprocating which is seen as behaving
as badly as the client.

189
3.2.12 HOW IMPORTANT IS COOPERATION IN THE MANAGEMENT OF CON-
TRACTS?

190
I asked respondents to rate cooperation from mission critical, (meaning that the con-
tract will fail without it), to unnecessary. I hoped to find a strong correlation between
mission critical / important answers and those who manage symbiotic contracts.

191
This is an unexpectedly definite result which is consistent across sub-groups. Lawyers
are outliers, more likely to be in the “important” group than “mission-critical”. I had
thought that around 70-75% of respondents would select the top two options. Taken in
conjunction with the result below showing a preference for high level cooperation, not
mechanical cooperation but real working together for a common objective this is a very
striking finding.

A small number, around twenty, describe their experience as being long-term supply
contracts or other, more transactional contracts. Of that group 60% say that coopera-
tion is important, and 30% say that it is mission critical differing, expectedly, from the
30.5% and 58.5% respectively in the whole sample. Those who manage complex con-
tracts rate cooperation as more important than those who operate more transactional
contracts.

192
3.2.13 WHAT DOES COOPERATION MEAN?

Interviewees talked of flexibility, compromise, trim/negotiate, give and take (11), com-
munication and mutual understanding (7), the need to “talk things out”, resolve issues
(15), communication (10) and escalation, keeping “friction to one side” or other man-
agement points (14). One counselled that cooperation can “descend to a nice chat” and
that some formality is required. The theme throughout is that soft and hard issues are
in play. One observed that it isn’t a question of “fairness”. Another that “woolly stuff”
was insufficient. One said that it is “implicit that people act in a rational manner”.” An-
other raised the importance of “face time” and one said “blackmail is old school”. “Be
reasonably frank”, a “little more upfront”, “recognise issues” and “behave reasonably”
were mentioned. No-one used good faith although trust, respect and honesty were
used. Others said: -

The sum is greater than the parts.

193
About problem solving, sorting out the issues, not being too formal when there
are issues.

I received twenty-three suggestions for other definitions of cooperation. Most could be

fitted into the definitions above.

3.2.14 WHICH CONTRACT TERMS PROMOTE COOPERATION?

I identified a number of provisions which help achieve cooperation. I asked respondents

to identify others.

This governance question, covering issues of communication, review and management

showed strong support, consistent across sub-groups, for strong contract governance
provisions. One might argue that the Common Law cannot provide such particularity,
but it can, I argue in Chapter 5, provide support for deterrence of bad practice, charac-
terised for this purpose as poor communication, lack of openness or candour, failure of
management to intervene and solve problems.

194
Poor change management, or opportunistic behaviour when changes and delays occur,
has provided fertile soil for disputes especially in the construction industry.106 The bal-
ance between very likely and helpful is different between 15.2 and 15.1, perhaps show-
ing a preference for management over mechanics.

The responses are similar to 15.2 above. The difference between this question and 15.1
is in the mention of disincentives. As in the answers to 15.2 it might be that managers
prefer management to mechanics.

106 Stella Rimington, Open Secret (Hutchinson 2001), former Director General of MI5,
said in her autobiography, '...the Thames House Refurbishment was fraught with diffi-
culties. It was clear that dealing with the building industry was just as tricky as dealing
with the KGB.’

195
Overall the answers to these questions are consistent with those to open questions.
Respondents look to good governance and communication to drive cooperation.

I then asked whether respondents considered other provisions to drive cooperation.

Interviewees suggested escalation provisions (7), fast track dispute resolution provi-
sions (6), pain/gain provisions, communication (4) and “softer” provisions. I received
one hundred and five other responses with around three thousand seven hundred
words. Many repeated, in different forms, the ideas floated in the questions and some
observed that the options seemed to have covered the point. Other suggestions in-
cluded: -

De minimis provisions in contracts help to avoid a lot of little claims removing

focus from bigger issues - but these need to be applied correctly to avoid clients
seeing them as the ability to instruct additional free work.

Joint innovation or customer excellence forums.

Value engineering...sharing cost benefits as a result.

I cannot imagine that a contract provision with the obligation of good coopera-
tion is really practicable. To promote cooperation it is helpful that the rights
and obligations of each party are specified in the contract

Sometimes it's about sharing the pain.

196
3.2.15 HOW IS COOPERATION ACHIEVED?

Interviewees spoke passionately about how one achieves cooperation. The snapshot
below reflects the basic themes of management, mutual understanding, reasonable be-
haviour, relationship management, governance and problem solving. My sample saw
the building of personal relationships as essential to success and the creation of coop-
eration through mutual understanding, role clarity, good communication and the crea-
tion of formal and informal problem-solving mechanisms.

Figure 15 How to Achieve Cooperation

Communication (or communication, communication, communication) 107 was often

mentioned. Respondents spoke of “less finger pointing”, recognition that issues need to

107 Communication and reporting is among the “top ten” important contract terms
according to IACCM surveys - IACCM, 2013/2014 Top Terms’ (2014).

197
be resolved (flexibility and reciprocity), the need for “soft skills training”108 (“how can I
help?”), poor management of “information flow” causes 99% of problems,109 the need
to “know the contract in the broadest sense”, formal and informal dialogue, the need
to “lead” or “be brave” to “take responsibility”, to do the “right thing”/exhibit the “right
behaviours”, work out socially/informally how to work together, treat each other with
respect, formal meeting structures (use “set pieces”), proper reporting (records), clear
lines of communication “at the right level”, openness (no “Chinese whispers”), “figure
it out”.

I received four hundred and four comments. I broke them down into five basic catego-
ries/themes, or, in process terms, inputs. I considered, once this had occurred to me,
working on a Six Sigma SIPOC (Supplier, Input, Process, Output, Client) chart but that
has a client at one end of the chain and the supplier at the other end. In this case we
need both parties to appear each end of the chain, so I created an IVAR (my acronym);
which provides me with a method of analysing the results into a properly configured
“how”. The themes or Inputs are Agreement, Communication, Management, Attitude
and Values (ACMAV).

The first theme or Input, mentioned one hundred and seventy-one times, was Agree-
ment/Contract, which creates “the ground rules”, and through the Vector of contract
content (clarity, scope, incentives, obligations, escalation formalities), one creates Ac-
tivity (in this case kick off meetings) which should Result in alignment.

108 From a senior counsel who once worked for me; who he reminded me that I could
have benefitted from this.

109 Lord Brown’s references to adamant refusal to provide information and Lord Ham-
ilton’s of “lack of candour” in Ritchie (n67) come to mind.

198
Table 13 Achieving Cooperation in Complex Contracts – Agreement/Contract Theme

How to achieve cooperation in the management of

complex contracts
404 comments received – number made against each dimension shown

Inputs Vectors Activity Results Com-

ments
Agreement/ Clarity 30 Kick off meet- Alignment 13 Agree the
Contract ings 19 ground rules
Scope, obli- Contract/Project
gations and Management
171 management Plan 11
19

Objectives
17
Balance (fair- Balance
ness?) 17 trust and
control
Escalation
formalities
11
Incentives 19 Reward good Skin in the game
behaviour. Pe- 1
nalise bad be-
haviour 9

The second Input is Communication, mentioned two hundred and ninety times, and
through openness, clarity, active communication, and pre-empting problems, by sharing
information and expectations one creates mutual understanding and alignment. Some
respondents were emphatic about communication (communication, communication,
communication) and others mentioned “constructive challenge” or a no-fault culture.

199
Table 14 Achieving Cooperation in Complex Contracts - Communication Theme

How to achieve cooperation in the management of

complex contracts
404 comments received – number made against each dimension shown

Inputs Vectors Activity Results Com-

ments
Communication Openness 47 Mutual under- Communica-
Firmness/clarity standing 46 tion. Com-
19 Understand- munication.
290
ing each Communica-
other’s drivers tion
30
Active commu- Share expecta- Alignment 1 Constructive
nication 19 tions 7 Share challenge
information 1
Early -don’t let no fault cul-
it fester -36 ture

pre-empt
problems
Listening 14

The third Input is Management, mentioned three hundred and forty-five times, and
through the Vectors of problem-solving, dealing with change, team-building, role clarity
(rigorous, tiered governance), management Activities such as performance reviews, re-
lationship building, escalation or involvement of senior management one achieves clear
responsibilities (“establish boundaries” so everyone knows who does what), open lines
of communication, and allows effective dispute resolution. Respondents commented
that important dimensions included “no personal ego”, “quality of leadership is the
thing”. In relationship management, they said “you can’t fall out with the guy next door
very day” and that achieving it isn’t easy – “one team building piss-up at the start of the
job isn’t enough!” Other advice included “don’t deal with idiots”.

200
Table 15 Achieving Cooperation In Complex Contracts - Management Theme

How to achieve cooperation in the management of

complex contracts
404 comments received – number made against each dimension shown

Inputs Vectors Activity Results Com-

ments
Manage- Problem solv- Regular perfor- Clear responsibilities No personal ego.
ment ing 5 mance reviews for actions and issue Quality of lead-
Deal with – mutual 81 resolution 6 ership is the
change 2 thing.
345
Share the highs
and lows
Plan 2 Management Plan and
activity plan 2
Team building Build relation- Open lines of commu- You can't fall out
29 ship – formal nication 8 with guy next
and informal door every day.
85
Build a shared vi-
sion

one team build-

ing piss-up at the
start of the job
isn't enough!

Joint extra-cur-
ricular activities.
Bowling and
barbeques in
North America.
Suckling pig
roasts and danc-
ing in East Eu-
rope. Petanque
tournaments in
France. Ban-
quets in China

201
How to achieve cooperation in the management of
complex contracts
404 comments received – number made against each dimension shown

Inputs Vectors Activity Results Com-

ments
Role clarity Clear roles 43 Someone owns the ac- Establish bound-
tions 6 aries - who does
Tiered roles 17 what and what
Everyone understands happens if this
Senior/execu- roles/responsibilities 4 does not work.
tive manage-
ment involved
17 Don't deal with
idiots.

Keep away from

the lawyers
Escalation 27 Clear tiers of Quick and effective Understand the
management dispute resolution downside of
15 conflict

Rigorous, tiered
governance
Empowerment Pay on time!
3

Attitude, mentioned one hundred and twenty-five times, is characterised by reasona-

bleness, working together, and taking responsibility (“be bold and brave”), and to
achieve Results of active cooperation and win-win, managers utilise flexibility, give and
take. It is necessary to be objective and unemotional, to be “unconditionally construc-
tive”, to be “firm but fair” and to be guided by a “genuine desire to do the right thing”.

202
Table 16 Achieving Cooperation In Complex Contracts - Attitude Theme

How to achieve cooperation in the management of

complex contracts
404 comments received – number made against each dimension shown

In- Vectors Activity Results Comments

puts
Atti- Reasonable- Flexibility 16 Active coopera- Firm but fair ap-
tude ness 19 tion 1 proach

Find solutions in-

125 stead of allocat-
ing blame

Not sweating
the small stuff
Working to- Give and take 15 Unconditionally
gether 20 constructive
Assist each Reciprocity 7 Win win 21 Treat suppliers
other 13 and customers
as you would ex-
pect to be
treated.
Be brave and Compromise 9 Don’t fudge
bold. Take re-
sponsibility 6 Genuine desire
to do the right
thing.
Objective/unemo- Do not make it
tional 6 personal

Values/behaviour, mentioned one hundred and twelve times, is characterised by hon-

esty (don’t be afraid to say something that isn’t popular”), respect and reliability (“keep
to your word”). Being transparent will create trust (although one used the Reaganism
“trust but verify”) and common goals. One respondent said

Everyone knows that things can go wrong …most people will be gentle if you
explain what happened.

203
Table 17 Achieving Cooperation In Complex Contracts - Values/Behaviour Theme

How to achieve cooperation in the management of

complex contracts
404 comments received – number made against each dimension shown

Inputs Vectors Activity Results Com-

ments
Values/ Honesty 28 Transparency 9 Trust 32 Don't be
Behaviour afraid to
say
some-
thing that
isn't pop-
ular,

Open,
honest,
honoura-
ble.

Everyone
knows
that
things
can go
wrong
and most
people
will be
gentle if
you ex-
plain
what
hap-
pened
Respect 11 Common goals 22 Focus as
team on
contract
delivery
success,
not finger
pointing.

204
How to achieve cooperation in the management of
complex contracts
404 comments received – number made against each dimension shown

Inputs Vectors Activity Results Com-

ments
Reliability 10 Keeping
to your
word, be
it a threat
or a
promise
Trust but
verify

CONCLUSIONS FROM THIS EMPIRICAL EVIDENCE

The purpose of my survey was to “generate data on what cooperation means to com-
mercial players and to determine the needs of those commercial players in the man-
agement of complex contracts”. I wanted to determine whether cooperation is im-
portant, what it means and how it can be, and is, achieved.

3.3.1 COOPERATION IS IMPORTANT

99% of respondents said that cooperation is mission critical or important. Interviewees

described cooperation variously as mission critical (5), “everything”, “key”, “absolutely
critical”,” the most important thing”, critical or extremely important (3), “key to suc-
cess”, or “don’t get the job done without it”. One said symbiotic, another important
and another very important; which generally aligns with online returns. Of the twenty-
two answers in Rome, two said important, eight very important, others essential, fun-
damental, key, crucial, top-max, vital, growing and one said “depends”.

3.3.2 WHAT COOPERATION MEANS

205
There were four hundred and eighty-one responses to the request for a definition of
cooperation. Respondents could select more than one answer; 46% did so. Two hun-
dred and seventy-five respondents selected the “high-level” mutual answer: -

Working together, sharing responsibility for outcomes, putting aside party in-
terests, working towards a joint or mutual goal in a relationship underpinned
by mutual trust

And three hundred and forty selected this edited version of Judge Toulmin’s deathless
definition110 :-

Each party acting reasonably, and objectively, not opportunistically, when

problems occur, being flexible with solutions where the problem is not funda-
mental

99% + selected one or other of these options, either on its own or in combination with
others. Around 23% chose the top option alone and 30% option 2 alone. A further 11%
chose options 1 & 2. Conversely, around 1% chose only one of the two bottom options.
I have not seen any such clear definition of cooperation in other empirical legal research.

3.3.3 COOPERATION IS ACHIEVABLE

110 Anglo Group at [125] “The duty of co-operation … extends to the customer accept-
ing where possible reasonable solutions to problems that have arisen. In the case of
unimportant or relatively unimportant items that have been promised and cannot be
supplied each party must act reasonably.”

206
The social and business nature of the management of complex contracts is apparent
from responses.111 Relationship building, communication, meeting people, cultural ex-
perience, teambuilding, minimising or solving conflicts, are mentioned by large num-
bers of respondents. However, it is business-like, unemotional, clearly focussed on
outcomes with an underlying tenor of performance; getting the business done.
Consistent with other answers 96% of respondents identified governance provisions
promoting formal communication, review, and dispute resolution as likely to assist in
creating cooperation and 95% thought the same of provisions ensuring clear fair and
fast decision-making where change is required together with fast-track dispute resolu-
tion. 84% agreed that discouraging late notification of problems would assist in promot-
ing cooperation. 78% thought that proportionality, ensuring that termination is only
possible where matters go to the heart of the contract, would assist. Risk/reward shar-
ing mechanisms were viewed helpful or more by 86%. Pricing conditions providing pro-
tection, preventing a party from “losing its shirt”, were less attractive than risk/reward
sharing mechanisms. Few other suggestions were made, allowing me to infer that my
list was about right.

3.3.4 SUMMARY

There are major differences between my study and previous studies. My study asks ex-
perienced commercial players to answer open questions about the wider frame of ref-
erence, their day to day actuality. I want to draw out coalface meaning for business
necessity and commercial coherence.

My survey uses real-life vignettes, drawn from real cases, which allow me to deter-
mine respondents’ attitude to situations already adjudicated; and to compare those
answers to those given to open questions. The coherence of the data, shown in the
“variance snapshot” in Appendices, together with the triangulation work, shows that it

111 Jane M. Wiggins, Facilities Manager's Desk Reference (Wiley 2010) says that facili-
ties managers need “highly developed communications skills” which will enable them
to build “excellent customer relationships – at 476.

207
is broadly comparable with other empirical studies when questions and context can be
directly compared, allows me to make a claim that it unearths certain commercial ex-
pectations.

It is worth considering Macaulay’s conclusion: -

Contract, then, often plays an important role in business, but other factors are
significant.112

Macaulay appears to mean by “contract” the “legal”, hard, black-letter element of the
deal. To respondents, the hard part of the contract is part of a framework, the “rules
of the game”, which comprises hard and soft elements; each of which must work. The
contract comprises a hard core of legal terms and, for example, scope definitions and
processes, and a softer penumbra of communication, give and take, and relationship
building.
The hard elements are of two types. One is the “contract” which few want to use and
that, I infer, means the “terms and conditions”, the “legal” elements, which many, in
line with Macaulay’s findings, don’t want to wave at the other party, although they rec-
ognise their necessity. As Deakin, Lane and Wilkinson concluded: -

the vast majority of firms saw both the use of writing and attachment of legal
force as as important means of clarifying the agreement…” and it would be
“complacent” to assume that a “voluntaristic attitude” to the legal system is
“conducive to cooperation”.113

The other hard element includes scope, objectives, risks, and governance and there is
a clear desire for clarity in these elements. As one respondent says it allows “service

112 Macaulay, ‘Non-Contractual Relations in Business: A Preliminary Study’ (n56) at

67.

113 Michie and Deakin (n46) at 123 and 134 Deakin Lane and Wilkinson as quoted at
n92 above.

208
expectations, delivery, management information and costs to be discussed openly”.
Macaulay quotes businessmen on how you solve problems: -

You get the other man on the telephone…you don’t read legalistic clauses at
each other if you ever want to do business again….

Customers had better not rely on legal rights…. [I will] not be treated as a crimi-
nal114
One of my respondents says, “I might get the contract out but that’s a failure for eve-
ryone”. Others made similar points, one (a finance director) saying “Non-enforcement
is the key. Success means getting to the objectives without looking at the terms and
conditions”. This means talking, picking the phone up, trying to resolve problems in a
business-like manner. The contract, the hard contract, is a key part of the background
to this work.

The soft elements also comprise two types. One is the informal element of governance
and deal-making. The other is informal relationship-building. Relationship building un-
derpins success by helping each party to understand others’ drivers and opinions and
ensures that formal and informal channels of communication are kept open and used
appropriately. Informal channels, which work both in having “boots on the ground”
and in social events are equally valuable in management terms; if not easy to describe
in legal principles. Lyons and Mehta describe building personal relationships as assist-
ing in the development of socially oriented trust (SOT), meaning that a: -

… history of social relations creates shared values, moral positions, affection

and friendship.115

114 Stewart Macaulay, ‘Freedom from Contract: Solutions in Search of a Problem?'

(2004) 2004 WisLRev 777 at 793.

115 Michie and Deakin (n46) Chapter 2, Private Sector Business Contracts: The Text
between the Lines at 53.

209
And that investment in personal relationships turns on “perceived inadequacies in the
law of contract”.116 In my sample, not one respondent mentioned affection or friend-
ship. One mentioned a team building “pissup” as being insufficient; perhaps consistent
with Lyons and Mehta’s references to investments in SOT, even by firms which had cov-
ered “every feasible aspect” of the deal in writing; such investments including visits to
the opera and ballet.117

The purpose of formal and informal relationship-building is to ensure that communica-

tion channels are open and clear; that everyone knows who does what, or, when things
go awry who to talk to and how to talk to them and what fixes are possible within rea-
sonable boundaries. It also recognises that contracts are neither perfect nor complete
and that there is room for legitimate debate as to what they mean, notwithstanding
that such debate should be conducted openly and constructively. There is no emotional
content; it is business driven, allowing the contract work to proceed in a recognisable
form. Steven McCann says that: -

…. there is a link between the public partner’s contract management style for
achieving a positive organisational culture and satisfactory delivery of VfM
[value for money].118

This is another reason why parties cooperate, communicate, try to make it work. It is
cheaper!

Cooperation in contract management involves complex human and corporate interac-

tion. It is a social and a business process, intellectual and managerial in nature, struc-

116 Ibid at 59.

117 Ibid at 59.

118 McCann (n95) at 126 also quoting other sources; “Developing good working rela-
tionships between partners can decrease the amount of corrective action (e.g. abate-
ment) that might otherwise be needed to improve contract management outcomes”
from Ernst and Young, The journey continues: PPPs in social infrastructure (2008)
http://infrastructureaustralia.gov.au/policy-publications/publications/Ernst-Young-.

210
tured and unstructured. It requires business-like interaction, efficacious, formal and in-
formal, between people and within businesses/enterprises working towards a success-
ful contract outturn. Respondent opinion inspirits Charles Handy’s definition of man-
agement, providing the missing “x” which makes resource=output.119

My survey respondents were offered the option of reciprocation in Vignette 4 and few
found the idea attractive; just 6% rating as their first choice and 12% as their second
choice. It was said that it involved “stooping to their level”, would dig “deeper trenches”,
or “relationships would sour”. I was surprised at this finding, but it is consistent with the
relationship-building, communicate and make-it-work philosophy of those engaged in
management of these contracts. Tit-for-tat, the bedrock of PD games, simply does not
figure in the management of these modern complex contracts. It is ditched in favour of
pragmatism; a realistic, problem-solving approach to the contract and its difficulties.
Those differences reflect the real-world nature of my study and the closeness of re-
spondents to the actuality of managing contracts. It is at once too simplistic, binary in
nature, and does not provide the basis for a solution to the problem. Parties recognise
that they will have to talk at some stage and that to reciprocate will only put that day
off.

The themes from the vignettes disclose a marked reluctance to use punitive measures
or to terminate but see value in fast track dispute resolution, negotiation, communica-
tion, and professional governance. These require constructive engagement, that the
parties talk, communicate, and work together to find the cause of the problem and
agree solutions. This requires time and effort, as parties must make proper endeav-
ours to find space and time to consider and unravel issues and to put the lid back on
the can of worms. This underlines the conclusion that respondents are more inter-
ested in performance than in revenge, the task is about making the contract work.

There is some, limited, evidence that lawyers are more often outliers than other
groups. They are, for example least likely to agree that paying up and preserving your

119 Charles B. Handy, Understanding Organizations (4th edn, Penguin 1993).

211
rights is a practical solution, and more likely to see cooperation as important than as
mission-critical. Another interesting point is that there is considerably less gender
based divergence than some authors might think.120

In broad terms, what I have gleaned from my respondents is consistent with other
studies. However, there are significant differences in that what I have heard is that the
contract creates the relationship; not vice versa. The relationship may pave the way
for future business, but its raison d’être is that of making the contract at hand work. It
follows the contract or contracting process; it does not lead it.

Parties do not cooperate in a vacuum. They cooperate to make the contract work, in
part because people are generally cooperative, and partly because making the con-
tract work is part of the deal that they have done; they feel somewhat obliged to co-
operate. Cooperation is also necessary to make these symbiotic contracts work; that’s
another reason why they cooperate. The question is what parts of the cooperation/re-
lation can be regulated and what part of that should be regulated (if any). Most of the
time aeroplanes don’t crash. Most of the time people don’t get cancer. Most of the
time contracts don’t go wrong. The argument is the same in each case. When these
things happen, the job of the engineer, the doctor or the lawyer is to find out what
happened and try to prevent it from happening in future.

The survey provides a definition of cooperation, a clear opinion that cooperation is

necessary and many hints and tips on how to achieve it. The requirements of good
communication between the parties, timeous and accurate information flow, solid for-
mal and informal governance, and reasonable attempts to solve problems and dis-
putes (constructive engagement) are essential to successful performance.

120 Rosemary C. Hunter, Clare McGlynn and Erika Rackley (eds), Feminist Judgments:
from Theory to Practice (Hart 2010) - Linda Mulcahy in Commentary on Baird Textile
Holdings v Marks Spencer Plc at 188; discussed below in subchapter 5.2.1.

212
Chapter 4 THE SOURCE, JUSTIFICATION AND APPLICATION OF THE
DUTY TO COOPERATE

In Chapter 2, I explored the extent to which the law can and will support a duty to co-
operate to enable or facilitate performance, finding variability in scope and methodol-
ogy. I argued there that the duty should emerge through construction, whether
through reading the contract and deciding that it is clear that the parties must work
together or from reading it and examining the background and reaching that conclu-
sion. The theme of the subchapters describing the law followed the pellucid phraseol-
ogy of Lord Blackburn in Mackay v Dick: -

where in a written contract it appears that both parties have agreed that some-
thing shall be done, which cannot effectually be done unless both concur in do-
ing it …1

In Chapter I described both “something” (many somethings) and how it appears, not-
ing that it is sometimes obvious as in Mackay v Dick, where a condition of acceptance
of the machine in question was that it must pass site tests. In that case the “some-
thing” is facilitation of access to site and the arranging and carrying out of suitable
testing. In other cases, such as IT contracts the “something” may not be so obvious
and may resemble a standard of behaviour or a code of conduct more than a concrete
obligation. In these cases, the “something” arises from the nature or background of
the contract.
In Chapter 3, I sought to unearth the views of commercial experts who manage mod-
ern, complex, symbiotic contracts to determine from them what it is, whether there is
a Blackburn “something”, that effectuates work under a symbiotic contract work and
how to make a contract work. These experts made it clear that contract success de-
pends on hard and soft elements, each of which can be further sub-divided into hard-

1 Mackay v Dick at 263-264.

213
legal and hard-scope/governance and soft-formal and soft-informal relationship build-
ing. There was marked reluctance to deploy punitive measures or terminate (even
where conduct has been dreadful), and significant emphasis on relationship building,
professional governance, fast-track dispute resolution, negotiation, talking, communi-
cating, and working together to find the cause of the problems and to agree solutions.
The essence is business-like interaction, little or no tit-for-tat, but get on with it and
make it work.

Accepting that legal recognition of such expectations must be argued for,2 my argu-
ment is a hard-core contextualist position; that these expectations are core to the con-
tract, and necessary incidents of successful performance. They define the “some-
thing”. Generic and specific content or description emanates from shared, normative,
commercial expectations; evidenced by the practices or assumptions or understand-
ings of the morally reasonable and commercially experienced.

Without attributing actual or potential binding force to any specific “something” (I do

this in Chapter 5), I explore theoretical writings on commercial expectations in subchap-
ter 4.1, reviewing both definition and source ideas, and follow this up in subchapter 4.2
by examining the tools available to Judges and litigants to manifest, or evince, commer-
cial expectations in trial conditions.

I take a pragmatic and incremental approach, showing that development of the law is
possible and that the tools for unearthing expectations already exist and do not need
to be invented. Deeply contextual contract construction, perhaps balanced,3 with one
eye to commerciality,4 is, in my opinion, the most promising possibility. The rules on

2 Francois du Bois ‘Good Faith, Good Law?’ http://wwwarchivelegalscholarsacuk/edin-

burgh/restricted/downloadcfm?id=312 at 7.

3 McMeel ‘ Foucault’s Pendulum: Text, Context and Good Faith in Contract Law’ at 21.

4 The term used by Arden LJ in Re Golden Key Ltd [2009] EWCA Civ 636 at [28].

214
admissibility of evidence are well enough developed to allow parties to make contex-
tual cases and Judges have sufficient case-management power and sometimes the
right experience to manage out extraneous material and to get the root of the context.
There is room for adjustment of various policy based restrictions on evidence and
these could be made without opening floodgates and without creating uncertainty (in-
deed, I argue it would decrease uncertainty).

THEORETICAL PERSPECTIVES ON COMMERCIAL EXPECTATIONS

The best-known claim for expectations is Johan Steyn’s: -

A thread runs through our contract law that effect must be given to the reason-
able expectations of honest men... that are, in an objective sense, common to
both parties…. which satisfy an objective criterion of reasonableness.5

Professor Sarah Worthington, rightly in my opinion, says that this “touchstone” is “too
vague to provide a useful normative yardstick”.6 Steyn does, however, suggest that: -

usages and practices of dealings in those disparate fields will be prime evidence
of what is reasonable.7

Robert Bradgate describes the Steyn touchstone as a “litmus test” which “identifies the
principle which underlies the detailed doctrinal rules”.8 Catherine Mitchell suggests that
reasonable expectations are “not a uniform standard but may be tied to community

5 Steyn.

6 Worthington Introduction xiii.

7 Steyn (n5) at 434.

8 In ‘Contracts, Contract Law and Reasonable Expectations ’ in Worthington (n6) at

667. In Bailey H. Kuklin, ‘Justification for Protecting Reasonable Expectations,' (2000)
29 Hofstra LRev 863 expectations are described as a “dull blade rather than the honed
scalpel” required at 865.

215
standards of fair dealing”. 9 Paul Finn describes them as constructed from the “raw ma-
terials” of: -

The character and terms of the contractual relationship in question, on its con-
text and on how the parties have conducted themselves ….10

To justify my claim that the law should be repositioned to give effect to, at least, some
of the norms described in Chapter 3, I will describe the changes in commercial reality
which have occurred in the last thirty or so years. Having shown that there is significant
change in the type of contract with which Courts are faced, and in complexity and
commercial attitude, I then consider various theoretical works on the definition and
source of commercial expectation arguing that my, Steynite, normative approach to
commercial expectation works in theory, although I argue that where parties have
actually agreed, in negotiation or by conduct, the Courts should enforce their
“subjective” agreement.

Using Stephen Smith’s taxonomy, I argue that justification for enforcing or taking into
account commercial expectation is normative. He refers to expectations of the morally
reasonable party; 11 I equate morally reasonable with commercially experienced who
know what it takes to make performance possible and successful in a symbiotic contract.

4.1.1 THE CHANGE IN COMMERCIAL REALITY AND COMMERCIAL PRACTICE

The commercial world has changed since Stewart Macaulay first investigated the phe-
nomenon of non-contractual relations in business.12 Many contracts managed by survey

9 Catherine Mitchell, ‘Leading a Life of Its Own? The Roles of Reasonable Expectation
in Contract Law' (2003) 23 OJLS 639 at 642.

10 In ‘Fiduciary and Good Faith Obligations under Long Term Contracts’ in Dhar-
mananda K (ed) Long Term Contracts (The Federation Press 2013) at 137.
11 Stephen A. Smith, ‘Reasonable Expectations of the Parties: An Unhelpful Concept'
(2009) CBLJ 366 at 369.

12 Macaulay, ‘Non-Contractual Relations in Business: A Preliminary Study’.

216
participants, including IT services, IT design and/or management, internet betting, en-
ergy management, LNG/GTL plant contracting, outsourcing and facilities management,
were unknown in the 1960s. Long-term maintenance and logistics contracts were rare;
being more usually managed ad-hoc or in-house.

Macaulay’s contacts, and Beale and Dugdale’s, 13 came from manufacturing entities
where the contract involved transactional buying and selling. Contracts have become
significantly more complex and interdependency has increased which can be gauged
from this PWC slide, showing the expectations of sophisticated clients in sophisticated
facilities management contracting.

Figure 16 Evolving Client Demands in Facilities Management

More recently Ian Macneil discussed relational contracts involving an automobile man-
ufacturer ordering “from another manufacturer with which it regularly deals, thousands
of piston rings …”.14 Even these contracts are now likely to be highly complex. The crank-
shaft installed in a Mini, an example used to illustrate integration of EU markets, a Brexit

13 Beale and Dugdale.

14 Ian R. Macneil, ‘Contracts: Adjustment Of Long-Term Economic Relations Under

Classical, Neoclassical, And Relational Contract Law' (1978) 72 NWULR 854 at 887. He

217
leitmotif, crosses the channel several times before final installation. The crankshaft is
made in France, service work carried out in the UK, then sent to Germany, installed in
the engine and returned to the UK for final installation.

Figure 17 The Journey of the Mini’s Crankshaft 15

The contracting world described by Oliver Williamson comprises product or plant. Ser-
vices do not rate a mention, far less mixed service and product and system contracts.
This is simplistic, and too reductionist. The commercial world becomes three types of
contract, three investment characteristics and two transacting frequencies. 16

has noted that “services are inherently more relational than the transfer of goods” in
work recognising that service contracts were assuming a more central role in commer-
cial settings Ian R. Macneil, ‘Many Futures Of Contracts, The' (1973) 47 SCalLRev 691
at 694.

15 The Guardian https://www.theguardian.com/business/2017/mar/03/brexit-uk-car-

industry-mini-britain-eu.

16 Oliver E. Williamson, The Economic Institutions of Capitalism (Free Press 1985) at

73-79.

218
Figure 18 Oliver Williamson's Governance Charts

The “essence” of Oliver Williamson’s work on contractual governance is that “particular

mechanisms or structures will emerge as responses to the characteristics of transac-
tions”.17 Nowadays, contracts involve hospitals, offices, complex plants, or infrastruc-
ture; mixing service provision and equipment supply, even the handover of and sharing
of management techniques and know-how.18 Zoe Ollerenshaw describes modern con-
tracts as “a ‘thick web’ of interfaces …a complex web…”19 and many one-off contracts
involve medium to long-term, complex, multifaceted, limited-term, performance, pos-
sibly between previous strangers.

17 Oliver E. Williamson, The Mechanisms of Governance (OUP 1996). Michie and

Deakin at 9 and see also Lyons and Mehta at 63 ‘Private Sector Business Contracts: The
Text Between the Lines’ - Williamson’s analysis “belies the deep complexity of real
world contractual governance”.

18 Collins, Regulating makes a similar comment at 138. See on IT contracting Rachel

Burnett, ‘The Changing Context of IT Contracts' (2004) 154 NLJ 343.

19 In ‘Managing Change in Uncertain Times’ in at 203 in DiMatteo and others quoting

5-8% per annum growth for outsourcing - footnote 4. Michie and Deakin (n17) at 1.

219
Catherine Mitchell says that changes in contracting practice include network and um-
brella agreements; arguing that they are created to “better reflect … the actual difficul-
ties”.20 Umbrella agreements are usually deliberately non-binding frameworks which al-
low call-off ordering by reference to a master contract. 21 John Gava has questioned
whether “umbrella or network” contracts are novel,22 and there may be force to that
argument, given Baird23 and Clarke v Dunraven,24 but there is a major change in com-
mercial practice towards multi-service providers such as Facilities Management (figure
below provided by the global outsourcing specialist ISS), back office outsourcing, and
management contracts, including Engineering Procurement and Construction (EPC or
EPCm) contracts in the infrastructure, engineering, and construction sectors.

Figure 19 Evolution Of Facilities Management Contracting

20 Mitchell, Bridging the Gap (n4) at 61.

21 See the acme - Baird v M&Sat [7]. And see Bernstein.

22 Gava at 125.

23 Baird v M&S (n21).

24 Clarke v Dunraven [1897] AC 59.

220
25

In general, outsourcing/management contracts are medium-long term, fixed term, fixed

scope contracts with heavyweight, semi-boilerplate change management, dispute man-
agement, unforeseen circumstances (force majeure) and commercial and technical var-
iation provisions built in as described, for example, by Lord Reid in Sutcliffe v Thackrah.26
They are not of a “call-off” nature, like umbrella agreements. Nor are they always long-
term; Jane Wiggins quotes a Mintel survey suggesting an average length of four years
for UK Facilities Management contracts.27

The Law and Economics literature does not reflect the changes in contracting I refer to
above. Much assumes that there are merely two types of contractual transaction being
one-off, arms-length transaction, or long-term, relationship based.28 In a still typical ex-
ample Baird claims that “…. the principal measure of the success of our contract law is
whether it in fact induces cooperation”; using a dichotomy between the one-off trans-
action (a book sale) and the long-term contract.29

In 1953 Stoljar observed, using very old-fashioned language, that in employment con-
tracts: -

25 www.uk.issworld.com, a £9Bn (approximately) corporation with 43,000 employees.

http://www.publications.issworld.com/ISS/External/issworld/White_papers/Perspec-
tives_on_the_FM_market_development/ Hodge, Glenn. See also Appendix 1 to this
Chapter.

26 Sutcliffe v Thackrah – see subchapter 2.7 and McClure in Dharmananda K (ed) Long
Term Contracts (The Federation Press 2013) at 117.
27 Wiggins. See John Cleavely and Tom Collins, ‘Risk in Facilities Management
Contracts' (2014) Ed LJ 284.

28 See E.g. Morgan, Minimalism at 62 referring to the apparent complexity of the liter-
ature, and Williamson, The Mechanisms of Governance (n17) above.

29 Baird at 586.

221
…the usual and typical problem is whether the servant has been guilty of such
misconduct as will entitle the master to dismiss him.30

An implied term that employer and employee will maintain mutual trust and confidence
emerged in the 1970s; explained by Lord Hoffmann: -

a person's employment is usually one of the most important things in his or her
life. It gives not only a livelihood but an occupation, an identity and a sense of
self-esteem. The law has changed to recognise this social reality.31

If such change is possible in Employment Law, it is worth exploring what change is pos-
sible in the commercial field; having shown that there has been similarly marked
change. Hugh Collins’ transformation thesis suggests that modern law, moving from the
classical era becoming a “more socialized” law must import duties to cooperate. 32 My
argument is based on the need to reflect the changing needs of commerce. As we have
seen above Judges can change basic principle after listening to expert advice and ana-
lysing market practice. Nowadays, delivery of defective software may not constitute a
breach of contract and a supplier may have a right to cure defects.33 Toulmin J’s implied
term of active cooperation in IT development contracts springs from a change in con-
tracting/commercial reality requiring a change in the law.34 Similarly; Leggatt J’s impli-
cation of good faith in Yam Seng.35 One derives from the realisation that IT contracts are
new and different; the other from the idea that distributorship contracts require new
forms of governance to make them work.

4.1.2 MEANING OF COMMERCIAL EXPECTATIONS

30 Stoljar at 249.

31 Johnson v Unisys Ltd at 35; my emphasis.

32 Thomas Wilhelmsson, Perspectives of Critical Contract Law (Dartmouth 1993) at

293.

33 Eurodynamics. Saphena Computing Limited v Allied Collection Agencies Limited.

34 Anglo Group; see subchapter 2.6.

35 Yam Seng; see subchapter 2.6.

222
Commercial expectations provide content to the “text between the lines” necessary, in
Stewart Macaulay’s words, to avoid the denial of reasonable expectations.36John Wight-
man describes “implicit understandings” as: -

‘the knowledge, practices and or norms … of which the parties to a particular

contract are actually aware, (or can … reasonably be expected to be aware) …
not typically rendered express …37

Ian MacNeil describes commercial expectations as “tacit assumptions” saying that they
are “inevitably present” and at their “extreme relational pole” their absence means that
the relationship cannot survive. 38 My translation; without them a symbiotic contract
will not be successful. In this chapter I will concentrate on the work of the formidable
neo-relationists, Hugh Collins and Catherine Mitchell, each of whom bring more mean-
ing to relationalism than most scholars, as well as the slightly more traditional, good
faith focussed Roger Brownsword.

Catherine Mitchell describes commercial expectations as: -

the collection of beliefs that surround the commercial contracting process …

subjective beliefs … an external [non-legal] vantage point … on top of legal co-
herence.39

Of commercial expectations she says that they: -

36 Macaulay, ‘The Real and the Paper Deal: Empirical Pictures of Relationships,
Complexity and the Urge for Transparent Simple Rules’ at 79.

37 In ‘A Comparison of British and American Attitudes Towards the Exercise of Judicial

Discretion in Contract Law’ David Campbell, Hugh Collins and John Wightman (eds),
Implicit Dimensions of Contract: Discrete, Relational, and Network Contracts
(Bloomsbury 2003) at 147.

38 Macneil, ‘Contracts: Adjustment Of Long-Term Economic Relations Under Classical,

Neoclassical, And Relational Contract Law’ (n14) at 903.

39 Mitchell, Bridging the Gap (n20) at 12-14.

223
Should be understood as a more general appeal to the law to recognise the social
values and behavioural norms that almost all commercial contractors … bring to
bear on their relationship … 40

Waitzer refers to reasonable expectations as: -

legal Polyfilla -moulding themselves around other structures to plug the gaps.41

As I argued in Chapter 2 a market or trade practice is not a gap. The expectation in

Tradax, that the charterer’s miscalculation would be drawn to her attention, is not a
gap; it is an unspoken part of the contract.42 Had the ship-owner been successful in ter-
minating the charter that, arguably, provided business efficacy. The drawing of the mis-
calculation to the charterer’s attention is what the parties had agreed. The reference to
the “ordinary reaction” of those in that market closely parallels the UCC definition of
trade usage which requires “such regularity of observance … as to justify an expectation
that it will be observed …”. 43

My survey exposes various expected behaviours, norms, which underpin successful per-
formance, indeed, which are necessary for successful performance, in these contracts.44
These norms include both behavioural norms and more specific, bright-line norms. Be-
havioural norms include good communication and relationship building (active cooper-

40 Ibid.

41 Edward J Waitzer and Douglas Sarro, ‘Protecting Reasonable Expectations: Mapping

the Trajectory of the Law' (2016) 57 CBLJ 285 at 287.

42 Although Bingham J did not treat the “ordinary reaction” as a trade practice - The
Lutetian. See also Lord Wilbeforce in Reardon Smith Line Ltd v Hansen-Tangen; The
Diana Prosperity cited in subchapter 2.8.3.

43 Uniform Commercial Code § 1-303(e).

44 Kevin Lingren, (2015) 33 JCL 160 reviewing Mitchell, Bridging the Gap (n20) says
that “any hope that a prospective reader might have of finding an account of evidence
of the actual expectations of commercial people…will not be realised”.

224
ation). There is then a continuum, a fuzzy in-between area, which includes problem solv-
ing/give and take. The bright-lines stretch to expectations that parties should be
asked/required to cure defects or provide enough sufficient information comfort a con-
cerned counterparty.

In an explicit appeal for a “substantial shift to a more relationally constituted contract

law”, 45 Catherine Mitchell suggests that “the point of a relational contract law is to
achieve some sense of how the parties understood their agreement”. 46 Steps which
might correct the claimed misalignment between commercial law and practice include
creating a commercial law which: -

• opens up analysis of contracts to the “wider business relationship” and the “eco-
nomic imperatives” underlying the deal. 47

This would, in part, be achieved by relaxing the rules regarding negotiation. I

deal with this point below, but one wonders how, for example, in examining the
“wider” relationship, cultural factors play out. In many cases dealt with in the
Commercial Court parties come from different jurisdictions and the idea of ex-
amining the cultural factors in play appears to me to be hazardous at best and
impossible at worst.48 It is possible to illustrate the difficulties by observing that
whereas it is common practice for relationships to be formed or continued on
the golf course in the UK, that is extremely uncommon in Germany. A beer with
German colleagues is just that; a beer. It is not part of the business relation. How

45 Mitchell, Bridging the Gap (n20) at 236. At 1 she says that the real deal means “that
diffuse collection of informal norms, implicit understandings and flexible commit-
ments”.

46 Ibid at 265. Note similar language in Catherine Mitchell, ‘Obligations in Commercial

Contracts: A Matter of Law or Interpretation?' (2012) 65 CLP 455.

47 Mitchell, Bridging the Gap (n20) at 237. She uses “entire business relationship” at
239.

48 See Schuler (L) AG v Wickman Machine Tool Sales Ltd and RTS Flexible Systems Ltd v
Molkerei Alois Muller Gmbh & Co Kg (UK Productions).

225
one measures this aspect of the relationship in the domestic case is hard to see;
how one does it when multiple cultures are in play is impossible.

Another way of effecting this is through legal recognition of previous dealing and
trade customs, … “such reasonable expectations may be compelling because, if
shared, they are an important foundation upon which the parties build their re-
lationship…”.49I discuss these below.
• Places the Court in the “situation of the parties who make these decisions and
trade-offs”.50

Some relaxation of the rules regarding conduct in instant and historical perfor-
mance and what was said in negotiation would be beneficial insofar as this ex-
plains the issue to hand.

The reasons of “practical policy” referred to by Lord Hoffmann for excluding ev-
idence of negotiations seem to include the subjectivity of the evidence, the costs
of bringing such evidence into play and relevance. 51 Ewan McKendrick com-
ments, saying that the rule is “suspect”, that negotiation evidence should be
available unless it relates to the subjective intent of the parties. 52 Catherine
Mitchell observes that these are not easy to differentiate.53Later, quoting Lord
Nicholls, she suggests that such evidence should be admissible if it “sheds light
on the language” and that documentary evidence seems to be preferred. 54 In

49 Mitchell (n9) at 654.

50 Mitchell, Bridging the Gap (n20) at 246.

51 Catherine Mitchell, Interpretation of Contracts (Routledge-Cavendish 2007) at 77-

83.

52 In ‘The Interpretation of Contracts: Lord Hoffmann's Re-Statement’ in Worthington

(n6) at 160.

53 Mitchell, Interpretation (n51) at 78.

54 Ibid at 79.

226
my experience, one sometimes makes agreement on conditions after a discus-
sion on what they mean. If that agreement is recorded in an email or minutes
there is no good reason why that should not be admissible as to what the condi-
tion actually means.55 But the exigencies of negotiation require that deals are
done in multifarious ways, at different levels and in different “channels”.
Dealmakers step in and out, make deals for different reasons, sometimes con-
necting apparently unrelated issues in order to cut through commercial im-
passes. Sometimes this is done simply to make progress, without much logic, to
get negotiators onto new matters.

In a typical sales environment, in my experience, a salesperson will discuss a con-

tract with a customer. Amongst other things, the topics of termination and de-
fects will probably crop up when the suppliers’ contract expert reviews condi-
tions. When the salesperson meets the opposite number, the procurement per-
son, they usually encounter two obstacles: -

• Neither is a contract expert

• Each must follow complex compliance processes which make changing con-
tract conditions difficult

The customer way well agree that termination won’t be triggered without allow-
ing the supplier an opportunity to cure and that the supplier would be offered
an opportunity to cure defects. Typically, the salesperson then writes to me (the
paranoid contract/commercial expert) who advises that a verbal agreement like
this is useless.56 The best thing, if written change cannot be effected, is to take
a step which may well be regarded as displaying a lack of trust; writing to his

55 See Tekdata Interconnections Ltd v Amphenol Ltd [2009] EWCA Civ 1209 where Dy-
son LJ says, at [30], - “an obvious example is where there is an issue as to whether a
term was orally agreed and in post-contractual correspondence the party who denies
the existence of the term admits that it was agreed”.

56 The salesman will, I know, from experience, regard this as incomprehensible; see
Steyn in ‘The Intractable Problem of the Interpretation of Legal Texts’ in Worthington
(n6) at 128 saying that business people just do not understand such a rule.

227
counterpart to record the discussion. Even then, my advice is that this is unlikely
to work. How does a Court resolve this? It is clear that the supplier knew that
there was a risk that the “agreement” was ineffective. However, what would a
reasonable commercial person with the background knowledge make of this?
The customer might also refer to the trading history between the parties saying
that this should provide sufficient reassurance and, despite the fact that record-
ing this might provoke suspicion I would do so and hope that a Court would rec-
ognize it as part of the matrix. In the end the law should protect “the parties'
rational expectations about how [the parties] … are likely to act in future…”. 57

• Use as “contextual enquiries”, Williamson’s factors of “asset-specificity”, “level

of uncertainty” and frequency of transacting. 58
She notes that working out where a deal is on the “relational continuum” may
not be straightforward. It is not, however, clear what asset-specificity might
mean to a Court. Sometimes a bespoke asset is build-to-design and sometimes
the purpose is specified, and the maker takes design decisions; there is no one
size fits all in asset-specific transactions. I discuss course of dealing below (in
subchapter 4.2.3) but I would note here that frequency of transacting is not al-
ways a good guide. There are situations in which large businesses transact with
other large businesses on multiple levels and between different divisions; fre-
quency does not imply homogeneity. Corporations are not always consistent in
their approach and one manager’s methods and tolerance levels will differ from
another’s.59
The way one might deal with “level of uncertainty” is not easy to envisage.

57 Smith, ‘Reasonable Expectations of the Parties: An Unhelpful Concept’ (n11) at 377

describing an empirical justification for recognising reasonable expectations.

58 Mitchell, Bridging the Gap (n20) 245-246.

59 Hugh Collins says something similar; that in larger firms “different departments
may select rival normative contexts” in Collins, Regulating (n18) at 135.

228
• Ensures that Judges “develop some sense of norms operating in particular indus-
tries and the contexts in which a more formalist approach might be expected”.60
I deal with judicial self-knowledge below in subchapter 4.2.5; urging caution.
Judges do not normally possess sharp-end commercial experience. Sometimes
they do but that experience is normally “warped”.61 Norms may appear on an
industry or transaction-type basis as I have described in subchapter 2.8.4 above.
There is some evidence that Courts do pay attention to commercial expertise
context. The “sophisticated parties” cases reviewed briefly in subchapter 2.8.3
show that Courts may bend towards formalism where solid legal advice has been
taken, where agreements are complex, or parties are sophisticated and will lean
against, for example, implying terms.
• Legalise “particular commercial practices” 62

She argues that Investors Compensation Scheme v West Bromwich Building So-
ciety 63 could show the way to accessing “implicit norms” and expectations and
that better alignment of “contract law and commercial expectations could be
effected by…contextual interpretation”.64 This could mean, she indicates, using
sources such as empirical studies, trade customs, and business norms. If this
means using evidence, including empirical studies, of trade or market practice,
or the assumptions of commercial players, as sources this seems to point in the
right direction. I review this in subchapter 4.2.1 below.

60 Mitchell, Bridging the Gap (n20) – at 247.

61 Little has changed since Chalmers used this term - at 129.

62 Mitchell, Bridging the Gap (n20) at 13 and 17. Jean Braucher believed that one
“needs to look at how parties really behave when initiating contracts to ascertain rea-
sonable expectations” – see William C. Whitford, ‘Jean Braucher’s Contracts World
View' (2016) 13 ACJ 58.

63 Mitchell, Bridging the Gap (n20) at 247 and 279. Investors.

64 Mitchell, Bridging the Gap (n20) at 279.

229
Hugh Collins overall position can be best described in his own words as committed con-
textualism: - “Thorough-going contextualism is … context determines how much text
matters...”65

He argues that we should distinguish between, and use for legal analysis of contracts,
three frameworks/dimensions/normative systems which govern action in contract 66
and are “always present in contractual relations”.67 These are the: -

• Business relation; the “trading relation” comprising numerous interactions, in-

cluding the deal-making and execution phases plus the social relationship (which
may include business lunches, family links, club membership and ethnic iden-
tity). He says that this provides trust and that “customary standards of trade” is
an important ingredient.68
• Economic deal; being the agreement which specifies the reciprocal obligations,
whose normative framework is “economic rationality” and which establishes the
economic incentives and the non-legal sanctions.69
• Contract; which comprises the “standards of self-regulation”, orienting conduct
to the identification of autonomous, “unsituated”, rights and obligations set out
in the documents and “accepted customary standards”. This sets up a new “com-
munication system”. 70

Referring to expectations as broader or open textured, he says that regulation might

proceed through an: -

65 In ‘Objectivity and Committed Contextualism in Interpretation’ in Worthington (n6)

at 193.

66 Collins, Regulating (n18) at 129.

67 Ibid at 141.

68 Ibid at 129.

69 Ibid at 129-131.

70 Ibid at 131-132.

230
… evaluative discourse. …. recognizing the force of [reasonable] expectations
based upon the economic deal and the parties’ history of dealings.71

The law, he says, must give due weight to each of these three frameworks, being sensi-
tive to the “history of prior dealings” and an “understanding of the informal conventions
… governing the business relation”.72 His answer to those who might object is that par-
ties who prefer a more formalistic approach are free to use private dispute resolution
networks such as arbitration. However, one might answer this by saying that the current
preference for Court resolution would, on the same logic, suggest a general content-
ment with the law as it is. Roger Brownsword also suggests that relational elements
might include repeat dealings as “an unstated factor of some significance”.73

One of the many problems associated with reviewing the wider or even entire business
relationship can be illustrated with a consideration of one of the cases considered by
Catherine Mitchell in which she says that the Courts did have ways of making the two
worlds of documents and understandings consistent.74 In Total Gas Marketing Ltd v Arco
British Ltd the Court was faced with giant oil and gas companies (there were three de-
fendants) disputing the effect of a failure to enter into an “allocation agreement” into
which entry was a condition of a gas supply contract, the gas being delivered to a termi-
nal owned by yet another player in the industry; AMOCO.75That the oil and gas business
is complex, even incestuous, can be gauged by remembering the fire at the Buncefield
Oil Depot in Hertfordshire. Here is an extract from the HSE report.76

71 Ibid at 180.

72 Ibid at 181.

73 Roger Brownsword, Contract Law: Themes for the Twenty-first Century (Oxford
University Press 2006) at 44.

74 Mitchell, Bridging the Gap (n20) at 255-256.

75 Total Gas Marketing Ltd v Arco British Ltd [1998] All ER (D) 227.

76 http://www.hse.gov.uk/comah/buncefield/buncefield-report.pdf.

231
Figure 20 Buncefield Oil Depot Network

Total is the fourth largest oil company in the world, with revenues of circa $127Bn and
Arco was purchased by BP for $27Bn in 2000.77 These are giant companies with net-
works of infrastructure investments, joint operations (almost all oil fields are developed
by consortia), business to business sales of less or more preferred products, and inter-
twined strategic interests. How a Court would examine their entire relationship is wholly
unclear to me.

Roger Brownsword refers to expectations as “practice-based”78 and suggests that we

might define unacceptable commercial pressure by locating: -

the standards recognized and accepted within the business community.79

In developing this theme, he says that where in a particular contracting context the
community has a shared understanding of where the line is to be drawn between fair
and unfair dealing and “concomitantly, shared expectations about the conduct of fellow
contractors”, community requirements include regular dealing, no gross disparity of

77 https://www.total.com/en/our-group/thumbnail/total-glance-fourth-largest-
global-oil-and-gas-company.

78 In DiMatteo and others (n19) – ‘Contract in a Networked World’ at 140.

79 Michie and Deakin (n17) at 273.

232
power, and relational contracting to the extent that there is a body of experience capa-
ble of handling matters when they go wrong. 80 This is less helpful. Why does an imbal-
ance of power matter? If parties, irrespective of size or power, are new to each other,
why can “community standards” not apply to the relationship? If each party is an expe-
rienced participant should that not be sufficient to create a presumption that they are
aware of the community’s expectations?

Adams and Brownsword explore a procedural approach, the identification of commu-

nity standards and a substantive approach, the identification of a community of inter-
est.81 This is, in my opinion, a promising approach to the identification of commercial
expectations. The advantage is that it elevates commercial expectations to the status of
an evidence based, morally derived, objective standard. Another advantage is that
where a wider practice can be demonstrated, that practice can apply to parties who do
not have long-term, iterative, relationships.

In considering how to “operationalize” a “co-operative ideal”, which involves regulation

of, or the placing of limits on self-interest (still a little vague), Adams and Brownsword
liken cooperation to a partnership model, accepting the need for a “non-speculative”
strategy for filling out substantive requirements. Accepting that collection of empirical
data might help identify community standards they observe that this might result in
uncovering some variability; “happenstance”. I do not consider this to be a problem.
Variance may be explained objectively by variables such as industry, culture, or context.
As my survey shows standards can, in respect of cooperation in the management of
complex contracts, be reduced to concrete principle and practice and explained in detail
by reference to reactions to real-world vignettes. One might compare, for example, the
potential for ruthless concealment of information in the Rabobank case,82 accepted as

80 Brownsword (n73) at 131.

81 Adams and Brownsword at 302-327. See John Wightman in ‘Beyond Custom: Con-
tract, Contexts, and the Recognition of Implicit Understandings’ in Campbell, Collins
and Wightman (n37) at 155 discussing community models meaning“..specialist shared
trading practices, embracing knowledge and expectations…”.

82 NatWest v Rabobank.

233
normal practice, with the observation of Mr Tyre in Ritchie that concealment of the in-
formation in that case was “not sensible commercial practice”.83 It depends on the con-
text and the background norms.

A more intransigent problem would be that we might find “standards shared only at a
high level of generality…”.84The survey avoids this possibility by exploring both high lev-
els of generality detailed vignettes to provide standards with content. The survey
demonstrates wide agreement between commercial players on relatively concrete mat-
ters.

My sample is hard to describe as a community; except to the extent that they are en-
gaged in similar transactions. The community relationship between an estates manager
at the University of Leicester and a former Executive Vice-President in an oil super-major
is hard to imagine unless we say that everyone so engaged is part of what must be an
amorphous, incommunicado, community.

For a community of interest, Adams and Brownsword, “grappling with some complex
moral theory”, develop a logical model, based on Alan Gewirth’s dialectical approach.
This, they essay, creates a “generic requirement that the exchange be performed as
agreed” and this would “shed light on co-operative requirements….”. Because party X
must take a favourable view of the “generic conditions of exchange”, non-fulfilment of
generic conditions by another agent is impermissible, and based on considerations of
reciprocity all such agents must be under a duty to respect generic conditions, but this
doesn’t disclose those generic conditions, nor what “as agreed” means so why the ge-
neric conditions would be “cooperative” is not clear. Although this strategy shows re-
ciprocal rights to “freedom and well-being” it is still not clear why this infers cooperation
as opposed to freedom to exercise self-interest. Part of the matrix might be that parties
can rat, can go their own way, can hide information.85

83 Ritchie.

84 Adams and Brownsword (n81) at 326.

85 NatWest v Rabobank (n82).

234
They accept that the difficulty with the dialectical approach is that it might not be fa-
voured by commercial contractors; the answer to which, they say, would be to allow
contracting out. These expectations should, in other words, be the default position; de-
feasible only through very clear language.

Roger Brownsword and Lord Steyn86 each link reasonable expectations to good faith.
Professor Brownsword discusses three possible models of good faith, the first acting to
protect “standards of fair dealing already recognised in a particular contracting context”
(which I have discussed above)the second concept attempting to “make the market”
and impose certain external obligations and the third he describes as “judicial licence”
or “visceral justice” (in a phrase he borrows from Michael Bridge). 87 However; good
faith does not assist us in finding out what parties actually expect; asking the parties
does. The fair dealing standard is too vague, in my opinion. If it means recognising that
conduct creates expectations and those expectations should be recognised, then it
aligns with my claim. Otherwise there is a risk of circularity

4.1.3 WHY THESE EXPECTATIONS SHOULD BE GIVEN LEGAL FORCE

In the Introduction to this Chapter I said that some of the expectations revealed by the
survey are core to the contract, necessary incidents of successful performance. These
shared (or mutual), normative, commercial expectations of the morally reasonable and
commercially experienced provide content for the duty to cooperate.

Referring to “background assumptions”, in an endeavour to account for how “agree-

ments are determinate”, Brian Langille says that customary practice and uses can have
that effect. A default position of those assumptions being binding is “simply a special
case of the need for contracting parties to make any unusual expectations clear”. 88

86 Brownsword (n73) at 127-128 Steyn (n5) at 459 “not a world of difference”.

87 Brownsword (n73) at 130.

88 Langille and Ripstein at 79. At 154 in ‘Beyond Custom: Contract, Contexts, and the
Recognition of Implicit Understandings’ in Campbell, Collins and Wightman (n37) John

235
Adam Kramer asserts that “serious cases of incompleteness of meaning are likely to be
rare” describing reasonable expectations as not being empty because all contracting
behaviour occurs in a “social context”,89 which includes “mutually known norms of be-
haviour”.90 Professor Carter says that “expressed intention is a relatively narrow con-
cept”91and that extending contract scope “far beyond” express intention is one of many
functions of contract law. He describes such extension powers under an objective the-
ory of contract entailing entry into contract as an express commitment to the institution
of contract including its rules for dealing with unexpressed intention.

Stephen A Smith describes a normative claim for enforcing or recognising expectations

as through the notion that it should “protect the expectations of morally reasonable
contracting parties” especially “about how they (the contracting parties) ought to act
in the future”.92 He says that this is the only universal claim but his key objection to it
lies in his view that it is the subjective views of the parties which are in focus. It follows
from that, that a further objection is that it provides no method of dealing with parties
with unreasonable expectations. In dismissing a normative variant, that practices in
the community in which the parties trade may help, he asks us, fantastically, to: -

Wightman describes such expectations as customary; used in the sense of practice ra-
ther than legal custom.

89 Adam Kramer, ‘Common Sense Principles of Contract Interpretation (And How

We've Been Using Them All along)' (2003) 23 OJLS 173 at 193.

90 Ibid at 182.

91 J. W. Carter and Wayne Courtney, ‘Unexpressed Intention and Contract

Construction' (2016)ibid 326.

92 Smith, ‘Reasonable Expectations of the Parties: An Unhelpful Concept’ (n11) at 369.

His description of an empirical basis, at 375 is similar – “the parties' rational expecta-
tions about how [the parties] are likely to act in future.”

236
Consider the views of the Mafiosi community regarding what is appropriate con-
tracting behaviour. It seems quite likely that at least some of these views are
unreasonable on general moral grounds.93

An offer you cannot refuse is not an offer in the conventional sense, so this argument is
not persuasive as a serious example of contracting behaviour as many of the normal
incidents of contracting do not apply.94 Notions of autonomy, or agreement, do not ap-
ply in Mafioso deals.

Catherine Mitchell says of normative claims: -

We may think it important that contracting processes and outcomes reflect

some requirement of fair dealing ...[parties] have an entitlement to fair treat-
ment.95

In my survey, few referred to fairness as an expectation. Fairness was mentioned

twenty-four times and “win-win” twenty-one times. Fairness meant different things. In
around half the cases it meant a fair contract, followed closely by meaning it was fairly
managed and then a few thought it meant a fair price (which might be the same as
generally fair).

Honesty, integrity, and similar notions, together with acting reasonably, communicating
effectively, managing the deal, were mentioned. It may be that we are discussing differ-
ent aspects of fairness. The deal itself may be unfair but it should be executed in line
with its terms, paper and expectation, (a procedural concept of fairness). Another prob-
lem with fairness is reflected in her opinion that: -

93 Collins, Contract Law at 375.

94 The second most quoted film line – from The Godfather 1972.

95 Mitchell, ‘Leading a Life of Its Own? The Roles of Reasonable Expectation in

Contract Law’ (n9) at 654-655.

237
Maintaining that fairness requires that reasonable expectations should be pro-
tected and that we have a reasonable expectation of fair treatment simply traps
us in a circle.96

That circularity can be avoided if one tries to find content for commercial expectation.
Fairness may be part of the content; Nash and construction law cases are examples in
point. It seems to me that if reasonable expectations are used in the way Lord Steyn
uses them that one can put together a normative case. I can see the force in the asser-
tion that these expectations are “implicit understandings” and diffuse (as contracts are
diffuse) but they are far from informal.97 For example, in The Lutetian (Tradax), Bing-
ham J referred to the “ordinary reaction” (implicit understanding) of those involved in
shipping.98

In a wholesale rejection of relational theory Dori Kimel describes the core of its incor-
poration argument that the law should incorporate relational norms by: -

giving legal force to parties' expectations that derive from such norms even in-
asmuch as the norms are merely implicit—that is, not articulated in the express
terms of the contract, and possibly even inasmuch as they conflict with those. 99

“Merely implicit” is an odd description. There is nothing “mere” about the implicit. Ar-
guing that the fact that such norms are extra-contractual is what gives them viability
and strength, that personal relationships and personal strength are mutually reinforc-
ing, the text being a “safety net”. He says that absorbing such norms into the law may

96 Ibid at 660.

97 See also Zhong Xing Tan, ‘Beyond the Real and the Paper Deal: The Quest for
Contextual Coherence in Contractual Interpretation' (2016) 79 MLR 623 - “expecta-
tions must be infinitely variable and could be derived from a variety of sources”.

98 The Lutetian (n42).

99 Dori Kimel, ‘The Choice of Paradigm for Theory of Contract: Reflections on the
Relational Model' (2007) 27 OJLS 233 at 244.

238
be “inhibitive”.100 It is a similar position to that of Lon Fuller who argued that some acts
only have value when performed voluntarily. 101 Text is clearly not unimportant and
must be given prominence, but it has to be read in context. The weakness in Kimel’s
argument is that expectations originate from multiple sources. These expectations do
not derive, except in limited instances, such as indications or promises given in negoti-
ation, from personal relationships. They emanate from the desire to make the contract
work. They are necessary to that end and they can fairly be described as good practice.

They operate as standards, modus operandi, not always easy to reduce to writing, per-
haps because they are so obvious that writing them down would be seen as somewhat
gratuitous distraction; per the colourful remark of Mackinnon LJ: -
if, while the parties were making their bargain, an officious bystander were to
suggest some express provision for it in their agreement, they would testily sup-
press him with a common 'Oh, of course!'.102

Catherine Mitchell refers to expectations as “slippery and elusive” before remarking

that: -

Courts may prefer to speak of reasonable expectation rather than moral princi-
ples because it obscures the fact that an appeal to reasonable expectation is not
so much a statement about the actual expectations … as a judgment of the court
ex post facto as to the standards the parties must observe.103

This is true where the Court has used reasonable expectations without there being any
actual evidence as to their content. If the claim is, for example, that certain things are
expected, for example that shipowners will quickly let an underpaying charterer know

100 Ibid at 248.

101 Lon Fuller, ‘Positivism and Fidelity to Law: A Reply to Professor Hart' (1958) 71
HarvLRev 630 at 672.

102 In Shirlaw v. Southern Foundries (1926), Limited. [1939] 2 KB 206 .

103 Mitchell, ‘Leading a Life of Its Own? The Roles of Reasonable Expectation in
Contract Law’ (n9).

239
he has underpaid, then one can argue that the duty may be articulated by an appeal to
the Court to recognise actual expectation. Where Courts use reasonable expectations
as a vague touchstone without evidence of content they do impose their own standards
of reasonableness.

That there are problems with the concept of reasonable expectations may be found in
Smith’s conclusion: -

The idea that the law …. should protect, the reasonable expectations of the con-
tracting parties sounds eminently sensible …. It is nearly always unclear ... it in-
variably turns out that the meaning is better expressed using different terms. In
practice, the idea that the law of contract protects, …. reasonable expectations
is a slogan.104

There is force in this argument and my argument is limited to recognition of commercial

expectation where content, common to reasonable parties, is within the grasp of the
commercial Judge and if one limits the idea to those expectations, or practices which
can be or have been evidenced and which are used to determine what the parties have
objectively agreed or understood as part of their bargain. In devising a strategy for find-
ing and defining commercial expectations I ensure that such a notion can be connected,
or, in the modern vernacular, hard-wired, to the parties. Giving legal recognition to
these expectations, where that is a practical proposition, is in the interests of both com-
merce and law. The norms exposed by the survey arise from experience and a belief in
performance of the bargain; not necessarily a non-legal vantage point and certainly not
a slogan. They are driven by the desire to keep the contract alive, and are consistent
across multiple demographic groups. Some of them must be, it is likely, less susceptible
to legal regulation than others. But some, described as “key”, “absolutely critical” and
“can’t get the job done without it”, should, I argue, benefit from legal recognition. My
conception of the real deal, which includes both paper elements and assumptions is
shown in this diagram: -

104 Smith, ‘Reasonable Expectations of the Parties: An Unhelpful Concept’ (n11) at

386.

240
Figure 21 The Contract/Real Deal

From my survey of commercial expectation in the field I conclude that the content for
commercial expectation emerges from an evidence-led examination of the matrix, the
background. If we are looking towards an industrial analogy a mould is not part of the
final product being discarded or re-used. Our concern is the residue, the moulded, and
in that sense commercial expectations are moulded rather than moulding. They are part
of the matrix, the mix; constituents of an alloy rather than a mould. They emanate from
trade or market practice (or assumption), from inter-party dealings, occasionally from
custom or usage, perhaps from survey evidence. It explains the contract where some-
thing is unwritten or has an alternative meaning.

THE SOURCE OF THE DUTY - COMMERCIAL EXPECTATIONS – POLYFILLA, PENUM-

BRA OR POLYSEMIA? GIVING IT SOME AYR

241
In this sub-chapter I will explore how objectively determined commercial expectations
can be exposed in proceedings. In reviewing sources, I include “x-phi” work, “philosophy
with an empirical edge”,105 only for the purpose of elimination.

4.2.1 EVIDENCE OF MARKET PRACTICE

Ferreting out Lord Steyn’s paragons seems to me to be the most realistic, and pragmatic,
method of finding commercial expectations.106 Commercial Courts have taken account
of expert or factual evidence of trade or market practice or expectation, or “assump-
tions”,107 to assist them in understanding commercial context for over 350 years.

In 1648 the Master of Trinity House and other “esteemed” merchants advised the Court
whether pirates were considered perils of the sea.108 In 1761, in a case involving water
damaged hogsheads of muscovado, Lord Mansfield said: -

The special jury, (amongst whom there were many knowing and considerable
merchants,) …understood the question very well, and knew more of the subject
of it than anybody else present; and formed their judgment from their own no-
tions and experience.109

105 Edmonds at 87.

106 A trip to Ayr might help – “Auld Ayr, wham ne’er a toon surpasses; For honest men
and bonnie lasses” - Tam O’Shanter; Robert Burns.

107 Andrews, ‘Interpretation Of Contracts And “Commercial Common Sense”: Do Not

Overplay This Useful Criterion’ at 43.

108 Pickering v Barkley (1648) Sty 132. In Buller v Crips 87 ER 793 Holt CJ took advice
from "two of the most famous merchants in London".

109 Lewis v Rucker (1761) 97 ER 769 (KB). For a history of the special jury see C.
Oldham James, ‘The Origins of the Special Jury' (1983) 50 UChiLRev 137. Prior to the
16th Century juries of cooks and fishmongers are recorded - James B Thayer, ‘The Jury
and its Development' (1892) 15 HarvLRev 295 at 300. Mansfield’s jury appears to have
been advisory - Todd Lowry, ‘Lord Mansfield and the Law Merchant: Law and Econom-
ics in the Eighteenth Century' (1973) 7 Journal of Economic Issues at 609.

242
The practice did not end with Lord Mansfield’s 1788 retirement. In Syers v Jonas in 1848
(in which several market practice cases are cited) Parke B accepted: -

evidence of the universal usage, that on a sale of tobacco, it was understood to

be by sample, though not mentioned to be so in the contract…

There is no doubt that in mercantile transactions … evidence of established us-

age is admissible.110

The special jury was abolished in 1949 by the post-war Labour Government and replaced
by fact or opinion (usually expensive opinion) evidence. 111 Jody Kraus argues that
merchant juries “being industry experts, are less likely to mistake local trade usage for
widely shared commercial practice”.112

In 1914, the Court examined the discounting practices of brewers in the London area
concluding that tied houses and free houses were treated differently.113 In a recent in-
depth review of the law on penalties, the Supreme Court used evidence of market
practice in determining whether an overstaying charge in a car park constituted a
penalty. Lord Hodge noted: -

local authority practice, the BPA guidance, and also the evidence that it is
common practice in the United Kingdom to allow motorists to stay for two hours

110 Syers v Jonas 2 Ex 112 426. See also Sir George Jessel in Robert H. Dahl v Nelson,
Donkin (1881) 6 App Cas 38 (HL) and Rey v Wyoherly 8 C&P (1838) - a special jury
skilled in landlord/tenant relations was impanelled.

111 HC Debate on abolition of Special Juries (1949). Quintin Hogg MP (later Lord Hail-
sham the Lord Chancellor) claimed that class was the reason for abolition.

112 Jody S. Kraus, ‘In Defense of the Incorporation Strategy’

http//papersssrncom/papertaf?abstract_id=170011 .

113 Charrington and Co v Wooder [1914] AC 71.

243
in such private car parks and then to impose a charge of £85, support the view
that such a charge was not manifestly excessive.114

Examining the question of a sub-broker’s payment entitlement, where timing was not
express, Sir Andrew Morritt remarked that Courts may: -

…. have regard to market practices falling short of trade usage or custom. They
are part of the factual context known to both parties.115

At first instance, Jonathan Hirst QC, sitting as a Deputy High Court Judge said: -

I also heard expert evidence from Glenn Cooper … and Adam Hart ... both well
qualified to give expert evidence and performed their obligations to the court
impressively. … a broad measure of agreement … on the basis of the expert evi-
dence … there is a general market practice or understanding in the City that a
sub-broker is not paid until the broker receives payment from the client.

So I would admit evidence of market practice which falls short of a usage as part
of the matrix of fact …116

In the Court of Appeal Aikens LJ strongly supported that holding, saying: -

it has been common practice for the Commercial Court to hear evidence of
“market practice”, which does not amount to evidence of an alleged “trade us-
age or custom”.117

114 ParkingEye Limited (Respondent) v Beavis (Appellant) [2015] UKSC 67at 287. I
parked my car in Abergavenny in early June 2017 and the local authority there pro-
vided an automated procedure allowing for a £5 overstaying charge if the overstay
was less than 2 hours. See British Crane Hire Corpn Ltd v Ipswich Plant Hire Ltd [1975]
QB 303, [1974] 1 All ER 1059 where evidence of common understanding led the Court
to conclude that the hirer’s standard conditions applied to the contract.

115 Crema v Cenkos Securities Plc at 70.

116 Ibid.

117 Ibid at 42-50. See also Lord Hobhouse in The Zephyr [1984] 1 Lloyd's Rep 58.

244
Catherine Mitchell is critical of the reluctance of the Courts to take account of “wider
social context” including “practices and understandings” in the industry118 in Total Gas
Marketing v Arco British119 but this does not accord with my reading of that case. The
House of Lords and the Court of Appeal each note that it is not unusual for gas allocation
agreements to be agreed only shortly before gas delivery commences. There is nothing
in the Judgments indicating that it was other than an intermittent fact of life; not routine
practice capable of giving rise to any understanding or commitment.

On the role of the expert witness in banking litigation Peter Ellinger says that evidence
is admissible as to whether: -

a “prudent banker” would have taken certain steps, … an expert witness could
indicate what would have been their own reaction, as a man working in the field,
in the given circumstances.120

As Bingham J said in Tradax the “the ordinary reaction of an owner who is tendered too
little hire is to point out the deficiency to the charterer in no uncertain terms”.121

In examining an IT contract Steyn J took expert evidence and concluded that it: -

convincingly showed that it is regarded as acceptable practice to supply com-

puter programmes (including system software) that contain errors and bugs. The

118 Mitchell, Bridging the Gap (n20) at 255-256.

119 Total Gas Marketing Ltd v Arco British Ltd (n75). Interestingly Lord Hope refers to
the argument that the clause in issue was drafted for the Seller’s benefit; without re-
marking that such evidence should not be allowed. Nothing turned on it.

120 Peter Ellinger, ‘Expert Evidence in Banking Law' (2008) JIBLR 557 and see United
Bank of Kuwait v Prudential Property Services Ltd [1995] EG 190 .

121 The Lutetian (n42) although Bingham J was careful to note that no trade practice
had been proven, which may be why the result was based on estoppel by convention.

245
basis of the practice is that, … the supplier will correct errors and bugs that pre-
vent the product from being properly used.122

The Privy Council accepted expert evidence on the application of price escalation
clauses. Although the expert, Mr McKenzie, was a statistician, his long business experi-
ence allowed Goddard J (much in the news recently), to rule that his conclusion would
have been “obvious to the parties”.123

In one City case the expectations of traders were considered; Colman J accepting: -

the evidence of Mr Thompson, derived as it was from a wealth of experience in

workout procedures, that amongst London banks it was in the 1990s considered
good practice for co-workout banks to disclose to each other what those con-
cerned with the workout personally considered to be material information.124

In one case Moore-Bick LJ supported the use of evidence in relation to a finding that
low-cost airlines depend upon being able to operate schedules requiring early morning
and late-night aircraft movement125 and in another, in which the parties accepted that
the customary deposit was 10%, Lord Browne-Wilkinson126 decided that providing for a
higher deposit militated against forfeiture unless justified by special circumstances. In a
case on discrepant shipping documents Jonathan Hirst QC accepted evidence that an
issuing bank electing to return documents should do so promptly, without delay. 127

122 Eurodynamics (n33).

123 Contact Energy Ltd v The Attorney General [2005] All ER (D) 428 (Mar).

124 NatWest v Rabobank (n82) at 114.

125 Jet2.com Ltd v Blackpool Airport Ltd at para 17.

126 Workers Trust & Merchant Bank Ltd v Dojap Investments Ltd [1993] AC 573 at 580.
In the US Nanakuli Paving & Rock Co. v. Shell Oil Co. 664 F2d 772 (9th Cir 1981) the
Court referred to “overwhelming evidence” of market practice known to Shell.

127 Fortis Bank Sa/Nv v Indian Overseas Bank [2010] EWHC 84 (Comm) at [32].

246
In the Ritchie case, used as the pattern for Vignette 1 in Chapter 3, Lord Brown said, of
Lloyd’s refusal to provide any information: -

Mr Colin Tyre, QC for the respondents acknowledged in argument that this was
“not sensible commercial practice”.128

The role of the expert witness or that of the witness of fact is to provide the Court with
the context, matrix or background; Moore-Bick J indicating that an expert should: -

… inform the court of any aspects of the commercial background which have a
bearing on the construction of the contract.129

Market practice can be excluded from a contract by using an “entire agreement”

clause.130

Like Lord Mansfield the modern Judge does have access to something analogous to a
“group of tame merchant jurymen to give evidence of commercial norms and under-
standings”.131 Having listened to the “contextual officious bystander” 132the Court can
determine content for commercial expectations of the parties. The difficulty may come
in the reluctance of parties to place trade practice or market practice or expectation
evidence in front of the Judge for tactical or cost reasons, but Courts could the use
Tradax133 approach, asking witnesses of fact. One can well imagine that Mrs Nash, a

128 Ritchie (n83) at [41].

129 Kingscroft Insurance Co v Nissan Fire & Marine Insurance Co Ltd (No 2) [2000] 1 All
ER (Comm) 272, [1999] Lloyd's Rep IR 603, 622. See also Galaxy Energy International
Ltd v Assuranceforeningen Skuld (Ejensidie) (The “Oakwell”) [1999] 1 Lloyd's Rep 249.

130 The Helene Knutsen [2003] EWHC 1964 (Comm).

131 Morgan, Minimalism (n28) at 167 uses the phrase to demonstrate the opposite.

132 Mark James, Expert Evidence : Law and Practice (3rd edn, Sweet & Maxwell 2010)
at 295.

133 The Lutetian (n42).

247
borrower suing a mortgage provider, was in no position to conduct a market survey to
uncover the expectations of mortgage holders, or the attitudes of mortgagors.134

Commercial expectations, the unwritten part of the bargain, encapsulated in market or

trade practice can be exposed by witnesses of fact, experts, those engaged in the trade
or concessions by Counsel. John Gava asserts that: -

obtaining information about the typical expectation of traders …runs into

problems of their existence…as well as problems about who will do the work
necessary to discover them ...135

Such expectations are, as I have shown, far from impervestigable. If practices are suffi-
ciently general, well-enough known and understood, probative, clearly part of the bar-
gain, Courts should and do use them in construing the paper contract and in putting the
unsaid down on paper.

4.2.2 CUSTOM
Custom or usage, “forms the basis of the contract”,136 and must be certain, notorious,
and clearly established: -

… so well known in the market … that those who conduct business in that market
contract with the usage as an implied term.137

Trade practice, by contrast, forms part of the matrix. Cooter suggests that the identifi-
cation of “actual norms” is the task of the lawmaker but provides no detail as to how

134 Nash v Paragon; despite this being a class action in which she was the representa-
tive.

135 John Gava, ‘False Lessons from the Real Deal' (2005) 21 JCL 182 at 185.

136 Chitty at 14-021.

137 Cunliffe-Owen v Teather [1967] 3 All ER 561 at 573. See a general discussion on
port customs in Rhidian D Thomas, ‘Custom of the Port' (2016) LMCLQ.

248
commodity,138 transactional industries, not industries using complex modern forms of
contract. In other environments such as construction, as we have seen in Chapter 2,
bright lines (to use Lisa Bernstein’s term139) are often substituted by requirements of
fairness and impartiality and control is created by a complex structure which includes
decision-making powers.

Christian Twigg-Flesner blames doctrinal certainty for the fact that custom is no longer
a “revivifying source of commercial law” 140 but it seems more likely that the world
moves too fast. Facilities Management and outsourcing organizations have not had time
to develop customs; for example. To be “good” a custom must be “reasonable, certain,
and notorious” -a threshold hard to meet for new types of contract.141Richard Austen-
Baker’s view that custom is largely a “dead letter” is fair; certainly, for modern, emer-
gent forms of commerce.142 the identification might proceed even although he argues
that the enforcement of custom is extremely important because current law fails and is
inefficient.143

I am yet to find a custom which could be applied to sophisticated modern contracts. If

one is buying or selling rabbits in Suffolk it may help to know that 1,000 means 1,200.
In other contexts, it may be useful to know that a hundred could mean “six-score” in

138 Spotted also by Catherine Mitchell, ‘Contracts and Contract Law: Challenging the Distinction
Between the 'Real' and 'Paper' Deal' (2009) 29 OJLS 675.

139 See Morgan, Minimalism (n28) quoting Lisa Bernstein (n21) at 208-209.

140 Christian Twigg-Flesner and Gonzalo Villalta Puig (eds), Boundaries of Commercial
and Trade Law (Sellier 2011) at 12.

141 Devonald v Rosser & Sons [1906] 2 KB 728 (Court of Appeal Kings Bench Division);
Chitty makes the same point.

142 Austen-Baker at 79.

143 Robert D. Cooter, ‘Decentralized Law for a Complex Economy: The Structural
Approach to Adjudicating the New Law Merchant' (1996) 144 University of
Pennsylvania Law Review 1643.

249
ling, cod, nails, and herring.144 It is less than helpful when one is looking at a contract
involving the outsourced administration of a complex payroll or pension scheme.

Catherine Mitchell says that trade custom might be one source of commercial expecta-
tions.145 As a general possibility in traditional commerce, this seems very doubtful, not
least because this notion may have been dealt a fatal blow by the empirical and histor-
ical work of Lisa Bernstein who reviews trade usages in US hay, grain and feed, textile,
silk, and lumber industries; concluding: -

"usages of trade" and "commercial standards …. may not consistently exist, even
in relatively close-knit merchant communities.

trade custom. . . is often amorphous and unsettled.146

Beale and Dugdale found “positive resistance” to the incorporation of trade customs in
contracts.147 It is worth remembering that these findings are based on manufacturing
or

4.2.3 THE PARTIES’ HISTORY

One might expect a history of dealing to be fertile ground in matrix examination. It is

where the parties are at closest quarters; in preceding business relations, arm-wrestling
in negotiations, and in the conduct of the business. English Law, however, places serious
obstacles in the way of the commercial Judge wishing to consider these elements. Lew-

144 Smith v Wilson (1832) 3 B & Ad 728. See Chitty (n94) on Custom at 13-060. For the
difficulty in software contracts see for example Trumpet Software Pty Ltd v. OzEmail
[1996] 560 FCA 1.

145 Mitchell, Bridging the Gap (n20) at 63.

146 Lisa Bernstein, ‘The Questionable Empirical Basis of Article 2's Incorporation
Strategy: A Preliminary Study' (1999) 66 UChiLRev 710.

147 Beale and Dugdale (n13) at 59.

250
ison says “a large number of transactions” are required to establish a course of deal-
ing148 and Richard Austen-Baker suggests that it “must be quite significant”. 149 Negoti-
ations, arguably “a large part of the matrix”,150 are not admissible for “reasons of prac-
tical policy”. 151 Performance, the actual modus operandi, is, equally, and, incomprehen-
sibly, inadmissible. 152 These are, therefore, currently a limited source of commercial ex-
pectation. It could be argued that under the current law the activities of parties not
involved in the transaction are more important, legally speaking, than the parties them-
selves. Their actual conduct or their actual, declared intentions are relegated to insig-
nificance whilst general trade or market practice is more likely to appeal to a Judge.

If Judges can treat trade or market practice as part of the background it is difficult to
understand why conduct is not so treated. Similarly, the need for large numbers of
transactions seems illogical. As Stephen A. Smith observes it is not unreasonable for
Judges to consider existing practices to determine whether they provide a solution.153
One might expect that the instant relationship would provide better evidence of content
than, say market or trade practice.

Hugh Collins suggests that “the rules are widely ignored in practice”. 154In Mamidoil-
Jetoil Greek Petroleum Co SA v Okta Crude Oil Refinery AD Rix LJ decided that objective

148 Lewison at 3.13 on Hardwick Game Farm v Suffolk Agricultural etc Association
[1966] 1 All ER 309 (AC).

149 Austen-Baker (n147) at 5.34-5.39.

150 Mitchell, Interpretation (n51) at 77.

151 Investors (n32). David McLauchlan, ‘A Better Way of Making Sense of Contracts?'
(2016) 132 LQR 577 at 584 - a “a surprisingly large number of cases” contravene these
rules.

152 Prenn v Simmonds [1971] 3 All ER 237, [1971] 1 WLR 1381 (HL). See Lord Steyn in
Worthington at 128 -business people simply do not understand such a rule.

153 Smith, ‘Reasonable Expectations of the Parties: An Unhelpful Concept’ (n11).

154 In ‘Objectivity and Committed Contextualism in Interpretation’ in Worthington

(n6) at 197.

251
criteria for deriving a new oil-handling fee could be found on the basis that this had been
possible over a 20 year relationship. 155 In Medirest, Lewison LJ used performance to
support a narrow interpretation of the cooperation clause; Cranston J having found
“that the dispute over SFPs and Deductions did not affect the day to day provision of
services, ...”. 156In another case the Court used evidence of prior negotiations to choose
between two possible meanings of a term.157

What may be required to supplement low transaction numbers is evidence of a wider

market practice.158 Kerr LJ ruled in one case that the fact that in some previous dealings
credits had been opened late did not establish a course of dealing “let alone a trade
practice”. 159 However, Evans LJ considered three years of intermittent dealings in First
Energy (UK) Ltd v Hungarian International Bank Ltd in explaining the “background of
dealings”.160

Where parties had had dealings for over 20 years and understood the commercial back-
ground to the contract the Court of Appeal applied a last-shot/battle of the forms anal-
ysis despite saying that the context of a long-term relationship and the conduct of the

155 Mamidoil.

156 Ibid at 145-146.

157 The Karen Oltmann [1976] 2 Lloyd's Rep 708. See also Proforce Recruit Ltd v The
Rugby Group Ltd [2006] EWCA Civ 69. However, the House of Lords disapproved Kerr
J’s “extension” of the private dictionary principle in Chartbrook Limited v Persimmon
Homes Limited [2009] UKHL 38, but approved the general principle “which is akin to
the principle by which a linguistic usage in a trade or among a religious sect may be
proved” – see Lord Hoffmann at [45]-[47].

159 Nichimen Corporation v. Gatoil Overseas Inc at 53.

160 First Energy (UK) Ltd v Hungarian International Bank Ltd [1993] 2 Lloyd’s Rep 194
at 205.

252
parties might sometimes be strong enough to displace the result which a traditional
offer and acceptance analysis would dictate.161 It is wholly unclear from any of the three
Judgments what might suffice. In this case the dispute was, almost inevitably, over lia-
bility for delay and non-conformance. It seems likely that such issues must have arisen
in past dealings and it does not appear to impose major costs or uncertainty in litigation
to ask the parties to provide evidence of past practice and to analyse terms and condi-
tions in that light. The evidence was that the battle of the forms was an administrative
affair, so the result seems to place mechanical matters above the need to find out what
parties have actually agreed.

In Baird Textile Holdings v Marks and Spencer plc162 an “exceptionally close and inter-
active commercial relationship”, 30-year, relationship came to an abrupt end at the
behest of Marks and Spencer. This involved close relationships between senior
executives, regular consultations on strategy, sales, design, technology, quality and
logistics, Baird’s appointment of managers selected by M&S, Baird working to M&S’s
seasonal timetables, and compliance with M&S‘s procurement policies and production
standards.
Baird’s case suggested an implied contract 163 recognising “broad obligations” to
continue the relationship. Under this Baird would be obliged to meet a reasonable or
appropriate share of M & S's actual requirements, where it had the capability to do so
and their price was reasonable. Baird submitted that the Court could, by examining the
parties' past performance, work out the minimum purchase obligations that M&S
should be taken to have committed itself to place and Baird to have committed itself to
supply during a three-year notice period. The Vice-Chancellor ruled that this would
involve the court writing a 'reasonable' contract for the parties, after making a complete
review of their situations, needs, abilities and expectations but that the “informal
business partnership” was insufficient to give any contractual protection, as there had

161 Tekdata Interconnections Ltd v Amphenol Ltd (n55).

162 Baird v M&S (n23).

163 Ibid at [67]-[68].

253
been no agreement on essentials (distinguishing Hillas v Arcos164). M&S had made it
clear that the only legal relationship it wanted was an order-by-order relationship.165

There is something missing in the analysis. Contracts are created by conduct as well as
by words.166 Some form of umbrella agreement subsisted between the parties involving
clear obligations to continue to discuss strategy, needs, prices and other
requirements. 167 This would infer a duty to communicate, discuss and try to agree;
perhaps analogous to the obligation to hold “friendly discussions” as defined by Teare J
– see subchapter 2.6.168 My difficulty is that I suspect that the outcome would have been
the same; no deal.

One problem with too relaxed a course of dealing principle is that implies that one in-
terprets a contract by reference to a previous contract. And one wonders how far that
process can go back in time. In Baird v M&S the relationship extended over 30 years.
Any examination of such a background becomes increasingly complex and increasingly
difficult for parties who may then be exposed to major problems with control and re-
tention of records going back many years even beyond conventional limitation periods.
For a Judge to explore relatively recent “relationship” based aspects of the parties’
transactions, or the way in which they have historically dealt with similar issues, may be
less fraught. If parties experienced amicable, constructive relations in previous dealings,

164 Hillas v Arcos.

165 Worthington (n6) Robert Bradgate in ‘Contracts, Contract Law and Reasonable Ex-
pectations ’ at 675 - the “very flexibility of the arrangements made creating a contract
difficult”. Collins, Contract Law (n97) - M&S “indicated clearly that it did not intend to
enter into a long-term binding contractual relationship... and its conduct was entirely
consistent with that position".

166 The Aramis [1989] 1 Lloyds Rep 213 Bingham J - if the parties would have acted as
they did without a contract that is fatal to any implication.

167 See Robert Bradgate in ‘Contracts, Contract Law and Reasonable Expectations ’ in
Worthington (n6) at 678 - an argument based on M&S being estopped from claiming
that there was no umbrella agreement could have been constructed. .

168 Emirates Trading.

254
or defaulting party has usually been allowed to cure a defect, a Court might enquire into
why a relationship had dissolved with that in mind as part of the background; confining
it to consideration of the parties’ method of dealing with similar problems in the past.

4.2.4 SURVEYS

My survey would be of value to support a commercial expert giving evidence. For exam-
ple, it suggests that the “ordinary reaction” of an expert asked for a report on a once
defective, apparently now repaired harrow would be, without hesitation, to provide a
report sufficient to allay the farmer’s concerns.169Market research surveys are admissi-
ble as is170 survey evidence if it is of “real utility” and Courts may review responses with-
out much guidance from statistical experts,171 although the quality of the survey and
data collection will go to weight.172

As I have argued in Chapter 3.1 the use of avatars in laboratory conditions is unlikely to
provide useful data on commercial expectation because, not only are the experiments
themselves wholly unrealistic but one cannot translate avatar reaction to real-world
conditions. X-phi experiments, despite their popularity, tell us nothing about the com-
mercial world, which is more nuanced and complex than one can replicate in a labora-
tory filled with ingénues. Experiments should be transferable and test real-world hy-
potheses.173 As Edmonds observes: -

169 Ritchie (n83).

170 Sidney Lovell Phipson and Hodge M. Malek, Phipson on Evidence, vol 18th (Sweet
& Maxwell 2013) at 33-02.

171 A Baily v Clark Son and Morland [1938] AC 557 (HL), Marks & Spencer Plc v Inter-
flora Inc [2012] EWCA Civ 1501 and see the robust decision in New Zealand in Ritz Ho-
tel Ltd v Charles of the Ritz Ltd [1989] RPC 333.

172 James (n89) at 18-009. See also Amey LG Limited v Cumbria County Council [2016]
EWCH 2856 (TCC) .

173 See also Korobkin and Patterson.

255
In the real world we are not constrained by having just two options, X and Y: we
have a multitude of options, and our choices are entangled in complex duties
and obligations and motives. In the real world, crucially, there would be no cer-
tainty.174

The real-world/real-people, complex nature of my survey makes its findings much more
credible than those emanating from students asked unrealistic questions in laboratory
conditions.

4.2.5 THE COMMERCIAL JUDGE

In this sub-chapter I explore the role of the commercial Judge in identifying commercial
expectation. Although some Judges have “profound and secure” commercial expertise,
and may be able to deal “magisterially” with certain transactions as a result, the advice
of Neil Andrews that Judges “must not assume that they are master of all trades” is
sensible.175 Lord Reed counsels against: -

an excess of confidence that the judge's view as to what might be commercially

sensible coincides with the views of those actually involved in commercial
contracts.176

174 Edmonds (n105) at 100. Collins, Regulating (n18) at 131 - empirical work fails to
“appreciate the presence” of several “normative frameworks”.

175 Andrews, ‘Interpretation Of Contracts And “Commercial Common Sense”: Do Not

Overplay This Useful Criterion’ (n107) at 52-53.

176 Grove Investments Ltd v Cape Building Products Ltd [2014] CSIH 43.

256
While Lord Hodge urges humility “about our ability to identify commercial pur-
pose”177and Lewison deprecates the tendency of Judges to determine commercial pur-
pose based on their own experience,178 Lord Steyn takes a more gnostic view: -

Modern judges usually have well in mind the reason for a rule and in a contract
case that means approaching the case from the point of view of the reasonable
expectations of the parties.179

In Equitable Life Assurance Society v Hyman180 Lord Steyn based an implied term limiting
the discretion of the Directors on the reasonable expectations of the parties which were
that the use of discretion should not deprive contractual guarantees of any value. Lord
Grabiner remarks, in unusually frank criticism, that Lord Steyn’s approach is
“speculative”: -

It is very unclear …where Lord Steyn found the “self-evident commercial object”
of the GAR or the “reasonable expectations of the parties”. It was certainly not
from anything any of the policyholders were told or promised ..

By contrast, Sir Richard Scott VC did consider the reasonable expectations of the
parties … by reference to the relevant policy documents.181

In dismissing a bank’s claim that the conduct of a manager who acted without actual
authority did not bind it, Evans LJ, without reference to evidence, that: -

177 In ’Can Judges Use Business Common Sense in Interpreting Contracts?’ in

DiMatteo and Hogg at 283. See Paul S Davies, ‘Interpreting Commercial Contracts: A
Case Of Ambiguity?' (2012) LMCLQ.

178 Lewison (n148) at 2.06.

179 Steyn (n5) at 442.

180 Equitable Life Assurance Society v Hyman .

181 Grabiner at 57-59.

257
It is not the practice, so far as I am aware, in normal commercial transactions for
written proof eg of board decisions to be demanded by contracting parties.182

Judges appreciate the exigencies of complex matters. As case managers they read dis-
pute resolution provisions and obligations widely and purposively. Mutuality and active
cooperation is at the heart of the Court’s approach to party obligations in arbitration;
Lord Diplock saying: -

The obligation is … mutual; it obliges each party to cooperate with the other in
taking appropriate steps to keep the procedure in the arbitration moving, … 183

In another case Coulson J observed that providing too much information (more than
one lever arch file), in an adjudication might breach a duty to cooperate: -

Unless parties and their solicitors co-operated properly and complied with the
TCC guide, the court would refuse to hear cases with promiscuous and unneces-
sary bundling.184

The dispute resolution Judgments have similarities with Judge Toulmin’s implied term
which includes the acceptance of reasonable solutions and acting reasonably where rel-
atively unimportant items cannot be delivered and the various rulings on how parties
should behave in disputes demonstrate that the Courts can construe contracts in ways

182 First Energy (UK) Ltd v Hungarian International Bank Ltd (n164) at 205 Steyn LJ
having saying at 204 that the alternative would “fly in the face of the way in which in
practice negotiations are conducted between trading banks and trading customers …
”.

183 Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corp Ltd
[1981] AC 909 HL at 25. And see The Hannah Blumenthal [1983] 1 AC 854, [1983] 1 All
ER 34 (HL) where the House of Lords refused to find that a long delayed arbitration
had been abandoned or frustrated; “The mutual obligation.. to keep the arbitration
moving is not merely a matter of each party co-operating with any initiative taken by
the other but a positive obligation imposed on each party to take the initiative himself,
with or without the co-operation of the other party”.

184 Deluxe Art & Theme Ltd v Beck Interiors Ltd [2016] EWHC 238 (TCC).

258
that encourage to parties to work together.185 The duty in arbitration is, of course, con-
tractual.

In complex modern symbiotic contracts experience and expertise on which to base an

analysis of what the parties would expect is, in my opinion, likely to be no more
accessible to the judiciary than expertise in banking or medical cases; notwithstanding
that the judges know how important cooperation is once complex machinery grinds into
action. It is arguable that they should have some idea of relative priorities once
problems arise, once disputes become apparent, and in the general hurly-burly of
business.

Perhaps surprisingly, Roger Brownsword would entrust judges with a “residual discre-
tion” to give effect to reasonable expectations where these involve creating network
effects, but this still leaves open the question of how the Judge uncovers such expecta-
tions.186

Bringing into play commercial expectations as a deus-ex-machina, or, worse, acting as

an undeclared amiable compositeur, using judicial intuition, carries the risk of diluting
the concept; allowing the claim that the “notion explains too much”. 187 Most Judges
have, however, served long apprenticeships at the Bar giving them some idea of
whether parties are holding back, attempting to make them “hostages of the arguments
deployed by Counsel” 188 and the expertise of specialist Technology and Commercial
Court Judges in construction and engineering contexts should not be underestimated.
Nevertheless, Judges should restrain themselves and deliver opinion based on the

185 See Laporte and another v Commissioner of Police of the Metropolis [2015] EWHC
371 (QB).

186 In ‘Contract in a Networked World’ in DiMatteo and others (n19) at 14.

187 Mitchell, ‘Leading a Life of Its Own? The Roles of Reasonable Expectation in
Contract Law’ (n9) at 663.

188 Lord Steyn lamenting a circuitous approach by Counsel to third party rights in Dar-
lington Borough Council v. Wiltshier Northern Ltd [1995] 1 WLR 68 at 78.

259
documentation or serious and declared experience in the type of transaction under
review.

CONCLUSION

Distilling the general principle for discovering the meaning of a contract Aikens LJ ex-
plained the Court’s job as: -

to discern the intention of the parties, objectively speaking, from the words used
in the commercial document, in the relevant context and against the factual
background in which the document was created.189

Relevant context and factual background can be revealed by evidence. Francois du Bois
says that commercial practice, a key part of the background, whether it is trade or mar-
ket practice, party conduct, the assumptions of the business relationship (to some ex-
tent): -

provides a source of norms about how to exercise our practices, about how to
be a good contractant.190

The explanation of commercial practice which is displayed by survey participants may

or may not show how to be a “good” contractant; but it shows how to be an effective
and successful contractant. It exposes community standards, and uncovers norms in
commercial practice which can be used to articulate a concept of commercial expecta-
tion of cooperation, with an agreed description of what cooperation means and how to
apply cooperation in practical settings. These expectations are “non-speculative” and
do not suffer from Adams and Brownsword’s concern that they might only be found at

189 BMA Special Opportunity Hub Fund Ltd v African Minerals Finance Ltd [2013]
EWCA Civ 416.

190 du Bois (n1) at 12.

260
a “high level of generality”.191 They are neither open-textured nor a slogan as suggested
by Smith.192

In Chapter 5 I will review these expectations, showing which might credibly be articu-
lated as a deep, concrete, duty to cooperate.

191 See Adams and Brownsword (n81)at 326.

192 Smith, ‘Reasonable Expectations of the Parties: An Unhelpful Concept’ (n11) at

386.

261
4.3.1 APPENDIX 1 TO CHAPTER 4.2

Further information from ISS showing the evolution of outsourcing of various functions to multi-
service providers.

262
263
Chapter 5 THE THIRD WAY – HOW IT IS DIFFERENT

In the Introduction, I describe my search for a duty to cooperate as pragmatic or func-

tional, a means to making contract law fit better in the commercial world seeking a bet-
ter fit between the law and the expectations of those at the sharp end. The commercial
expectations and changes in commercial reality identified in Chapters 3 & 4 underline
the need for a coherent, higher-level concept of cooperation which meets the needs of
modern commercial actors. In this Chapter I provide content for a deep, concrete duty
to cooperate, consider similarities to and dissimilarities from other definitions of coop-
eration, describe enforcement possibilities, and consider remedies available to Courts
to deal with breach.

THE THIRD WAY

There is a third way to bring concepts of cooperation in modern complex contracts into
play in English Contract Law. It is neither necessary to rewrite the law and principles
entirely, as relational theorists require, nor to undermine the commercial strengths of
the Common Law, which minimalists and formalists assume would be the result. Using
well-known constructs, it is possible to draft a concrete, overarching duty of coopera-
tion, especially for complex modern, symbiotic contracts.

My survey reveals that commercial expectation in the background to many modern

forms of contract arise from the pathway to success in performing these contracts lying
in active cooperation, communication, and problem solving. The goal is performance
and is achieved by good management and leadership worked in formal and informal
channels. Reciprocity and punishment are regarded as useful but ineffective. Those at
the sharp end know that they must build relationships to discern what drives the other
party, providing a foundation for cooperation, solid communication, and practical prob-
lem-solving. Dennett observes that: -

264
I can still take my task to be looking out for Number One while including under
Number One…my family, the Chicago Bulls, Oxfam, you name it…1

Below is my idealised “transcendent” duty to cooperate (hereinafter TDTC), specifically

for symbiotic contracts; but with application to others: -

In complex, highly-interactive contracts, characterized by a high degree of

inter-dependency, which require significant communication, active
cooperation, and predictable performance for their success it is implicit, an
inevitable inference from the spirit and the background, that parties must
engage constructively and professionally, and do those things necessary to be
done for the full realization of the bargain. This duty to cooperate requires the
parties to work together constantly, to plan, manage and organize the work,
and accept where possible reasonable solutions to those problems which occur
from time to time, transmitting information in good time to ensure that
informed decisions can be made, providing each other with the opportunity to
cure defects (advising the other of defects or defective performance as soon as
practicable), undertaking consultation and making concessions where there is
uncertainty or matters have been left to be resolved, and when taking
decisions arrogated to them, which affect the other party, act impartially,
honestly, fairly and reasonably, making a genuine examination of each’s
relevant commercial expectations.

This third way bears analogy to concepts of “contemplation”, or “neighbour” at a high

level of abstraction, leaving room for debate and allowing parties to adjust their rela-
tionships without abandoning their autonomy. Following Lord Atkins’ logic from Do-
noghue v Stevenson,2 I “content myself” with claiming that there is a “general concep-

1 Daniel C. Dennett, Freedom Evolves (Penguin 2004) at 180.

2 Donoghue v Stevenson ; [1932] AC 562.

265
tion” of a duty to cooperate, which “cannot in a practical world” extend to the protec-
tion of every injury or breach of contract,3 filling in the details by examples in Chapter
6. The duty is an enabling/facilitating mechanism4 which controls day to day conduct by
requiring parties to ensure that each can take advantage of their bargain.

Dori Kimel observes, in a passage which begs the question of which norms should be
regulated by contract law: -

One of the most important functions of contract law …. is to support personal

detachment by way of enabling parties to transact without relationships, at
arm's length …. What often enables parties to contracts to develop co-opera-
tive relationships … what often enables potentially relational contracts to de-
velop into truly relational ones—is the very existence of a 'detached core': a
certain stable baseline, comprising of clearly articulated …. enforceable rights
and obligations.5

In drafting the TDTC, I have separated “informal” elements of relationship building from
the formal. In formal elements, I worked from doctrine and analogy to build a “core” of
rights and obligations which could be applied to symbiotic contracts. Activities such as
“team-building”, are categorised as useful but commercially “informal” values such as
respect and transparency give way to a need for constructive engagement. In short, I
separate out first, those elements not amenable to legal protection, then consider the
background elements which are necessary to success, according to respondents, and
which “would have affected the way in which the language of the document would have
been understood by a reasonable man”.6

3 Ibid especially at 580 and 599.

4 J F Wilson, Principles of the Law of Contract (Sweet and Maxwell 1957) at 262. Stoljar
at 231.

5 Kimel at 248.

6 Lord Hoffmann’s description of background in Investors at 913.

266
The TDTC does not originate in, is not derived from, or depend on, cognate notions of
good faith or mutual trust and confidence. Mutual trust and confidence in employment
contracts means that neither party will conduct itself in a manner likely to destroy or
seriously damage their relationship of confidence and trust.7This is asserted by Judges
to reflect a new “social reality”8 entitling Courts to take account of “wider considera-
tions” such as balancing an employer’s interest in managing his business and the em-
ployee’s interest in not being unfairly exploited.9 In one key case, Lord Bridge accepted
that it could only be justified on “wider considerations … as a necessary incident of a
definable category of contractual relationship”.10 11 Some commentators see a possible
transformation of commercial contracts to align them with these values.12 I am not con-
vinced that this principle is necessary or workable for enabling or facilitating perfor-
mance in commercial contracts. Its source is in the objective expectations of experi-
enced commercial parties. There is no immanent loyalty, fidelity, crypto-fiduciary or
quasi-agency element. Notions such as loyalty, fair dealing, or improper, or unconscion-
able practice, or mutual trust and confidence requirements are wholly unnecessary.

7 The term originated in Courtaulds Northern Textiles Ltd v Andrew [1979] IRLR 84, EAT
where a supervisor's comment to Mr Andrew 'Well, you can't do the bloody job any-
way' was held to destroy the bond of confidence between them amounting to con-
structive dismissal. Andrew’s solicitors (Reynolds Porter Chamberlain) pleaded it as an
implied term.

8 Lord Hoffmann in Johnson v Unisys Ltd at [35].

9Lord Steyn in Mahmud v Bank of Credit and Commerce International SA (In

Liquidation) [1998] AC 20; [1997] 3 WLR 95 (HL) at [46], Ewan McKendrick, Contract
law: text, cases, and materials (OUP 2014) at 361 observes that it is based on a lower
standard than necessity.

10 Scally v Southern Health and Social Services Board [1991] 4 All ER 563 (HL) at 571.

11 See also R. V. Upex, Encyclopedia of Employment Law (Sweet & Maxwell 1992) at
1A-2.5 and Chitty at 37-105.

12 See Douglas Brodie, ‘Fair Dealing and the World of Work' (2014) 43 Industrial Law
Journal 29 at 50-51 and Collins, Contract Law at 337-338 on duties of disclosure.

267
Content derived from Toulmin J’s formulation of “active cooperation”13 bears similarity
to good faith concepts but that is not its source.

I articulate the duty at a similar level of abstraction to Lord Atkin in Donoghue v Steven-
son or Baron Alderson in Hadley v Baxendale.14 David Howarth might consider this as
design: -

Lawyers design social structures and devices in a way that parallels engineers’
designs of physical structures … Contracts, companies, trusts, constitutions, and
statutes are the buildings, bridges, machinery, roads, and railways of social life.15

Although making and testing my social device is design in this sense, 16 the analogy, to
me, and I spent 35 years in engineering environments, of this as engineering has major
mismatches. Engineers work from experimentally derived, verifiable, material. 1+1=2 in
the engineering world. In law, it depends on the context of the 1. Or the other 1. Or the
2. Or the +. But his point that academics do not spend enough time drafting new con-
cepts at a level of abstraction that might prove useful in a Courtroom is a strong one.

DEFINITIONS OF COOPERATION
In this sub-chapter, I describe how obligations academics define cooperation, consider-
ing similarities to and differences between these ideas and the TDTC. Interestingly there
is no listing for cooperate or cooperation in legal dictionaries.17

13 Anglo Group at [125].

14 Hadley v Baxendale at 354.

15 David Howarth, ‘Is Law a Humanity: (Or Is It More Like Engineering)?' (2004) 3 Arts
and Humanities in Higher Education 9 at 12.

16 See also D. Howarth, Law as Engineering (Edward Elgar 2013).

17 Eg; David M Walker, The Oxford Companion to Law (Clarendon Press 1980).

268
Survey respondents consider that cooperation goes further than “coordination and
planning”,18 which one might call mechanical or techno-cooperation. To them coopera-
tion is about making contracts work; supporting performance. It is similar to Bruce
Schneier’s definition “cooperation doesn’t imply anything moral; it just means going
along with the group norm”. 19 The TDTC differs from other definitions in combining
physical and managerial elements and is based on legal authority plus the expectations
of reasonable commercial actors. In the sense that it bears similarities to some judicial
exposition it is not, at heart, radical.

5.2.1 FULL-BLOODED RELATIONAL SCHOLARSHIP

In relational contract literature cooperation represents a basic real-world dynamic and

is a major component of norms such as preservation of the relationship or solidarity.20
Jay Feinman describes it: -

The substantive core … proceeds from two propositions; that contract is funda-
mentally about cooperative social behaviour… the recognition that different
contracts have different contexts and values gives balance to the concepts of
competition and cooperation…21

Ian Macneil described cooperation in a fairly vague way without detail as to how it might
work in hard cases: -

18 Harold Canfield Havighurst, The Nature of Private Contract (Northwestern UP 1961)

at 21-22.

19 Bruce Schneier, Liars and Outliers (Wiley 2012) at 53.

20 Eg; Austen-Baker, at 222 - “Relational contract theories assume that … contracting

parties are likely to want to perpetuate exchange relations”, Ian R. Macneil,
‘Contracting Worlds and Essential Contract Theory' (2000) 9 Social & Legal Studies
431.

21 Jay M Feinman, ‘Relational Contract Theory in Context;' (2000) 94 94 Nw ULRev

742 at 743.

269
Relational responses to a breakdown of cooperation thus tends … necessary or
desirable to restore current and future cooperation… negotiation, mediation, ar-
bitration and orders to do things. 22

Solidarity in relational thinking is often presented as an “internal” norm meaning it is a

norm between the parties and, therefore possible to attack as too subjective or formu-
lated at too high a level of abstraction; or both.23

Robert Gordon describes cooperation in relational contracts (memorably saying they

are more like marriages than one-night-stands) as: -

In bad times, the parties are expected to lend one another mutual support, ra-
ther than standing on their rights.24

I am not sure that “mutual support” is right. Parties expect that in bad times they will
find ways to make the contract work. Relationists mainly view cooperation as a method
of adapting to internally or externally generated changes in longer term, usually “incom-
plete” contracts rather than the need for cooperation in the daily working environment

22 Ian R. MacNeil, ‘The Many Futures of Contract' (1973) 47 Cal L Rev at 741; which
reminds me of King Lear ”I will do such things. What they are yet I know not. But they
shall be the terror of the earth” See also Arrighetti at 175 suggesting that relational
theory requires “flexibility” in contract enforcement partly because express terms are
not sufficiently flexible. See subchapter 2.7; discussing management techniques
through decision-making provisions that provide powers to control contracts when
trouble hits.

23 Richard E Speidel, ‘The Characteristics and Challenges of Relational Contracts'

(2000) 94 NWULR 827 at 827.

24 RW Gordon, ‘Macaulay, MacNeil and the Discovery of Solidarity and Power in Con-
tract Law' (1985) Wis L Rev. Lyons and Mehta say in ‘Private Sector Business Con-
tracts: The Text Between the Lines’ in Michie and Deakin at 51 that relational contract-
ing allows vulnerable partners to trust that counterparties will “respond in a co-opera-
tive manner” to unforeseen events. Kimel (n5) quotes this at 245-246 to support his
argument that not all relational norms can or should be legally regulated in “affective”
and analogous agreements.

270
in reasonably well specified medium and short-term contracts.25 This dimension of co-
operation is actually renegotiation, requiring that parties renegotiate contractual rights
in the interests of maintaining a relationship; described as “highly questionable” and
“quixotic” by Melvyn Eisenberg. Ewan McKendrick agrees, in the same volume, with a
US Judgment that such a construct “cannot withstand scrutiny”.26 This objection is sup-
ported by a reading of Terry Daintith’s analysis of a “very violent” shake-up in the iron
ore supply industry which resulted in long-term contracts “surviving”: -

at the expense of an almost total change in the character of the contracts … From
fixed-term, fixed-quantity, fixed-price contracts, they have been converted into
requirements contracts which may, through extension, have an indefinite term,
with annually negotiated prices.27

It is, in my opinion, impossible to construct legal principles which could lead to such
results. Michael Trebilcock’s observation that relationalism “entails a highly amorphous
sociological enquiry that seems well beyond the courts in case to case adjudication” is
fair comment.28

It is very difficult to see how one can force a result onto free parties. One can ask them
to behave professionally and to try to settle disputes notwithstanding that they remain
free to disagree. The contracts analysed by Terry Daintith were, as he says, the subject
of major renegotiations and it is likely that each result was different. Even if the contract
is used as a “tool of cooperation”,29 cooperation is voluntary, and involves a commercial

25 Speidel (n23) at 829.

26 J. Beatson and Daniel Friedmann (eds), Good Faith and Fault in Contract Law
(Clarendon 1997) at 300 ‘Relational Contracts’ and ‘The Regulation of Long-Term Con-
tracts in English Law’ at 314 respectively.

27 Daintith and Teubner, Contract and Organisation: Legal Analysis in the Light of
Economic and Social Theory at 186.

28 Trebilcock at 141-142.

29 Wilhelmsson, at 19-20, describing Daintith and Teubner, Contract and Organisation:

Legal Analysis in the Light of Economic and Social Theory’s (n27) findings at 186.

271
negotiation as opposed to reliance on legal rights (although negotiation is carried out in
the shadow of the contract).
Commenting on Baird Textiles Holdings plc v Marks and Spencer plc 30 (discussed at
4.2.3) John Wightman notes relational elements which might have been relevant such
as solidarity/fidelity. 31 Linda Mulcahy and Cathy Andrews, masquerading as “Lady
Mulandrew”, then provide us with an alternative, feminist Judgment, saying that
feminist and relational values each emphasise cooperation and concern for others,
masculine behaviour being more arms-length, strategic. My survey does not bear this
out; there is almost no difference between male and female respondents on reactions
to difficult situations. They say that the various risks undertaken by Baird were
“unlikely” to have been accepted without a broader set of obligations and that “it seems
very implausible to suppose that Baird would have invested in such additional
production capacity”.32 I agree with that although Baird had the option of negotiating
guarantees. They make one poor point – “in short M&S enjoyed the benefits of having
subsidiaries without the full costs”; without remembering that M&S did not receive the
profits from those quasi-subsidiaries either.33

Williamson (supported by Jonathan Morgan) provides a facile solution to relational con-

tracting – a clause that parties “agree that they will co-operate over any problems en-
countered….”.34 Medirest’s General Counsel might be able to explain to him the pitfalls
(see generally subchapter 2.6 above).

5.2.2 OTHER ACADEMIC CONSTRUCTS – MAINSTREAM OBLIGATIONS SCHOLARS AND

HYBRID OR PARA-RELATIONISTS

30 Baird v M&S.

31 Hunter, McGlynn and Rackley ‘Commentary on Baird Textile Holdings v Marks Spen-
cer Plc’ at 188.

32 Ibid at 193.

33 Ibid at 189.

34 Morgan, Minimalism; “as Williamson points out, a simple clause could be inserted
in every long term contract”.

272
In Samuel Stoljar’s original review in 1953, describing duties to cooperate by category
(Building, Commission, Employment, and Notice); illuminating the principle with cases
going back hundreds of years he says: -

Since the fundamental and pervasive theory of the common law of contract is
that of a bargain between two parties the natural …. corollary is that the parties
must mutually co-operate to enable and facilitate the fulfilment of their bar-
gain…35

He explains the two parts to cooperation: -

not to hinder [and] a distinctly positive duty… to take all such necessary or addi-
tional steps… that will either materially assist or will generally contribute to the
full realization of the bargain. 36

When one turns to other academic writings, things are apt to be a bit murky. The nature
of the cooperation, the meaning of cooperation and how it might affect actual cases is
oft-times not clear, reflecting Howarth’s critique. 37

For example, Adams and Brownsword, attempting to define cooperation, say: -

co-operation is not simply a matter of performing … or making it possible for the
other party to perform…On the other side co-operation is not a matter of acceding
to any demand made.38
This is a bit vague. They suggest the classical law is predicated on competition when
cooperation would be “more rational”. 39 They place a modern notion of cooperation

35 Stoljar (n4).

36 Ibid at 232 and he illustrates the prevention principle with the case of Foreman S T
and S Bank v Tauber – see Chapter 2.2 above.

37 Howarth (n9 & 10).

38 Adams and Brownsword at 301-302.

39 Ibid at 295.

273
“somewhere between the classical model … and sheer altruism” (proponents of pure
altruism are a rare breed), saying that it implies “responsibility and restraint” and that
the test is whether conduct is compatible with the contractual community of interest.40
My concept is enabling and facilitating conduct which ensures that the contract is a suc-
cess, and requires some responsibility and restraint and is connected with a notion of a
contractual community.

They also argue that a cooperative model would require people to consider how the
scrupulous or honourable would react.41 My model requires constructive engagement
and professional attempts to resolve problems. This might require people to consider
how the experienced commercial professional would react (the “ordinary reaction” per
Bingham J in Tradax42). In other work, Roger Brownsword says that a cooperative ethic
of contract would be defined by “equality of interest” in which contractors treat their
interests as holding equal weight.43 The TDTC insists that where key decisions affecting
one party are taken by the other, fairness and impartiality play a central role.

Professor Brownsword also says that Macaulay’s work supports the view that business
operates on a cooperative level, maintaining that it does not matter, as a matter of
practical ethic, whether cooperation is created through moral principle or enlightened
self-interest. Cooperation, in these terms, means roughly what Macaulay describes as
disputes being “suppressed, ignored or compromised in the service of keeping the rela-
tionship alive”44; described by Adams and Brownsword as “emphasising that for many

40 Ibid at 302. At 297 they refer to the “relevant body of commercial opinion”.

41 Ibid (n34) criticizing Cockburn J’s famous/cynical epigram in Smit v Hughes (1871)
LR 6 QB 597 (QB) - “The question is not what a man of scrupulous morality or nice hon-
our would do …”.

42 The Lutetian at 157.

43 Brownsword at 28-29.

44 Stewart Macaulay, ‘An Empirical View Of Contract' (1985) 1985 WisLRev 465 at
468.

274
business people co-operation is the name of the (relational) game”.45 If relationship
means contract, then my model is aligned with this, but future business is a by-product,
a “nice-to-have”.

Hugh Collins deals with the topic in some detail saying that in the classical law there was
“no general obligation to cooperate, to assist each other, to perform in good faith, or to
make the contract a success…”.46

He suggests that cooperation might require “obligations of loyalty and mutual assis-
tance” requiring parties to: -

go beyond performance according to the strict terms..., displaying trust, in as-

sisting each other as far as possible in …. use ...of discretion

a general obligation to cooperate, to assist each other, to perform in good faith,

or to make the contract a success.47

One of the original dimensions of my survey was that it asked practitioners what success
means. The answer was performance; in broad terms. Good faith, in terms, is not a ma-
terial issue for practitioners. Communication was consistently cited as being an essential
part of cooperation in managing contracts and when asked how they would use discre-
tion, in general practitioners consult and consider the interests of all parties; see sub-
chapter 3.2.3. However, Professor Collins seems to confine the need for cooperation to
longer-term transactions arguing: -
If ..one regards the law of contract as offering an opportunity for entering into
binding long term commitments…calculations of self-interest … should not be

45 Adams and Brownsword (n38) at 299.

46 Collins, Contract Law (n12) at 330 – 363.

47 Ibid at 331-332. See Michie and Deakin (n24) Lyons and Mehta in in ‘Private Sector
Business Contracts: The Text Between the Lines’ at 107 that empirical work shows co-
operation is associated with “flexibility to contractual performance”.

275
permitted to subvert the value of the institution in contracts. Instead the law
must impose certain duties of co-operation. 48

Elisabeth Peden says that it is appropriate to see cooperation as equivalent to good

faith: -
Cooperation basically must embrace a duty to act honestly and a duty to have
regard to the legitimate interests of the other party.49
That is quite close to my thinking on decision making but doesn’t reach the level of detail
required by Adams and Brownsword.

5.2.3 LAW AND ECONOMICS DEFINITIONS

Eric Posner claims: -

Law and economics writing has become so paralyzed by complexity that a wise
judge would simply ignore it.50

As I have noted above (at 4.1.1) one problem with this literature is that it does not rec-
ognise the existence of new, modern forms of contract which require cooperation as a
practical day to day matter for performance. The literature tends to the assumption that
cooperation is about renegotiation and preservation usually defining it in carrot and
stick, Prisoner’s Dilemma terms or as extended self-interest, enforced by the long-term

48 Collins, Contract Law (n12) at 30.

49 Peden at 170.

50 Posner, Eric A ‘Economic Analysis of Contract Law After Three Decades: Success or
Failure?’ (2003) 112 Yale L.J. 829 at 880 cited by Morgan, Minimalism (n34) at 60 who
remarks that business wants the clear and simple rules of English Law instead - the
rules in Chitty’s 2000 or so pages and the multitude of cases cited? Mitchell, Bridging
the Gap, notes that the literature “appears to pull in different directions”.

276
relationship.51 This almost bipolar literature provides support for both classical and re-
lational approaches to cooperation in the literature,52emphasising walk away, pay up
later, theories of efficient breach (Richard Craswell points out that there are many meth-
ods of defining efficiency53) on one extreme and supporting relational models, based on
longer term contracting on the other.54

Oliver Williamson understands opportunism as: -

the incomplete or distorted disclosure of information, especially to calculated

efforts to mislead, distort, disguise, obfuscate, or otherwise confuse.55
Most failure to communicate seems to be either incompetence or sulking. It is not al-
ways calculated but it is sometimes designed to take advantage of a rising or falling
market or to lock a tenant into an advantageous lease; see subchapter 2.5.

5.2.4 TRUST BASED DEFINITIONS

Lyons and Mehta distinguish between socially oriented trust (SOT) and self-interested
trust (SIT) making the point that SOT is less powerful when difficulties arise.56 They

51 eg - Baird, ,Robert M. Axelrod, The Evolution of Cooperation (Basic Books 1984)

Cooter, Robert E. Scott, ‘Conflict and Cooperation in Long-Term Contracts' (1987) 75
Cal LRev 2005.

52 Baird (n51). Trebilcock (n28).

53 In Peter Benson, The Theory of Contract Law: New Essays (Cambridge University
Press 2001) at 20.

54 Ibid - for a survey of this material see Richard Craswell in Chapter 1 Two Economic
Theories of Enforcing Promises. See generally Anthony T. Kronman and Richard A.
Posner, The Economics of Contract Law (Little, Brown 1979).

55 Williamson, The Economic Institutions of Capitalism (n16) at 47.

56 Michie and Deakin (n24) in ‘Private Sector Business Contracts: The Text Between
the Lines’ at 63-64.

277
also claim that trust, not law, is the component that allows parties to “respond in a co-
operative manner to unforeseen events”.57 In similar work, in an article discussing suc-
cess factors in joint R&D projects, drawing from a survey of enterprises in three Euro-
pean Countries, Fink and Kessler58 distinguish between instrumental trust which draws
power from sanctions and maxim based trust which draws power from “self-commit-
ment” saying that where enterprises make use of maxim based trust they seem to do
better. Self-commitment includes some risk-management like processes such as in-
vestigating the reputation of the other party, previous dealings. Others are attuned to
making the project work such as communicating, modifying behaviour, taking a risk,
accepting setbacks. They also note that the more “cooperative experience” the parties
have the more success can be expected.59 It is worth remembering that these relation-
ships have the support of legal systems in which good faith plays a larger role than it
does in England and Wales. Their analysis is explicitly relational, rejecting governance
or market mechanisms as controls; instead claiming trust as an increasingly significant
coordination mechanism. The “structural” and “interpersonal” characteristics of
maxim based trust, however, include elements susceptible to governance and legal or
market sanction such as

• Resilience - inferring problem solving.

• Communication - I can get right to the point.
• Transparency - understanding other parties’ processes. 60

These results align neatly with my survey results, showing that respondents’ manage-
rial ethos corresponds closely to conditions for success in R&D collaborations. In that
certain expectations, such as good communication, and problem-solving endeavours

57 Ibid at 51.

58 Matthias Fink and Alexander Kessler, ‘Cooperation, Trust and Performance – Empir-
ical Results from Three Countries' (2010) 21 British Journal of Management 469. The
survey received 458 responses from 10,000 requests.

59 Ibid at 479.

60 Ibid at 476 and 480.

278
are amenable to contractual regulation, I am unable to agree fully that the approach is
either fully relational or must be fully trust-based. The behaviours described by re-
spondents do not appear to be truly extra contractual, non-governance, market-neu-
tral. Survey results tend to demonstrate a correlation between good communication,
solid management, and success. Luo observes that in these types of contract com-
pleteness also drives performance; showing again that the deal needs formal and in-
formal elements.61

In the same volume Deakin, Lane and Wilkinson describe cooperation in “supplier
partnerships”, or “networks” where there is a degree of information sharing, staff ex-
change, and cross ownership of know-how and IPR as involving: -

An intention or willingness to maintain a trading relationship over a period of

time, to avoid adversarial behaviour and to adopt an attitude of flexibility with
regard to contractual performance.62

This formulation is not very different to Toulmin J’s, nor to the TDTC.

5.2.5 MANAGERIAL THOUGHTS

Charles Handy identifies cooperative employment contracts as those in which the indi-
vidual identifies with the goals of the organisation and becomes creative in the pursuit
of those goals, with more voice on the goals and more discretion in how to achieve
them: -

61 Yadong Luo, ‘Contract, Cooperation, and Performance in International Joint

Ventures' (2002) 23 Strategic Management Journal 903.

62 Michie and Deakin (n24) in ‘Contract Law, Trust Relations, and Incentives for Co-op-
eration: A Comparative Study’ at 107.

279
in a cooperative environment expert or charismatic power works best and posi-
tion power is less effective.63

There is an echo of the views of my respondents here. The relationship is important and
must be built through communication and engagement.

5.2.6 TIT-FOR-TAT ≠ COOPERATION

Farther on up the road, someone's gonna hurt you like you hurt me
Farther on up the road, baby you just wait and see
You got to reap just what you sow, that old saying is true
Like you mistreat someone, someone's gonna mistreat you64

Prisoner’s Dilemma (PD) games are so-called because the acme of the species is two
prisoners, accomplices, who have been arrested. Their dilemma is that if each keeps
quiet they each get one year in gaol, if one rats, the rat goes free and the rattee goes to
gaol for several years. If they each rat, each gets more than one but less than several
years behind bars. This popular pastime was invented in the 1950s by Merrill Flood and
Melvin Dresser at the RAND Corporation. 65 Enormous effort has been put into the de-
sign of PD experiments in endeavours to show why and how human beings work to-
gether. The difficulty is explained by Hugh Mellor: -

If this is philosophy then questionnaires asking people whether they think circles
can be squares, is maths.66

Anatol Rapaport, who designed the most successful algorithm for score maximisation
in iterated PD games, tit-for-tat, understood the shortcomings of game theory. It must
be supplemented by consideration of “the role of ethics, of the dynamics of social

63 Handy at 47 & 141.

64 Don Robey/Joe Medwick Veasey – 1957.

65 Schneier (n19) refers, at 262, to a database search yielding 73,000 academic papers
with Prisoner’s Dilemma in the title.

66 Edmonds at 93.

280
structure, and of social structure and of individual psychology”.67 It is not solely econo-
mists who refer to the most egregious outcome as resulting from cooperation but
even authors who seek moral principles are not free from this error.68In the sense co-
operation is used in the research hypothesis and in the dictionary sense, not defecting,
not ratting is not cooperation.69There is no enabling or facilitation, and no joint work
or activity.

Survey respondents were offered the option of reciprocation in Vignette 4 and few
found the idea attractive; just 6% rating it as their first choice and 12% as their second
choice. It was said that it involved “stooping to their level”, would dig “deeper
trenches”, or “relationships would sour”. This is consistent with the relationship-build-
ing, communicate and make-it-work philosophy of those engaged in management of
these contracts. There is some evidence, from a public good, pooled wealth game run
by Fehr and Gachter that free riders are so resented that cooperative players are will-
ing to punish them; even at a cost to themselves.70 Deakin and Michie counsel, on PD
games that: -
The conditions under which contracts [are] renegotiation-proof are so extreme
as to have only a tenuous connection with…practice. 71

67 Anatol Rapaport, Fights, Games, and Debates (University of Michigan Press 1974).
See also Anatol Rapaport, ‘The Use and Misuse of Game Theory' (1962) Scientific
American.

68 Schneier (n19) at 53, Joshua David Greene, Moral tribes : Emotion, Reason and the
Gap between Us and Them (Atlantic Books 2013) at 30, Prinz at 313.

69 Prisoner’s Dilemma games are often presented as offering a choice between coop-
eration and defecting. But there is no common goal. Each Prisoner has a separate goal;
to avoid or minimize his own incarceration. Note Collins, Regulating at 130 describing
PD experiments as non-cooperation games and “inherently unstable”.

70 Ernst Fehr and Simon Gächter, ‘Cooperation and Punishment in Public Goods
Experiments' (2000) 90 The American Economic Review 980.

71 Michie and Deakin (n24) ‘The Theory and Practice of Contracting’ at 9-10.

281
Tit-for-tat, the bedrock of PD games, simply does not figure in the management of mod-
ern complex contracts. It is at once too simplistic, binary in nature, and does not provide
the basis for a solution to the problem. Parties recognize that they must talk at some
stage and that to reciprocate is mere adjournment.

REMEDIES AND ENFORCEMENT MECHANISMS RECONSIDERED

My primary claim is that cooperation is both necessary and desirable for the success of
symbiotic contracts. I argued in Chapter 2 that proper analysis of these contracts leads
to the conclusion that the matrix includes a desideratum that the “something” which
“needs to be done”72 includes managerial/active cooperation in these modern, com-
plex, symbiotic, contracts; akin to the active cooperation duty delineated by Toulmin
J.73In Chapter 4 I showed that the law possesses the right tools for finding out what the
duty means in individual contracts and classes of contract and in this Chapter I have
shown that it is possible to draft, at a reasonably concrete level of abstraction, a duty to
cooperate.

From survey results, I argue that in these modern complex contracts, parties eschew
termination and expect each other to engage constructively to solve disputes and prob-
lems. Accordingly, remedies should be designed with this background in mind; Courts
must “mould the remedy to the circumstances”74; a dualist approach to remedies.75

72 Mackay v Dick at 263-264.

73 Anglo Group (n8) at [125].

74 Ibbetson at 259 commenting on Hong Kong Fir.

75 Andrew Robertson, The Law of Obligations : Connections and Boundaries (UCL Press
2004). In Chapter 2 ‘Remedies and the Classification of Obligations’ at 17, Michael Til-
bury describes two theories of remedies; monist and dualist. Monist means that obli-
gation and remedy are congruent rights; the latter that Courts make a determination
of the obligation and then makes a context-specific evaluation of the remedy.

282
In many cases, normal damages remedies will be perfectly sufficient. In other cases,
damages will be “inadequate” and I endeavour to show that there are plausible alter-
natives.76 I concentrate on an analysis of remedies which might satisfy, in whole or in
part, the need to deter termination and encourage constructive engagement where nor-
mal damages may not be suitable or adequate. They are: -

• Remedies analogous to those for prevention. I will explore how remedies which
“neutralise” prevention might be taken a step further. In these instances, Courts
may substitute their own machinery and remedies may operate as though a pre-
vented obligation has been performed.
• “Wrotham Park” damages; a semi-discretionary remedy, sometimes described
as gain-based damages, where damage is difficult to establish “allowing a flexi-
ble response to the need to compensate the claimant for the wrong that has
been done to him”.77
• Statutory adjudication. Although not a remedy, this provides a fast-track, rough
and ready, temporarily final, dispute resolution framework which should allow
parties to get on with the work and resolve disputes quickly and effectively.
• Limiting the right to terminate. This is not a remedy, but deters termination and
encourages parties to engage with each other to keep the contract alive.
• Cost penalties; should the matter reach the Courts.

Ralph Cunnington identifies four remedies which may be available to a Court where
damages are not adequate.78 These are specific relief, loss of amenity damages, gain-
based damages, and punitive damages. Loss of amenity damages are used where the
object of the contract is the provision of amenity or pleasure which is not usually the

76 Lord Nicolls description in Attorney-General v Blake [2000] UKHL 45 at [21].

77 WWF-World Wide Fund for Nature v World Wrestling Federation Entertainment Inc
[2007] EWCA Civ 286 at 59.

78 In ‘The Inadequacy of Damages as a Remedy for Breach of Contract’ Charles Rickert

(ed) Justifying Private Law Remedies (Hart 2008) at 114-127.

283
aim in commercial contracting and punitive damages are not available in England. Ac-
cordingly, I have not included those as possibilities. Andrew Burrows classifies reme-
dies functionally as: compensation, restitution, punishment, compelling performance
of positive obligations, preventing wrongful acts, compelling the undoing of a wrong,
declaring rights.79 Prevention remedies tend to declare rights and/or compel perfor-
mance. Wrotham Park damages may be classified as either compensatory or restitu-
tionary. Limiting the right to terminate and allowing fast-track adjudication can compel
the undoing of a wrong, or declare rights.

At the “extreme pole” of relational contracts, says Ian MacNeil: -

Trouble is anticipated and dealt with by “cooperation and other restorational

techniques”.80

This may fit into the TDTC’s constructive engagement requirements. Although it might
act as a deterrent I excluded excommunication as one possibility; Sir Michael Latham
recording;

Mr Nisbet also kindly supplied a copy of his book “Fair and Reasonable - Building
Contracts from 1550” …. Conditions of contract in the Middle Ages were clearly
onerous. A contract in York in 1335 required the carpenter to complete work
within three months on pain of excommunication.81

5.3.1 REMEDIES FOR PREVENTION

79 Burrows, Remedies for Torts and Breach of Contract at 8.

80 Macneil, ‘Contracts: Adjustment Of Long-Term Economic Relations Under Classical,

Neoclassical, And Relational Contract Law’.

81 Sir Michael Latham, Constructing the Team (1994) at section 4.4.

284
Courts have various remedies at their disposal to deal with prevention of performance.
One is proleptic, treating prevented obligations as performed, or forbidding reliance on
them; “a sort of estoppel” according to 82 JF Burrows. 83 In Mackay v Dick Lord Watson
ruled that where a party “impeded or prevented the event, it is held as accomplished”.84

Another is to exonerate the innocent party from performance.85Most commonly expe-

rienced in construction or engineering contract cases, prevention bars an employer
from claiming liquidated damages for employer caused delay. This dates back to the
“first modern decision” 86 in 1838 in Holmes v Guppy, 87 described by Keating J as
founded on the “most invincible reason”.88 The principle applies equally in shipping con-
tracts.89 Where an employer fails to provide proper drawings and instructions or access

82 Carter at 11-47. Colley v. Overseas Exporters [1921] 3 KB 302 - suing for the price
was limited to cases in which delivery has taken place. In Sir Richard Hotham v The
East India Company 99 ER 1295 at 1299 –Ashhurst J said - “it being rendered impossi-
ble … by the neglect and default of the company's agents … it is equal to perfor-
mance.”

83 Burrows at 396.

84 Mackay v Dick (n70) at 270-271 cited by Devlin J in Mona Oilat 1017 “If the breach
… prevents the plaintiff from performing a condition … he is to be taken as having ful-
filled that condition, and, if the condition is one on which his right to payment de-
pends, he may sue for payment …”. Walker, Principles of Scottish Private Law cites this
case at 662-663 referring to the condition as “potestative”; under the power or control
of one of the parties.

85 Roberts v The Bury Improvement Commissioners at 329.

86 Stoljar (n4).

87 Holme v Guppy. Stoljar (n4) at 237. See Stannard at 9.14 citing Peak Construction
(Liverpool) Ltd v McKinney Foundations Ltd (1970) 69 LGR 1, 1 BLR 111 (CA) where Lord
Salmon said at 121 “I cannot see how … the employer can insist on compliance with a
condition if it is partly his own fault that it cannot be fulfilled.”

88 Russell v Viscount Sa da Bandeira (1862) 143 ER 59 (Common Pleas) at 205.

89 The Mass Glory [2002] EWHC 27 (Comm) .

285
to site the obligation prevented will be “eliminated”90 or the prevented party “exoner-
ated”, even released from liability for forfeiture. 91 Attempts to create a contractual
mechanism to manage preventative activity will be construed strictly against the em-
ployer.92

Where a party refuses to appoint a valuer, or interferes with certification, where a cer-
tifier declines to act, 93 where a certifier’s conduct falls short of “a high standard of fair-
ness” or is oppressive and “partisan”,94 the Court may substitute its own machinery,
taking matters into its own hands; Lord Fraser refusing to accept that one party could
flout provisions “at his own sweet will”: -

……. the machinery …. has broken down because the respondents have de-
clined to appoint their valuer… I prefer to rest my decision on the general prin-
ciple that, where the machinery is not essential, if it breaks down for any rea-
son the court will substitute its own machinery.95

The Court substituted the requirement for agreement on a valuer with an inquiry into a
“fair and reasonable price”; perhaps because damages were not an adequate remedy.96

90 Stoljar (n4) at 233.

91 Roberts v The Bury Improvement Commissioners, Joseph Hunt v Bishop 155 ER 1523
(Exchequer).

92 Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (n85).

93 Watts v McLeay 19 WLR 916.

94 Pawley v Turnbull (1861) 3 Giff 70 cited by Hudson and Wallace, Hudson 1970 at
467. See also Canterbury Pipelines v Christchurch Drainage Board [1979] 2 NZLR 347.

95 Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444 (HL) at 484. See Richardson
v. Smith (1870) LR 5 ChApp 648 and In re Malpass, Decd. Lloyds Bank Plc. v Malpass
[1985] Ch 42.

96 Gareth Jones, ‘Specific Performance: A Lessee's Covenant to Keep Open a Retail

Store' (1997) 56 CLJ 488 at 490.

286
In Pallant v Morgan cases, where one party to a joint land deal rats, said to be based on
agency concepts by Bowstead, Courts may hold that the land is held for both parties
jointly and that if the parties fail to agree on the division of the property it will be resold,
and the proceeds divided equally subject to reimbursement of some expenses.97I dis-
cuss the value of this remedy in Chapter 6.

5.3.2 WROTHAM PARK DAMAGES

In a line of cases, dating from Wrotham Park Estate Co v Parkside Homes Ltd (Wrotham
Park),98 damages may be assessed by reference to the breaching party’s gain, where
measuring a loss to the innocent party is difficult or impossible or where damages are
inadequate. In these cases, damages are awarded as: -

damages for loss of a bargaining opportunity or, which comes to the same, the
price payable for the compulsory acquisition of a right. 99

It may be that the law has advanced to allow Wrotham Park damages where it would
be “just” to do so, not simply because no loss has been suffered but where the calcula-
tion of loss might present serious difficulty.100

In D&G Cars Ltd v Essex Police Authority, ‘a relational contract par excellence’,101 the
authority terminated a long-term vehicle recovery and crushing contract on discovering
that a recovered vehicle had been repaired and absorbed into the contractor’s fleet. In
this case the breach, the repair and re-use of a car which should have been crushed,
would have caused the authority no damage. However, had the Authority wished to
maintain the relationship, Wrotham Park damages or an abatement calculation based

97 Pallant v Morgan. Watts, Reynolds and Bowstead at 6-110.

98 Wrotham Park Estate Co v Parkside Homes Ltd [1974] 2 All ER 321, [1974] 1 WLR
798. Andrew Burrows, Remedies for Torts and Breach of Contract (n77) at 400 de-
scribes these as restitutionary.

99 WWF-World Wide Fund for Nature v World Wrestling Federation Entertainment Inc
Chadwick J at [42].

100 See Morris-Garner v One Step (Support) Ltd [2016] EWCA Civ 180.

101 D&G Cars Ltd v Essex Police Authority [2015] EWHC 226 (QB) Dove J at [176].

287
on the contractor’s cost savings, as in Amey LG Ltd v Cumria County Council could pro-
vide the basis of a damages claim. 102 Either might deter such breaches, forcing the Con-
tractor to be open and negotiate should he find a desirable car to add to his fleet.

5.3.3 STATUTORY ADJUDICATION

Always “intended to be rough justice”, the UK’s statutory adjudication scheme, allow-
ing an adjudicator to make a determination within 28 days of a reference, has “spread
around the world”.103 It “was, and is, a revolution that has transformed the landscape
of construction disputes.”104 The “rough and ready” adjudication scheme for tenancy
deposit disputes, equally, appears to be transforming the handling of disputes around
deposits.105 The survey results show that respondents (70-90%) would welcome fast-
track adjudication. Those with Construction experience were more willing to describe
it as effective or helpful.

As Chief Justice Wayne Martin suggests expert determination is one possible route for
fast-track dispute resolution, but it carries the risk of finality even when a determina-
tion is “idiosyncratic and extreme”.106 The advantage of adjudication lies in its tempo-
rarily binding nature. It allows for rough justice to be reviewed in more refined tribu-
nals.

102 Amey LG Limited v Cumbria County Council .

103 Keating Chambers Legal Update for Summer 2015.

104 James Pickavance, A Practical Guide to Construction Adjudication (John Wiley &
Sons 2015) at 1.10.

105 Julian Sidoli del Ceno, ‘Adjudication in Tenancy Deposit Scheme Disputes: Agents'
Perspectives' (2015) 7 IJLBE 162.

106 In Dharmananda K (ed) Long Term Contracts (The Federation Press 2013) at 352.

288
Figure 22 Approximate Numbers of Litigation Cases and Adjudications in the UK

If these numbers are still valid, and Robert Fenwick Elliott’s estimate that adjudication
costs are 10% of those of litigation it seems unarguable that the process is effective.107

5.3.4 LIMITING THE RIGHT TO DETERMINE

Courts will strip away rights to terminate for minor breaches through the rules enunci-
ated in Hong Kong Fir Shipping Company v Kawasaki Kisen Kaisha Ltd (Hong Kong Fir).
108 In a falling market, charterers cancelled a charter; alleging unseaworthiness. The
Court found that there were no reasonable grounds for supposing that the vessel
could not be made seaworthy in a reasonable time. Consequently, since the commer-

107 Robert Fenwick-Elliott, ‘Building and Construction Industry Adjudication – The UK

Experience’ .

108 Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26, [1962]
1 All ER 474 (AC).

289
cial purpose of the voyage had not been frustrated the repudiation was wrongful. Fol-
lowing this case termination provisions will usually be classified as innominate, not as
conditions, placing limits on parties’ ability to terminate for minor breaches109 and cre-
ating incentives to maintain the relationship. It is ancient law going back centuries.110
Accepting that it may be may be possible to draft strict termination provisions Hudson
counsels against clauses apparently permitting“ … termination for any breach” refer-
ring to Courts’ “reluctance” to “read such wording literally”.111 Hugh Collins says the
case reinforces “the value of co-operation by forbidding reliance on the term as a pre-
text”.112 Roger Brownsword describes this as “covert manipulation of doctrine” which
should be replaced by subjecting “withdraw [al] … to a good faith proviso …”.113

John Wightman says that “cooperation is fostered by leaning against the use of technical
breaches to escape”.114 Writing before corrective legislation, (the 1979 Sale of Goods
Act115), he laments the toleration of extreme uses of rejection rights (now limited by
section 15A of the Act), 116 meaning Lord Atkin’s lapse of judgement, (which could be
contrasted with Lord Reid’s view that such interpretation is only viable where there is
no other explanation), in a case where goods were agreed to be fit for purpose but
slightly non-conform to description: -

109 Note in Fitzroy House Epsworth Street (No. 1) Ltd v Financial Times Ltd [2006]
EWCA Civ the conflation of material and substantial.

110 See for example Sir Richard Hotham v The East India Company (n75).

111 Hudson at 8-046.

112 Collins, Contract Law (n12) at 360.

113 Roger Brownsword, ‘"Good Faith in Contracts" Revisited' (1996) 49 CLP 111 at
127.

114 Wightman.

115 Sale of Goods Act 1979 (1979 c 54) .

116 Wightman (n112) at 91 says this of Re Moore & Co v Landauer [1921] 2 KB 519
(KB). See also Arcos v Ronaassen [1933] AC 470 (AC).

290
A ton does not mean about a ton, or a yard about a yard. Still less …does ½ inch
mean about ½ inch. If the seller wants a margin he must and in my experience
does stipulate for it. … recognized trade usage [particular figures] may be given
a different meaning, as in a baker's dozen.117

The breach of a payment term, unless covered by an express provision, will, usually be
insufficient to justify termination.118 This may be different when non-payment is pro-
longed and “cynical” with “repeated complaints … and broken promises”.119 In time
clauses, as Lord Wilberforce once explained - there is only one breach possible; to be
late.120
The Court may refuse to allow termination where it suspects opportunistic motive. In
one IT case, it was clear to the Court that the Defendant wanted to escape from the
contract due to a change in his own circumstances, and consequently declined to ac-
cept that delays in performance or completing in a reasonable time, were repudia-
tory.121

5.3.5 COST PENALTIES

In a series of cases in England Courts have punished parties in costs for unreasonable
behaviour in ADR. They show a willingness by Courts to provide incentives to cooperate

117 Arcos v Ronaassen (n114) at 479. In Suffolk 1,000 rabbits, by custom, means 1,200
- Smith v Wilson .

118 Dalkia Utilities Services plc v Celltech International Ltd [2006] EWHC 63 (Comm),
[2006] 1 Lloyd's Rep 599 and see Spar Shipping AS v Grand China Logistics Holding
(Group) Co Ltd.

119 Alan Auld Associates Ltd v Rick Pollard Associates [2008] EWCA Civ 655 at [20].

120 Bunge Corpn v Tradax SA [1981] 2 All ER 513, (HL) [1981] 2 Lloyds LRep at 5.

121 Astea (UK) Ltd v Time Group Ltd [2003] EWHC 725 (TCC).

291
in dispute resolution; although they may not yet go far enough.122 The Halsey rationale,
cited in Reid v Buckinghamshire Healthcare NHS Trust is that: -

If the party unwilling to mediate is the losing party, the normal sanction is an order
… that they will have to pay their opponents costs even if those costs are not pro-
portionate .... This penalty is imposed because a court wants to show its disap-
proval of their conduct.123

CONCLUSION

There is a certain amount of synthesis in the TDTC, which is a novel abstraction based
on a unique combination of doctrinal, empirical, and theoretical analysis. Burrows’
unenthusiastic claim that cooperation “is a vague term and can be used to be used to
cover a wide range of situations” is something of a counsel of despair.124 The fact that
cooperation will be required in a wide range of situations means that day to day
requirements covered by a duty to cooperate will vary with the scope of the contract;
which is roughly how Lord Atkin described the neighbour principle. In analysing
academic opinion, I think that the level at most academics approach cooperation is too
abstract; it needs to get closer to the coal face (or the help-desk).

My claim that the TDTC can be fairly described as a third way survives comparison to
other conceptions of cooperation including Common Law articulations, relational con-
structs, academic opinion, good faith claims, and Prisoners’ Dilemma experiments.

In this Chapter I have shown that it is possible to draft a concrete duty to cooperate at
a level of abstraction that aligns with some modern case law and the expectations of

122 Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576. See also Masood
Ahmed, ‘Implied Compulsory Mediation' (2012) 31 CJQ 151 and Masood Ahmed,
‘Bridging the Gap between Alternative Dispute Resolution and Robust Adverse Costs
Orders' (2015) 66 NILQ 71.

123 Reid v Buckinghamshire Healthcare NHS Trust [2015] EWHC B21 citing Halsey v
Milton Keynes General NHS Trust at [28].

124 Burrows (n81) at 390.

292
commercial experts. In addition, I have, briefly, explored a few ideas, using standard,
albeit seldom used, remedies, to demonstrate that the Common Law does have some
flexibility in the way that it deals with parties unwilling to perform in a constructive and
cooperative manner. Some may take time to develop. Wrotham Park damages were
highly controversial in 1974 but we have advanced to a point where they are considered
useful where flexibility is required.

293
Chapter 6 A FEW HARD CASES AND CONCLUDING THOUGHTS ON RE-
FORM
In this Chapter I apply the TDTC to a number of hard cases with the aim of determining
whether it can be applied in a coherent fashion; without undermining the certainty ap-
parently required in the commercial world. I conclude by making a case for some, lim-
ited, reforms to remedies and processes, as well as a more ambitious plea for coherence
in interpretation for modern contracts, creating a platform for the development of a
foundation for legal enforcement of deep cooperation in these complex affairs.

APPLYING THE DUTY TO COOPERATE TO THE HARD CASES

Using case law and informed by my survey I have presented a workable concept of
cooperation for modern complex contracts, aligned with the expectations of those who
manage such contracts. In academic literature, there is little linkage of cooperation to
real cases showing how enforcing cooperation might work, 1 what sort of rules might be
used and how case results and analysis might be affected.2 In this subchapter I test the
application of the principle, examining its implications when presented with the sort of
problems encountered in the performance of modern complex contracts.

I take some interesting cases and ask: -

• What would happen if the TDTC were applied?

• What remedies might a Court use to encourage cooperation in such cases?

In some cases, I show that the TDTC is not engaged by the breach. I have examined such
cases to show that the TDTC is an enabling duty with limited scope, there to facilitate
performance. It is not an overarching duty, nor a tenebrous concept in the manner of

1 Howarth commenting that academics do not do enough “design” says that this is
typical.

2 None of my hard cases, other than the marginal Baird Textiles case, is covered in
Hunter, McGlynn and Rackley - a rare and welcome attempt to rewrite difficult cases
from a different perspective.

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good faith. It is distinctive and independent and touches contracts only when one party
must act or step aside to facilitate performance by the other.

I considered whether I might test the TDTC against implied-in-fact tests. This is a higher
bar than construction as the term must be reasonable, necessary to provide business
efficacy, obvious, and clear.3 Exploring this to determine how much real difference ex-
ists between gap-filling and construction might be of interest in later work but for rea-
sons of time and space I elected not to pursue the task.4

6.1.1 MEDIREST5

The Relevant Facts

That imperfect behaviour is not confined to construction contracting may be seen by

reading Medirest. It provides a splendid example of the sort of commercial activity that
forced Parliament to legislate to ameliorate the behaviour of construction industry play-
ers by creating a statutory fast-track, adjudication process to provide temporary finality
for disputes.6
At first instance Cranston J described context: -

“it concerned the performance of a long term, complex contract, involving the
provision of an important service to members of the public, the patients and

3 Marks and Spencer v Paribas at [21] citing BP Refinery (Westernport) Pty Ltd v Shire
of Hastings (1977) 52 ALJR 20.

4 Ibbetson cited in subchapter 2.8.4 says that the nineteenth century development of
implication rules “did not necessarily affect the answer”.

5 Medirest.

6 For the background see Latham, and Pickavance at 1.2 “Commercial intimidation was
rife, … thousands of firms were forced out of business. What the industry needed was
a dedicated enforceable fast-track dispute process”.

295
visitors to the hospital …., the Trust was in a real sense pursuing a common pur-
pose with Medirest of benefit to the public.”7

He also notes that

In several cases, although a fault was remedied in the presence of senior Trust
staff, the Trust asserted that it could not be reasonably satisfied that a fault had
been remedied and continued to calculate service failure points because no
email was received. That, in my view, was not reasonable behaviour on the part
of the Trust. 8
In addition, when Medirest sent a conciliatory letter the response of the Trust was an
internal instruction to "pull it to bits”.9 The final straw for the contractor seems to have
been the Trust’s inquiry as to how much they would be willing to pay to keep the con-
tract.

I have been unable to find any contemporaneous commentary claiming that Cranston
J’s first instance Judgment would create uncertainty.

Applying the TDTC

Cranston J observed that it was “unlikely that reasonable commercial parties would
have contracted on the basis that the Trust could make absurd calculations, with the
serious consequences which then could threaten, and still be regarded as acting in a
manner compliant with clause 3.5 or rationally”.10 He described material breaches as
including: -
absurd calculations of service failure points which … were in many respects in-
defensible. Those calculations led to demands for payment. … [and] a failure to

7 Medirest (n5) at [33].

8 Ibid at [46].

9 Ibid at [82].

10 Ibid at [42].

296
respond positively when Medirest protested the calculations and sought to re-
solve the dispute.11
It is not only the decision to award or assert that requires cooperation; it is the manage-
ment of the aftermath, and as the TDTC would infer. That requires good communication,
some form of “constructive engagement”12, pointing out alleged deficiencies clearly and
constructively. As shown in subchapter 4.2.1 an expert could have helped the Court
come to an opinion on whether the parties fell below some objective threshold in the
management of the aftermath. It is hard to imagine the officious bystander who would
consider it to be sensible commercial practice to “pull” sensible proposals “to bits”,

Additionally, the unfair and far from impartial decision making would run afoul of the
TDTC requirement to take decisions fairly and impartially (long a construction law prin-
ciple; see subchapter 2.7.4).

My survey respondents regard communication and engagement as essential for the suc-
cess of these contracts. It supports an argument that the ordinary reaction of a com-
mercial manager asked how Mid-Essex should have responded to a request to discuss
the deductions to be that they would “without hesitation, have agreed to a meeting, to
discuss in a constructive and professional manner, how to resolve the issues” and I
would expect them to consider that this is not only right but necessary for the success
of such contracts.

What Remedies should be considered?

Disappointed by the Medirest decision, Mary Arden argues for a more balanced ap-
proach to cooperation: -

11 Ibid at [83].

12 See Laporte and another v Commissioner of Police of the Metropolis at [13], Turner
J using the phrase to describe a failure to engage in ADR proceedings for this phrase.

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We need to recognise more generally that there are some contracting situations
where the parties expressly do not want to give each other the right to take de-
cisions exclusively in their own interests …

They are not expecting to be told that their agreement to cooperate is meaning-
less….13

Employing the general principle that where a certifier fails, and machinery is not essen-
tial, then the Court may substitute its own machinery could have two results. 14 The
Court could make its own judgment on the appropriate deduction of service points or it
could regard the provision as vitiated due to the constructive failure of the decision-
making party to appoint a fair decision-maker. The Court can then decide using normal
principle; what damage has the contractor caused?
One interesting feature of the case is that each party purported to terminate. The sup-
plier first; for material breach under an express term. The Trust because a threshold of
1400 service deduction points had indisputably been reached. Cranston J found that
both were entitled to terminate; concomitantly neither was entitled to significant post-
termination damages. There are several possibilities here. I consider two.
• Medirest terminated opportunistically; knowing that it was at risk of a 1400-
point termination. The Trust followed suit, also opportunistically, suspecting
that Medirest’s termination might be justified. In this case Cranston J’s Solomon-
ish Judgment is attractive. It means that neither party reaped much reward from
termination.
• Medirest was seriously fed up, and terminated for that reason and the Trust had
little option but to protect its position. In my opinion that also supports Cranston

13 Arden at 212-213. For some sense of the bewilderment that Medirest causes see
Dunné.

14 Sudbrook Trading Estate Ltd v Eggleton applied in Bruce v Carpenter and others
[2006] EWHC 3301 (Ch). See Megarry VC in In re Malpass, Decd. Lloyds Bank Plc. v
Malpass.

298
J’s Judgment. It allowed Medirest to divorce a difficult customer and it prevented
the Trust from deriving any benefit from its absurd behaviour.

A formal adjudication process might have forced the parties to reconsider their behav-
iour earlier than late 2009 when the atmosphere had been wholly poisoned, and mat-
ters came to a head.
Cost penalties could help to deter such behaviour. Although the Trust won, its behav-
iour could be reflected in costs by analogy to a failure to mitigate or a failure to engage
in mediation or act reasonably once it became clear that a dispute was in progress.
This is law which would have to be developed. Courts can express their disapproval by
cost sanctions of the conduct of winning parties who refuse to mediate.15 They may
also punish parties who make extravagant claims, and win only a small proportion of
the claim.16By analogy Courts could punish parties who behave unreasonably, creating
or exacerbating problems. At present they may do this indirectly; see the discussion
below in 6.1.10 where a litigant’s conduct was held to have contributed substantially
to the problems encountered.

6.1.2 PORTSMOUTH CITY COUNCIL V ENSIGN HIGHWAYS17

The Relevant Facts

In this case Portsmouth City Council, advised by a consultant, embarked on a strategy

of penalising Ensign, its Highways maintenance contractor, by deducting Service Points
to force it to accede to commercial demands. This included deducting the maximum
amount of Service Points for every default, refusing to communicate in relation to

15 See eg in Reid v Buckinghamshire Healthcare NHS Trust; Master O’Hare’s disap-

proval of the winner’s conduct.

16 Business Environment Bow Lane Ltd v Deanwater Estates Ltd [2009] EWHC 2014.

17 Ensign.

299
breaches, finding breaches which Ensign might find hard to remedy and storing up de-
ductions over several months so that Ensign could be “ambushed”. Post Medirest, the
CC decided to ask the Court for declarations in relation to the width of the cooperation
term and its powers to deduct Service Points.

Applying the TDTC

The Judge remarked “unsurprisingly, Ensign was very disturbed at these

developments”.18 Applying the TDTC means that parties should avoid “disturbing” each
other in this manner. Instead they should communicate, engage, and problem-solve.
Behaving in this hole-and-corner manner is plainly non-compliant with the TDTC. Ewan
McKendrick’s opinion that acting with the predominant purpose of injuring the other
party may be bad faith19 is not borne out by Ensign. The express obligation to cooperate
in good faith was held not to apply to service point deductions or calculations. In the US
it appears that “overreaching” interpretation of contract language, abuse of a
bargaining position, or arbitrary termination may breach the UCC’s good faith
requirements.20 In Australia one Judge said that obligations to cooperate in good faith
precluded a party “from cynical resort to the black letter”. 21A simple duty to engage
and communicate professionally and constructively would be breached by PCC’s
behaviour.

What Remedies should be considered?

18 Ibid at [8].

19 Alpa G and Andenas M (eds), Private Law beyond the National Systems (British In-
stitute of International and Comparative Law London 2007) - Ewan McKendrick at 697.
20 Robert S. Summers, ‘"Good Faith" in General Contract Law and the Sales Provisions
of the Uniform Commercial Code wrong ref but keep pdf' (1968) 54 Va L Rev 195 at
203.

21 Overlook v Foxtel [2002] NSWSC 17. See also Summers who indicates at 203 that
“overreaching” interpretation of contract language may beach the good faith require-
ments of the Uniform Commercial Code.

300
The issues are similar to those in Medirest and I concentrate on the difference which
lies in the tactical ambushes planned by the Council. Effluxion of time might make adju-
dication less useful.

In this case Edwards-Stuart J implied a term that the City Council claimant would act
honestly and on proper grounds and not in a manner that was arbitrary, irrational or
capricious. In my opinion that did not go far enough; given that this is almost a construc-
tion contract I am surprised that a requirement to act fairly and impartially was not ap-
plied.

An obligation to be fair and impartial, as described in subchapter 2.7.4, mainly in con-

struction contract cases, in taking decisions which affect the other party is more than
sufficient to control behaviour of the type with which Ensign was faced. The result
should be that the Court replaces the contractual machinery, so long as that machinery
is not “essential”, with its own decision making; based on normal principle. 22 That
means that the City Council must proceed along normal lines; proving damage. This
would be a deterrent since these Service Point clauses are designed to substitute oner-
ous and time-consuming requirements to prove damage with agreed sums for defined
events. In these service contracts proving damage is doubly difficult. If Ensign fails to fill
in a pothole what damage does PCC suffer? If none there may be a remedy in abatement
available allowing PCC to recover damages based on the cost saving made by Ensign.23

6.1.3 BAIRD TEXTILE HOLDINGS V MARKS AND SPENCER PLC24

The Relevant Facts

The case involved a long-term commercial relationship in which the parties had con-
sulted closely on detailed strategy and requirements, in which contracts were made on

22 See eg Sudbrook Trading Estate Ltd v Eggleton (n14) cited above at 5.3.1.

23 Amey LG Limited v Cumbria County Council .

24 Baird v M&S.

301
an annual order-by-order basis. Marks and Spencer terminated the relationship ab-
ruptly and Baird argued before Sir Andrew Morritt VC that there existed an implied con-
tract under which M&S had “broad obligations” to give Baird a reasonable share of the
business so long as the price was reasonable.

Applying the TDTC

As I say in Chapter 4.2.3 the “umbrella” arrangements would: -

infer a duty to communicate, discuss and try to agree; perhaps along the lines of
the obligation to hold “friendly discussions” as defined by Teare J.25 My difficulty
is that I suspect that the outcome would have been the same; no deal.

It may be impossible to force the parties to reach a result, especially in circumstances

where one party, M&S, had, over a long period made it clear that the business would
be conducted on an order-by-order basis. If, as Judge LJ observed, management or eco-
nomic conditions had changed,26 that should be enough to allow M&S to “escape”. In a
case like this one possible test is that set out in Esso by Tuckey LJ27 that the outcome
must be based on genuine examination of the commercial factors affecting the business.
A brutal exposition of the new reality, telling Baird that M&S simply no longer wanted
to deal with them, or that a strategic decision to relocate partnerships to the Far East
had been made, would be sufficient to put an end to the obligation to discuss.

What Remedies should be considered?

It was an inference from their conduct that they would work together to try to reach
new deals but, as between two relatively sophisticated parties Courts should be reluc-
tant to intervene. In a loose arrangement, term length notwithstanding, the ability of
either party to walk away should be controlled only where there is clear unambiguous

25 Emirates Trading.

26 Baird v M&S (n24) at [76].

27 Esso v Addison.

302
agreement. As Teare J observed,28 Judges will have little difficulty in recognising a failure
to enter into proper discussion. The remedy may lie in loss of chance damages.29

6.1.4 YAM SENG PTE LTD V INTERNATIONAL TRADE CORPORATION LTD (YAM
SENG)30

The Relevant Facts

In Yam Seng, the contract, under which Yam Seng obtained an exclusive licence to dis-
tribute “Manchester United” cosmetics, was short; comprising eight clauses drafted by
the parties. David Campbell described the problems: -

A warm business relationship cooled largely because ITC repeatedly failed to

supply merchandise as agreed, so that YSL itself repeatedly made commitments
… that it could not meet … ITC's explanations of its failures and assurances of
improved performance justifiably came to be regarded as implausible or outright
false. YSL eventually terminated the agreement, and sued for breach of contract
…31

ITC’s conduct was found to be repudiatory and Yam Seng entitled to damages.

Applying the TDTC

Leggatt J defined the agreement as a relational contract requiring: -

28 Emirates Trading (n25).

29 Ibid at [43].

30 Yam Seng.

31 David Campbell, ‘Good Faith and the Ubiquity of the ‘Relational’ Contract' (2014)
77 MLR.

303
a high degree of communication, cooperation and predictable performance
based on mutual trust and confidence and involve expectations of loyalty.32

The communication and cooperation requirements fit the TDTC but there seems little
reason to imply additional good faith obligations particularly given the depressingly quo-
tidian nature of the breaches; which consisted of late shipments, failing, or refusing to
supply all the specified products, undercutting agreed prices, and providing false infor-
mation. The first of these, late or non-delivery, hardly merits novel treatment. The evi-
dence suggested: -

common ground … that there is an industry assumption that retail prices in do-
mestic markets will be higher than the corresponding duty free retail prices at
airports or on board aeroplanes.33

Undercutting prices clearly runs counter to the commercial expectations of the parties.
The third complaint, that of providing false information, clearly offends the TDTC in that
there is no proper communication; indeed, there is the opposite. On Yam Seng David
Campbell observes that: -

good faith obligations essential even to a commercial contract of this sort must
be implied in order to give efficacy to the fundamentally co-operative contrac-
tual relationship.34

A simple duty to cooperate by communicating honestly, professionally and construc-

tively to make the contract successful would have been sufficient to resolve the third
issue in dispute; that of providing false information. Leggatt J defined the communica-
tion requirements; showing that a term can be defined with sufficient precision: -

32 Leggatt J in Yam Seng (n30) at 142. He refers to Lord Steyn’s comment in First
Energy (UK) Ltd v Hungarian International Bank Ltd – “… the reasonable expectations
of honest men must be protected …”.

33 Yam Seng (n30) at [60].

34 Campbell (n31).

304
… ITC needed to plan production and take account of the expected future de-
mand from Yam Seng for Manchester United products. … Yam Seng, …, was ar-
guably entitled to expect that it would be kept informed of ITC's best estimates
of when products would be available to sell and would be told of any material
change in this information without having to ask.35

What Remedies should be considered?

If the parties felt that the relationship should continue fast track dispute resolution
through statutory adjudication might well help.

In cases like Yam Seng I think that normal conditions apply; terminate for repudiatory
breach and claim damages; which was exactly the outcome.

Yam Seng was cited in a case involving the termination of a distributorship in which the
Claimant asked the Court to imply a good faith duty to provide accurate and honest
appraisals of the continuance of the relationship. The Court declined.36 There is nothing
in the TDTC which would change that decision.

6.1.5 BRISTOL GROUNDSCHOOL LTD V INTELLIGENT DATA CAPTURE LTD37

The Relevant Facts

The parties had collaborated, in a contract described as relational by Spearman J, on the

production of training manuals for commercial airline pilots. Applying good faith “stand-

35 Yam Seng (n30) at [143].

36 Ilkerler.

37 Bristol Groundschool Ltd v Intelligent Data Capture.

305
ards of commercial dealing” Spearman J held that the unauthorized downloading of ma-
terial by one party constituted “commercially unacceptable” conduct; in breach of an
implied duty of good faith.38

Applying the TDTC

If the test is whether reasonable people would find the downloading commercially un-
acceptable, in the context involved there is no gap. The conduct would be a breach of
the unexpressed/expectation part of the agreement. It does not appear necessary to
measure this against a duty to cooperate. This is a straightforward breach of contract.

What Remedies should be considered?

Normal damages for breach.

6.1.6 COMMUNICATION CASES – MONA OIL, TRADAX, AE LINDSAY, AND PETER DU-
MENIL39

The Relevant Facts

The thread that unites these cases is that one party possesses information not commu-
nicated to the other. In each it is arguable that had the information been passed on the
contract would have been performed. In each the contract was terminated.

In Mona Oil, in which the sellers required immediate payment to allow them to effect
the delivery of seventy-five oil tanks the arrangement was that the agent (T&Co), would
confirm that the tanks were at the buyer’s disposal. T&Co refused to act pending written
confirmation of the arrangement, which they received but did not pass on. On a mis-
taken assumption that T&Co were refusing to act the seller terminated.

38 Ibid at [138]-[139].

39 Mona Oil; A. E. Lindsay & Co Ltd v Cook The Lutetian; Dumenil.

306
In Tradax, a charterer made an error in calculating off-hire days fees and the shipowner
withdrew the vessel.

In Dumenil, a warehouseman told the buyer, that he had had no “Gaythorn” skinned
rabbits, but did have GPL. The buyer must have been puzzled, the two being the same,
and on reflection, recognized that the seller might be unaware of their warehouseman’s
error.

In AE Lindsay a credit had been miscalculated: Pilcher J accepted that the miscalculation
entitled the defendants to terminate: -

businessmen have got to stand on their rights and do stand on their rights.40

Applying the TDTC

The TDTC requires that parties undertake consultation where there is uncertainty. Such
obligations would clarify matters for business; and provide certainty. I would express
the general proposition using a mixture of the words of Jenkins LJ and Bingham J: -

It behoves any reasonable commercial actor, before taking steps to terminate a

contract, to consider whether there is an alternative explanation for the situa-
tion which has arisen, and to contact the other party to point out deficiencies in
an attempt to clarify matters.

There are similarities between this principle and a right to cure defects in that the un-
derlying idea is that parties should keep the contract alive by providing an opportunity
to rectify errors and defects.

On this basis the party at fault in Mona Oil is Mona Oil, the seller. Notwithstanding that
the buyer had the necessary information to perfect the contract, and should have com-
municated that information to Mona Oil, it was open to Mona Oil to make enquiries
prior to taking a decision to terminate.

40 A. E. Lindsay & Co Ltd v Cook (n39) at 333.

307
In the AE Lindsay case, where Pilcher J allowed a businessman to “stand on his rights”,
perhaps because either party could have identified the error, the shipowner, who knew
that the incorrect amount had been tendered, should have pointed out the discrepancy
(“in no uncertain terms”; per Bingham J. The party taking the decision to put an end to
the contract should have an onus to double-check that the breach is not deliberate.

Bingham J’s Tradax solution; which is that if you know that an error has been made one
should communicate that fact to the other party is wholly consistent with the TDTC.

And it is clear from my argument that I consider Jenkins LJ’s Judgment in Dumenil to be
commercially sensible. In Dumenil, as Jenkins LJ said, it “behoved” the buyer to follow
up; seemingly because the mistake was puzzling.

The explanation of Mona Oil and Dumenil offered by JF Burrows – that the Court as-
signed liability to the party which made the error and which could have corrected it by
following up- may be correct but the problem with this analysis is that the party may
not have realised that a mistake had been made.41 In each of these cases it is hard to
see that enforcing a duty to communicate where reasonable doubt exists would cause
uncertainty.

The House of Lords refused to allow a lessor to take advantage of a minor error, obvious
to a reasonable reader, in dating a lease determination notice. In such cases more clarity
would follow from the TDTC rather than the abstruse Judgments which referred to a
latent ambiguity. 42

The principles I suggest in the TDTC provide incentives for parties to follow up and en-
sure that they have not got hold of the wrong end of the stick (or the wrong side of the
rabbitskin).

41 Burrows and see also Dumenil (n39) where the terminating party failed to follow up
and double-check a clearly erroneous message.

42 Mannai.

308
The provision of information should be handled carefully. Describing, in IT contracts, a
trend to draft provisions which create obstacles to relief from delaying events Clive
Davies points out the tension, understood by many in such situations, between a legal
requirement to provide notices and the inevitable “upset” that will follow such no-
tices: -

the last thing the supplier executive tasked with delivery wants to do is unnec-
essarily upset the supplier's customer. Yet that is precisely what he or she is re-
quired to do under the contract. It is also what his or her professional adviser
will be telling him or her to do.43

A duty to communicate clearly, underpinning such contractual notices, might make

such communication more of a matter of course and less likely to cause relations be-
tween the parties to strain.
In one sense, this is a right to cure a defect which means that the mistaken party must
be informed of the defect. It is also consistent with modern forms of contract in which
defaulting parties are offered a right to cure, where possible, before termination rights
crystalise. 44

Construction might show that there is no duty to communicate. In the Rabobank45 case,
in a “co-workout” in which two banks worked together to find a way through the finan-
cial problems of a mutual client, one bank possessed of information suggesting that the
client’s financial problems were somewhat deeper than the other appreciated. In this

43 Clive Davies, ‘The Successful Management of Delay in IT Outsourcing Contracts’

http://wwwsclorg/siteaspx?i=ed39430 .

44 See eg Clause 36 of the Institution of Mechanical Engineers, MF/1 (rev 6) : Model

Form of General Conditions of Contract (rev 6. edn, Institution of Engineering and
Technology 2014). There are similar provisions in Institution of Civil Engineers, The
New Engineering Contract. (Thomas Telford 1991).

45 NatWest v Rabobank.

309
case the evidence showed that market practice was to communicate only the infor-
mation thought material by those working on the matter.

What Remedies should be considered?

In The Antaios, in which Lord Diplock criticized the owner’s attempt to take advantage
of a rising market, the House of Lords upheld an arbitrator’s decision that only repudia-
tory breaches entitled an owner to terminate a charterparty. 46 This provides an incen-
tive to communicate and, as such, is consistent with the TDTC. Together with a positive
duty to ask questions, to resolve uncertainties, this would work in all the cases consid-
ered in this subchapter. Had the TDTC duty to consult and clarify been incorporated and,
of course, followed, then Rhodesian Railways would have obtained its oil tanks, Mr Du-
menil his skinned rabbits, and Lindsay’s their frozen chickens.

6.1.7 J& H RITCHIE LTD V LLOYD LTD47

The Relevant Facts

A used harrow, purchased by the farmer, Ritchie, developed a vibration in its drive chain.
The farmer continued to use the harrow for two days, the vibration continuing until
Ritchies decided that the problem was serious. The supplier, Lloyd, provided a replace-
ment, took the vibrating harrow back to their workshop where it was discovered the
there was a serious defect in that two bearing were missing. They fixed the problem and
returned the harrow, and then refused to tell the farmer what the problem had been.
Lord Rodger observed of Lloyd’s refusal that it would: -

46 The Antaios see also Ch 2.1.6.

47 Ritchie.

310
… inevitably undermine the Appellants' trust and confidence in the Respondents'
due performance of the contract.48

Applying the TDTC

Lord Mance said that: -

a natural implication of the arrangement made that the seller would, at least
upon request, inform the buyer of the nature of the problem …. 49

It wasn’t so natural as to have persuaded the seller. Under the TDTC parties should
transmit sufficient information to allow informed decisions to be made.

Accepting that the result in Ritchie v Lloyd was “desirable” Kelvin Low doubts whether
the term implied passed either an officious bystander or business efficacy test.50 My
survey shows solid commercial support for forcing the supplier to disgorge or create the
relevant information; easily passing the bystander test. Lord Hope ruled that the farmer
had been “deprived of the information that they needed to make a properly informed
choice”.51 Lord Rodger was “satisfied that business efficacy required the implication of
[such] a term”52 and my sample agreed with that.

What Remedies should be considered?

As respondents to my survey reveal fast track decision making would be helpful. Statu-
tory adjudication, as used for construction contracts might work. If it really was a “nat-
ural implication” that information would be provided one might expect adjudication to

48 Ibid at [37]. In the Inner House Lord Philips said that the lack of confidence was
based only on conjecture or speculation – at [57].

49 Ibid at [52].

50 Kelvin F.K. Low, ‘Repair, Rejection & Rescission: an Uneasy Resolution' (2007) 123
LQR 536.

51 Ritchie (n47) at [19].

52 Ibid at [37].

311
provide a fast commercially sensible answer (paraphrasing Lloyd’s Counsel conceding
that Lloyd’s reticence had not been “commercially sensible”).53

6.1.8 D&G CARS LTD V ESSEX POLICE AUTHORITY54

The Relevant Facts

The Authority terminated this vehicle recovery contract, ‘a relational contract par excel-
lence’55 on discovering that a recovered vehicle had been repaired and absorbed into
the contractor’s fleet as opposed to being crushed.

Applying the TDTC

Dove J implied a term that the parties would act with honesty and integrity, explaining:
-

“… 'integrity', ...is to capture the requirements of fair dealing and transparency

which are no doubt required … in a contract … between the parties lasting some
years…...

They would amount to behaviour which the parties would … have identified as
obvious acts which were inconsistent with the maintenance of their intended
long-term relationship of fair and open dealing and therefore would amount to
a breach of their contract.”

That second paragraph explanation is, arguably, comprehensive and sufficient. The re-
quirement of fair and open dealing, “intended”, so reached by construction, would be
breached by the covert diversion of the vehicle. The reference to trust and confidence,
as well as that to integrity, is superfluous and confusing. The TDTC is not necessary. If

53 Ibid see Lord Brown at [41].

54 D&G Cars Ltd v Essex Police Authority.

55 Ibid Dove J at [176].

312
any of it applies it is the requirement to communicate effectively but this might be
stretching it too far.

What Remedies should be considered?

The reluctance of the Courts to imply terms of mutual trust and confidence into com-
mercial contracts is explained by Richard Spearman QC in a case involving complex prop-
erty development agreements: -

... if the parties wish to produce the result that each of them has the right to
terminate the contract in the event that it loses trust and confidence in the
other… then they should do expressly.56

Flaux J, considering “tweets” made by a reality TV participant, declined to imply a term

requiring the upholding of mutual trust and confidence. ITV2 had other remedies: -

If the behaviour of Mr Hendricks in relation to the tweets or otherwise was such

as to evince an intention on the part of the claimant not to perform the Produc-
tion Agreement … that would amount to a renunciation of the contract …57

This appears to me to be right. The rules relating to repudiation are clear and will often
cover situations where one party has wholly lost confidence in the other. The loss of
confidence will usually, derive from the defaulting party showing that it no longer in-
tends to be bound. The need for trust and confidence, of a type which would allow an
innocent party to terminate immediately, appears an unnecessary extension to the ex-
isting ability of a party to renounce when the other has evinced an intention not to per-
form.

56 Chelsfield Advisers LLP v Qatari Diar Real Estate Investment Co [2015] EWHC 1322
(Ch) and see MR H TV Ltd v ITV2 Ltd [2015] EWHC 2840 (Comm).

57 MR H TV Ltd v ITV2 Ltd. See also Carewatch Care Services Ltd v Focus Caring Ser-
vices Ltd [2014] EWHC 2313 (Ch) and Jani-King (GB) Ltd v Pula Enterprises Ltd [2007]
EWHC 2433 (QB) for similar Judgments.

313
In D&G Cars the conduct of the operator was clearly repudiatory. What more is neces-
sary? Unless, as I note above, in sub-chapter 5.3.2, the Authority wished to continue the
relationship; in which case Wrotham Park damages might be appropriate allowing the
Court to award damages based on the outcome of a hypothetical negotiated transfer of
the diverted car. Another possibility is an enhanced Pallant v Morgan remedy. If the
contract included agency elements and the destruction of vehicles was undertaken on
that basis a Court might conclude that the benefit accruing to the agent was due to the
principal.

6.1.9 DECISION MAKING POWERS – NASH AND LYMINGTON58

The Relevant Facts

In Nash the lender, Paragon, in financial trouble and consequently unable to borrow at
normal market rates, raised interest rates by 2%. Mrs Nash and others challenged this
use of decision-making power. In Lymington a licensee wished to sub-license the use of
berths in a marina to his two brothers on a rolling basis. The marina owners demurred
and were challenged on the use of this “absolute discretion”.

Applying the TDTC

If one applies the TDTC to these decision-making cases, altering the general negative
duty, implied-in-law as a matter of policy, 59 not to act capriciously, arbitrarily or
irrationally (rules described by Jack Beatson as a limited concept of ‘abuse of rights’60)
to a positive duty to act fairly and impartially, perhaps allowing the Esso measure of
genuine appraisal of one’s own commercial requirements as a guide to one’s own
interests, it is hard to see that this would alter the result. This is unlikely to reduce

58 Nash v Paragon; Lymington.

59 See Gerard McMeel in ‘Overview: the Principles and Policies of Contractual Con-
struction’ in Burrows and Peel at 33 saying this.

60 Beatson and Friedmann Ch 10 at 228.

314
certainty; since such standards have been in place in the construction industry for over
a century; as I show in subchapter 2.7.4.61 In both Nash and Lymington, the Court heard
evidence that the decision-maker had considered its own requirements genuinely so
there would appear to be no additional burden imposed. Would requiring each to act
fairly and impartially have changed the decision? It seems unlikely.

What Remedies should be considered?

There are two possibilities. Where a decision-maker fails to reach decisions fairly and
impartially the Court may either substitute its own decision, as I discuss in subchapter
5.3.1 above62 or it may act as a reviewer; requiring the decision-maker to reconsider.
Neither is particularly radical.

6.1.10 WALTER LILLY & CO LTD V GILES PATRICK CYRIL MACKAY AND DMW DEVEL-
OPMENTS LIMITED63

The Relevant Facts

The outrageous behaviour of one Mackay, is described in the Judgment: -

… his behaviour towards the Architects, some WLC employees and other con-
sultants was not simply coarse64 … it was combative, bullying and aggressive and
contributed very substantially to the problems on this project.

… Mr Mackay .. accused Mr Davis … of being … a charlatan and liar …

61 See eg Chambers v Goldthorpe.

62 See in particular Sudbrook Trading Estate Ltd v Eggleton (n14).

63 Walter Lilly & Co Ltd v Giles Patrick Cyril Mackay and DMW Developments Limited
[2012] EWHC 1773 (TCC).

64 A term also used by Newman J in Horkulak v. Cantor Fitzgerald International.

315
At a walk around meeting Mr Mackay referred to Mr Davis as a "f***ing Pussy"
… At a similar meeting a week later he called Mr Davis to his face a "f*****g little
twat"

Applying the TDTC

One would be forced to conclude that Mr Mackay’s behaviour deviated somewhat from
any standard of constructive engagement as few efforts were made to resolve matters
reasonably. The TDTC requires that parties interact constructively, make efforts to cure
(not cause) problems. Mr Mackay’s behaviour would not meet that standard.

As Akenhead J suggested his failure to act professionally contributed “very substan-

tially” to the problems on the project.65 In that the Judge found that the behaviour con-
tributed to the problems I argue that a term which might restrain such behaviour, re-
quiring professional engagement, attempting to resolve problems, not to pour fuel on
them, is also reasonable and necessary.

What Remedies should be considered?

It is not clear that statutory adjudication would help. The link between behaviour and
problem might be hard to pin down for particular issues.

I would have insisted to Mr Mackay that the personal abuse desist, as part of my obli-
gations towards my people, and I would have replaced them with more robust person-
nel, instructing them to insist on proper standards of behaviour, sending the bill for do-
ing so to Mr Mackay, basing the claim on his breach of a term to engage constructively.
Commercial contractors should be able to weather even the sort of storms caused by
even language as extreme as that used in this case and I would question whether facing
the architect and the builder with the choice of repudiation or affirmation in these cir-
cumstances makes commercial sense. However, the possibility of having to deal with a

65Walter Lilly & Co Ltd v Giles Patrick Cyril Mackay and DMW Developments Limited
(n63) at [96 (v)].

316
changing team, with claims for additional expense, disruption and delay arising from the
changes might deter Mackays.

6.1.11 CHANGES IN CIRCUMSTANCES

The Relevant Facts

Changes in circumstances covers a wide field. I confine this sub-chapter to generic

changes which take place during performance and affect performance, such as varia-
tions, force majeure, delays; the sort of things which, says Zoe Ollerenshaw, are “heavily
planned for”,66 with variations and extensions of time, in particular, providing fertile
grounds for disputes. 67 Judges, when disputes arise on valuations and extensions of
time, are fairly strict on the duties of certifiers and decision-makers. They will observe
that asking for perfect information is not reasonable; noting that architects, for example
“are not strangers to the project”,68 or that architects should not adopt a “passive” at-
titude to problems.69In addition they must act lawfully, fairly, and even somewhat sci-
entifically; making assessments of time in a “logical and calculated” manner which
should not be “impressionistic”.70

Applying the TDTC

66 ‘Managing Change in Uncertain Times’ in DiMatteo and others at 204.

67 Eric Eggink, ‘Correct Scoping of Employer's Requirements: The Prevention of

Change Orders' (2017) ICLR 4 at 4.

68 Aikenhead J in Walter Lilly & Co Ltd v Giles Patrick Cyril Mackay and DMW
Developments Limited (n63) at 467.

69 Holland Hannen and Cubitt v. Welsh Health Technical Services Organisation (1981)
18 BLR 1.

70 Brian Eggleston, Liquidated Damages and Extensions of Time (3rd edn, Wiley-
Blackwell 2009) at 329 citing John Barker Construction Ltd v London Portman Hotel Ltd
.

317
Where such change occurs, or when an employer wishes to change requirements two
elements of the TDTC are engaged. One is the duty to communicate clearly and ensure
that the other party understands your requirements (as in the active cooperation
model) and the other is to engage constructively to agree the right outcome as soon as
possible. Parties to these types of contract are, as Zoe Ollerenshaw indicates, likely to
be well advised and sophisticated and therefore able to deal with change using boiler-
plate clauses to manage changed circumstances (force majeure), variations to scope and
quantity, delays, rent review clauses and so on.71 Paul Finn, however, has doubts as to
whether parties to such contracts really are “well advised leviathans”.72

In these contracts express provisions usually govern two aspects of such changes. The
contractor will be obliged to notify the employer of the matter and will also be obliged
to provide information for the employer or the certifier to review.73An offer to inspect
records should be treated seriously, and what the contractor should offer are "such de-
tails…as are reasonably necessary for such ascertainment".74As Akenhead J said

it is necessary to construe the words in a sensible and commercial way that

would resonate with commercial parties in the real world. The Architect or the
Quantity Surveyor must be put in the position in which they can be satisfied that
all or some of the loss and expense claimed is likely to be or has been incurred.
75

71 Ian R MacNeil ‘Uncertainty in Commercial Law' (2009) EdinLR 68 recognizes the

possibility to a limited extent at 81. See McClure J at 117 in Dharmananda K (ed) Long
Term Contracts (The Federation Press 2013), and Lord Reid in Sutcliffe v Thackrah at
737.

72 Dharmananda (n71) Paul Finn Fiduciary and Good Faith Obligations under Long
Term Contracts at 137.

73 See generally Eggleston, Liquidated Damages and Extensions of Time (n70).

74 Walter Lilly & Co Ltd v Giles Patrick Cyril Mackay and DMW Developments Limited
(n63).

75 Ibid at 468.

318
In New Zealand it has been held that an extension of time must be advised to the con-
tractor as soon as reasonably practicable.76Tying these elements together Contractors
are obligated to communicate reasonably sufficient detail to a certifier who is then
obliged to deal with it professionally and expeditiously, ensuring that the contractor can
then get on with the work with some underlying commercial certainty.

In my discussion of active cooperation in subchapter 2.1.6 I note that Zoe Ollerneshaw’s

suggested content for good faith negotiation obligations in “heavily relational con-
tracts” is similar to that expected by Judges where ADR is a possibility; essentially, con-
structive engagement, listening, trying to solve problems. She accepts that parties must
be free to “fail to agree” and places all this in the construct of being: -

truthful to English contract law’s need to fulfil the reasonable and legitimate ex-
pectations of reasonable men.77

What Remedies should be considered?

I turn to Teare J again to say that Judges should know when a serious attempt to get to
the right answer is being made. Assuming that one party makes no real attempt to man-
age the issue, refusing to enter sensible discussions or communicate, what are the legal
alternatives that might force a change of heart? One is, in my opinion, adjudication. A
rough and ready decision-making process, threatened by the other, might bring a recal-
citrant to the table. Teare J noted that a breach of such an obligation [to negotiate]
might sound in loss of chance damages.78 One wonders whether such damages would
then extend to the costs of litigation forced on the cooperative party. It might allow
damages in respect of properly recorded management time wasted as a result of the
breach.79

76 Fernbrook Trading v Taggart [1979] 1 NZLR 556.

77 ‘Managing Change in Uncertain Times’ in DiMatteo and others (n66) at 201-221.

78 Emirates Trading (n27) at [43] and [48].

79 Tate & Lyle Food and Distribution Ltd v Greater London Council [1981] 3 All ER 716.

319
6.1.12 GENERAL THOUGHTS ON THE CASES

The review of various hard cases shows that the TDTC can be applied consistently across
cases where contracts are complex and constructive engagement is of the essence. I
suggest that it is more certain, and easier to apply, than the somewhat subjective re-
quirements of good faith and that it provides coherence. I show that not every breach
of a complex modern contract is a breach of the duty to cooperate; that the duty is there
as an enabling/facilitating mechanism, allowing contracts to be performed effectively.

Although the good faith/relational contract Judgments are extremely interesting care
must be taken not to exaggerate their importance. There are countervailing cases in the
Appeal Court (Yam Seng was cited in Medirest and neither approved nor disapproved)
and it may be that resolution of the differences between the cases could be years away.
As I have tried to show the key good faith cases are unpersuasive in that other construc-
tions and remedies could have the same result; with more certainty. Rather than argu-
ing for a high level duty of good faith it appears to me that English Common Law can
develop its own remedies where party behaviour militates against effective perfor-
mance of the deal.

Even in the “relational” cases the Judges do not go so far as French Law requires in con-
struction contracts as described by Peter Rosher: -
… each party must facilitate the performance of the other party's service when-
ever it has the power to do so. The contractor must “involve himself in the rela-
tionship in such a manner as to render it useful for his business partner”.80

CONCLUDING THOUGHTS AND SUGGESTION FOR REFORM

80 Peter Rosher, ‘Partnering/Alliancing - a New Way of Thinking about Construction:

Part 1' (2015) IBLJ 237.

320
The claim that contracts are made to be performed (the “only pure contractual interest”
81) is reflected in responses to my survey. Even where behaviour is deplorable parties
seek to continue performance and to find a way through the issues by discovering root
cause and seeking practical solutions. Respondents’ expectations are based on respect
for the deal, on a perceived need of successful performance, hedged by realism and a
pragmatic approach. Hence, Courts, and parties, should not act as “destroyers of bar-
gains” 82 , but strive to make contracts work; neither should put “spanners in the
works”.83 The “Intractable Problem of Interpretation” accounts for the “preponderant
part of the legal work of English Judges”, perhaps 90%, according to Lord Steyn and this
is interesting in that it may point to Judges spending more time on content than meeting
of minds.84

If commercial practitioners are correct to think that successful performance requires

cooperation, even give-and-take, and are able to articulate what that cooperation
means, Courts should endeavour to read contracts in such a way that those require-
ments are given effect. Based on respect for the paper deal, with a hard-edged, prag-
matic realisation/expectation that in executing the deal a penumbra, an outer layer, of
cooperation, involving relationship building, communication, and problem solving is re-
quired for successful performance commercial actors eschew punishment or reciprocity
in their dealings. These expectations are core to the contract, and they emerge through
reading the contract and enquiring into the commercial matrix to discover what it was
that the parties have agreed. Stewart Macaulay advised that we “focus the issues” by
accepting: -

81 Roskill J in Cehave v Bremer Handelsgesellschaft mbH [1975] 3 All ER 739. See

Daniel Friedmann, ‘The Performance Interest in Contract Damages' (1995) 111 LQR
628 at 629.

82 Lord Tomlin - Hillas v Arcos.

83 Goff.

84 In ‘The Intractable Problem of the Interpretation of Legal Texts ’ in Worthington as

much as 90%.

321
that there is a text between the lines … if we do not attempt to implement this
implicit text we are denying reasonable expectations.85

The real deal, the deal the parties think they have done, has two basic components; the
paper contract and juxtaposed commercial expectations. It looks like this: -

Figure 23 The Real Deal

Underlying the survey answers is a theme that contract involves formal and informal,
hard and soft elements.86 The paper deal provides clarity and direction, but delivery re-
quires communication, clarification, mutual understanding and cooperation. Terms and
conditions and liabilities are ominous, undesirable, necessary, background. Scope, gov-
ernance, pricing and specification provide direction and clarity. Management and com-
munication make it happen. Although it is not always easy to distinguish between hard
and soft elements and which can, and which should be legally enforced in proposing a
TDTC I have concentrated on those enforceable elements which achieve cooperation.

85 Macaulay, ‘The Real and the Paper Deal: Empirical Pictures of Relationships,
Complexity and the Urge for Transparent Simple Rules’ at 79.

86 Arrighetti at 191 says that the contract is important but there is also an atmosphere
of “flexible pragmatism”.

322
Contracts work, or, at least, complex contracts work at multiple levels. My concept is
shown in these slides. Deal makers create a framework between corporate entities but
to make that work management teams must communicate, understand each other,
work out what the problems are and how to resolve them. Active cooperation is implicit.

323
Contract structure, formal and informal, can be understood using the following graphic
representation. The informal (yellow), formal and cloudy elements illustrate the “messy
reality” (as I note above in subchapter 1.3 this is a phrase which I have borrowed from
David Ibbetson) that is contract. As we have seen, for example, it is often hard to deter-
mine when behavioural provisions will be given effect and when not and what the de-
terminants are that separate agreement to agree from provisions which can be given
content. There are elements of relationship building, such as governance and commu-
nication, which can be reduced to legal requirements and there are others, such as so-
cial functions, or visits to the opera which might challenge even a Mackenzie Chalmers.

Figure 24 Contract Structure - Formal and Informal

In some ways, the survey reflects Macaulay’s view that contract is a mere device for the
conduct of exchanges, but the paper contract is regarded as one part of a framework.
Parties make relationships in order to understand the other party, which, in turn, ena-
bles them to trim, give and take, in the shadow of the paper deal, the framework. There
is no separation of the paper deal from the real deal; they are two parts of the same
whole. As David Campbell’s trenchantly argues, although “exchange” is a rather narrow
description of modern contracts, the limits of law and economics may well lie in the fact
that: -

324
at the basis of exchange lie fundamentally co-operative social relations which
are necessary for and cannot be explained by... exchange relationships.87

As I have shown in Chapter 3 the contract drives the relationship and not vice versa; the
relationship is formed for the purpose of getting the work done. Participants referred
to the paper contract as scene-setting, a fall-back, providing the “rules of the game” and
governance, a roadmap, and a management tool; not solely containing terms, condi-
tions and liabilities.

Considering my argument that the duty to cooperate is a core part of the contract, ex-
pected as such by the parties (Chapter 3) and exposed by construction (Chapter 2) I
argue, per Lord Donaldson, that defeating it should be difficult: -

I have on occasion found it a useful test notionally to write … a declaratory clause

…. We then get a contract reading: "It is further agreed that Manchester United
Football Club will pay a further sum of £27,770 …when Edward MacDougall has
scored 20 goals … provided always that Manchester United Shall be under no
obligation to afford MacDougall any reasonable opportunity of scoring 20 goals".
It at once becomes clear that the inclusion of the proviso renders this part of the
contract "inefficacious, futile and absurd".88

Accordingly, to defeat the TDTC through express terms I argue for something like a “red
hand” obstacle which: -

… would need to be printed in red ink on the face of the document with a red
hand pointing to it before the notice could be held to be sufficient. 89

87 In The Relational Constitution of Contract and the Limits of ‘Economics’’ in Michie

and Deakin (n16) at 320. His solution is a “rigorous” relational challenge to the classical
model.

88 Bournemouth & Boscombe Football Club Ltd V Manchester United Football Club Ltd
(n95).

89 Lord Denning in Spurling (J) Ltd v Bradshaw [1956] 2 All ER 121, [1956] 1 WLR 461
(n96) at 125.

325
Although Arthur Leff’s warning that some people would sign a contract headed in pink
“this is a swindle!” is valid 90 we can, nevertheless consider such a default as a way of
replacing Lord Reid’s “search for some other possible meaning”. 91 It is consistent with
the Adams and Brownsword approach described above in 4.1.2 that contracting out
should be possible. The contract would have to say something along these lines: -

It is agreed that the Purchaser may terminate

this contract, without further notice, for mi-
nor or inconsequential or technical breaches
or minor defects whether or not they affect
the [work/service]

It is agreed that the Purchaser may make de-

ductions from the price in an absurd manner
and refuse to discuss the underlying rationale
behind the deductions, or provide infor-
mation sufficient to allow the Contractor to
make an informed judgement….

It is agreed that the Purchaser may use the

discretion granted at clauses [x,z,y and b] on

90 Arthur A Leff, ‘Contract As Thing' (1970) 19 Am ULRev 131.

91 Schuler (L) AG v Wickman Machine Tool Sales Ltd at 521.

326
a whim or in a manner which is unfair, or irra-
tional, or capricious, or arbitrary or unreason-
able, or wholly selfishly without any regard to
the interests of the Contractor.

It is agreed that exact payment is a condition

of this contract. Should the Buyer pay too lit-
tle or fail to provide a precisely conforming
letter of credit the Purchaser may terminate
the contract forthwith, without further no-
tice.

Figure 25 Red Hand Clauses

I limit my other suggestions for reform to five.

• Statutory adjudication, largely based on that imposed on the construction indus-

try should be made available for all non-consumer contracts. As I have argued
above, in subchapter 5.3.3, a fast track, temporarily final, rough and ready
scheme for dispute resolution, could reduce costs and provide a speedy solution
to disputes. My survey respondents appeared to support such a scheme, and
there were comments from them that problems should not be allowed to “fes-
ter” or that one should “take the difficult problems early” (see the diagram at
3.2.10), and problems should be pre-empted (see the table at subchapter 3.5.3).
• Courts should try harder to unearth commercial expectation. As I have shown in
subchapter 4.2 such expectations come from multiple sources, including sur-
veys, previous cases, judicial experience, and witness evidence. Judges can and
should try to get at meaning through deeper enquiries into background. If the

327
source is the parties, then the Judge is not making law but finding it (as I argue
above in subchapter 4.1.2) If that also infers more judicial activism this should
be made clear by Judges as they question witnesses. I support the view of Lord
Reid that among the responsibilities of the Common Law Judge is development
of the law to meet “changing economic conditions and habits of thought”.92
• Courts should take a more relaxed approach to interpretation; allowing some
leeway in adducing evidence of negotiations, taking more seriously the prior
conduct of the parties and allowing actual performance as pointers to meaning.
This is unlikely to reduce certainty and as Lady Arden says, the case management
powers now available to Judges enable them to get rid of extraneous material.93
• In considering remedies Courts should be more innovative, making use of their
review and replace powers where “machinery” is not essential, taking advantage
of the flexibility offered together with Wrotham Park damages or something
analagous to the Pallant v Morgan “equity. A party which abuses agreed dam-
ages clauses to the extent that the relationship becomes rocky should not be
able to rely on advantageous provisions once it has abused them.
• A more robust attitude to costs might go some way to supporting, for example,
ADR, adjudication and constructive engagement.

Lord Devlin said in 1957 that: -

The danger in any branch of the law is that it ossifies. If all lawyers were made
doctors overnight they would flock to the dissecting rooms for I am sure that
they prefer corpses to live patients.94

I have shown that there is no need for the law to become an ossuary when confronted
with modern forms of commerce. A hard-boiled, but not fanatical, devotion to contex-
tualism would strengthen our commercial law through a deeper recognition of the role

92 Myers v DPP at 1021.

93 See subchapter 2.8.3 and Static Control Components v Egan.

94 Devlin.

328
of cooperation; founded on the expectations of reasonable parties. Although I see room
for pessimism there is plenty of scope for optimism and the appearance of a great com-
mercial Judge who might take on Lord Blackburn’s mantle. My vision is of a contract law
that helps modern complex contracts work which infers the incorporation of objectively
gleaned commercial expectations.

329
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XII
XIII
Appendices to Chapter 3

Face to Face Interview Decisions

Table 18 Is an Interview Appropriate?

Is a face to face interview appropriate, necessary, or possible?

No if Yes if Comment
Large numbers of people are in- Small numbers of people are involved 27 interviews carried out
volved
People are widely dispersed People are accessible The Hague, Lincoln, Surrey, Duisburg, Edin-
burgh
Many of the questions are closed, Most of the questions are open and require an ex- Some closed questions but many are open
i.e. predictable, factual tended response with prompts and probes
A 100% response is not necessary Everyone is key and you can’t afford to lose any A solid cross section sample will be sufficient
The material is not particularly The material is sensitive in character. Trust is in-
subtle or sensitive volved
You want to preserve anonymity Anonymity is not an issue, though confidentiality Anonymity is an issue. I can anonymise an in-
may be terview. Confidentiality is an issue
Breadth and representativeness Depth of meaning is central with only some ap- I can deal with breadth online and depth in in-
of data are central proximation to typicality terview
Research aims are factual and Research aims mainly require insight and under-
summary in character standing

XIV
Question Design Checklist
Table 19 Question Design Checklist

Sue and Ritter 942 Robson943 Simmons944 Notes

Every question you ask should be Ask questions only where respondents are Double checked
related to survey design likely to have the knowledge to answer
Don’t add questions just because Avoid unnecessary or objectionable detail It is easy to slip into Double checked
you can asking questions be-
cause the answers may
be interesting
Ensure questions are valid – that Keep careful watch Double checked
they can be linked back to the con- that your questions are
cepts being researched relevant to your study
If there is a likelihood of social de- Avoid a prestige bias Hard to avoid when you are
sirability bias try to deal with it by Avoid producing response sets asking about cooperation. Tri-
employing guilt easing strategies angulation helps.
in the questions

942 Valerie M. Sue and Lois A. Ritter, Conducting Online Surveys (Sage 2007).

943 Robson (n1) at 255-256.

944 In G. Nigel Gilbert, Researching Social Life (Sage 2008) at 188.

XV
Open ended questions tend to get Brinkman945 - In qualitative in-
more valid responses than closed. terviewing, pose questions ask-
questions but may reduce re- ing “how” instead of “how
sponse rates much.”
Closed questions provide more re-
liable measurements but re-
sponses may not be entirely valid
Use multiple choice,use multi an- Avoid creating opinions; allow a “no opin- Followed
swer , allow “Other”… ion” alternative.
Use short simple, jargon free Keep the language simple.
questions and don’t lead Keep questions short.
Avoid leading questions
Remove ambiguity
Give the substance of the question first;
then the alternatives.
Try to make sure that questions mean the In a global group this isn’t easy
same thing to all respondents and I don’t know how to check
it.
Avoid sensitive topics in interview situa- Followed – ethical approval ob-
tions tained.

945 Brinkmann (n8) at 49.

XVI
Subsamples used for Variance Analysis
Table 20 Subsamples used in Variance Analysis

Unused Variables Comment

Late respondents / See Robson (n1) at p 277 – but he admits that it may be a “counsel of perfection”. Not used; after analysis, there is
Early respondents insufficient variance to justify the exercise.
Online respondents / Sometimes referred to as contextual variables. Not used; after analysis, there is insufficient variance to justify the exer-
interviewed re- cise.
spondents / followed
up respondents
Standpoint / status – Variables allow this although some come from multiple standpoints – I would, for example. This is similar to the Robson
contractor or em- advice to try multiple locations. Not used; after analysis, there is insufficient variance to justify the exercise.
ployer or subcontrac-
tor
Used Variables Comment Collect Coding / data range String = text.
info D = Discrete –
Yes/no defined cate-
gory.
C = Continu-
ous – measur-
able
Legal Culture There may be differences between Anglo American and Continental Yes Common Law – US D
traditions and more in emerging jurisdictions and it may be im- Common Law
portant to be able to identify how they affect responses. Civil Tradition
China

XVII
Emerging
Mixed
Discipline Commercial and technical participants may have differing views on Yes Technical D
the matter. Some may have more than one discipline. Commercial And
Procurement string
Project Manage- because text
ment possibility for
Legal other is in-
Academic cluded
Student
Type of As the hypothesis asserts that only some contracts should have im- Major Projects D
Contract - plied into them a duty to cooperate this variable may be important. Projects
Speciality R&D contracts
IT Services
Construction, Build-
ing Engineering
Long term supply
contract
Consultancy
Facilities Manage-
ment
Maintenance Man-
agement
Other / comment
Seniority This will be somewhat subjective as one person’s executive is an- Optional Executive D
other’s senior manager and so on Senior Manager
Manager

XVIII
Contract/Project
Manager
Other
Gender It is possible that there will be differences in answers according to Yes M/F/Other/prefer D
gender. not to say
Industry As it is the type of contract which is the subject matter of the re- Optional Text response string
search industry might be an interesting variable but it doesn’t appear
to be material
Company As it is the type of contract which is the subject matter of the re- Optional Text String
search company might be an interesting variable but it doesn’t ap-
pear to be material. There may be companies which would like an
insight into the attitudes of their participants
I coded companies to ensure anonymity and then used codes for
• a major engineering company from which I had around 70 re-
sponses (2)
• an oil supermajor from which I had around 80 responses (3)
• Higher Education and Government (4 +14)
• other oil majors (17)
• Law firms (18)
Length of experience It is hard to determine what difference this will make. If a hypothesis Yes 0-5 C
was required it would be that less experienced respondents might 5-10 interval
well be more inclined to manage in “tell” mode and use formal con- 10-20
tractual mechanisms more than those with more experience 20+
Standpoint / status – Yes Contractor D
contractor or em- Employer string
ployer or both Subcontractor
Consultant / Advi-
sor

XIX
Other - specify
Type of respondent The purpose of this breakdown is to be able to analyse differences in Interviewee Contextual
responses from respondents in different settings – to assess the ef- Online survey variable
fect of so called satisficing946 Online + interview

946 John Stolte, ‘The Context of Satisficing in Vignette Research' (1994) 134 The Journal of Social Psychology 727 satisficing- respondents not
paying the same attention in the vignette as they might in real-life; suggesting using contextual variables to minimize this.

XX
Variance Snapshot
Table 21 Variance Overview/Snapshot
Minimal variance Some variance Variance – too few responses Variance in one answer Outlier
to draw conclusions
Subgroup Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
➢ Code M/F Culture
Question 
4.1
4.2 Legal
4.3 Legal
4.4 o/sour
finance
4.5
5.1
5.2 17
5.3 4+14 1-10M
5.4 US Legal
Commercial
5.5
7 Others <1M
8.1
8.2 P Man
Legal
8.3
8.4 3 Civil Comm
8.5 3
8.6
8.7 GM <1M
Question 9 allows multiple answers so there are more possible combinations of answer and the data are more thinly spread.
9.1
9.2 Others

XXI
Minimal variance Some variance Variance – too few responses Variance in one answer Outlier
to draw conclusions
Subgroup Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
➢ Code M/F Culture
Question 
9.3
9.4
9.5
9.6
Question 11 allows multiple answers so there are more possible combinations of answer and the data are more thinly spread.
11.1 Others
11.2 <1M & 1-
10M
11.3 100M-1Bn
11.4 1-5 years
11.5 1-10M
12.1
12.2
12.3 1-5 years
12.4
12.5
12.6 <1M & 1-
10M
14 Expected! Legal
15.1 Eng Just!
15.2 Legal
15.3
15.4
15.5
15.6 18
Question 16 allows multiple answers so there are more possible combinations of answer and the data are more thinly spread.
16

XXII
Vignette 1 – Supplier refuses to provide a report - detailed graphs

Minimal variance Some vari- Variance – too few responses Variance in one answer Outlier
ance to draw conclusions

Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Rela- Familiarity Profession
Code M/F Culture tional

Question 

4.1

I selected the graphs for portfolio, legal culture, gender and profession.

XXIII
100% 100%

80% 80%

60% 60%

40%
40%

20%
20%

0%
Crude but usually Impractical. I need Too expensive and Unpleasant but the No response 0%
effective. proper reassurance. doesn't solve the best solution in the Crude but usually Impractical. I need Too expensive and Unpleasant but the No response
problem. circumstances. effective. proper reassurance. doesn't solve the best solution in the
problem. circumstances.

80% 100%

60% 80%

40% 60%

40%
20%

20%
0%
Crude but usually Impractical. I need Too expensive and Unpleasant but the No response
effective. proper reassurance. doesn't solve the best solution in the
problem. circumstances. 0%
Crude but usually Impractical. I need Too expensive and Unpleasant but the No response
effective. proper reassurance. doesn't solve the best solution in the
problem. circumstances.

XXIV
Minimal variance Some variance Variance – too few responses Variance in one answer Outlier
to draw conclusions
Subgroup Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
➢ Code M/F Culture
Question

4.2 Legal

I selected the graphs for profession, legal culture, experience and seniority.

XXV
60% 60%

40% 40%

20%
20%

0%
0% Crude but usually Impractical. I Too expensive Unpleasant but No responses
Crude but Impractical. I Too expensive Unpleasant but No responses effective. need proper and doesn't solve the best solution
usually effective. need proper and doesn't the best solution reassurance. the problem. in the
reassurance. solve the in the circumstances.
problem. circumstances.

60% 60%

40% 40%

20% 20%

0% 0%
Crude but usually Impractical. I need Too expensive and Unpleasant but the No responses Crude but usually Impractical. I needToo expensive and Unpleasant but No responses
effective. proper reassurance. doesn't solve the best solution in the effective. proper doesn't solve the the best solution
problem. circumstances. reassurance. problem. in the
circumstances.

XXVI
Minimal variance Some variance Variance – too few re- Variance in one answer Outlier
sponses to draw conclu-
sions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Question  Code M/F Culture
4.3 Legal

I selected graphs for profession, gender, familiarity and portfolio.

XXVII
60% 60%

40% 40%

20% 20%

0% 0%
Crude but usually Impractical. I need Too expensive and Unpleasant but the No responses
Crude but usually Impractical. I need Too expensive and Unpleasant but the No responses
effective. proper reassurance. doesn't solve the best solution in the
effective. proper doesn't solve the best solution in the
problem. circumstances.
reassurance. problem. circumstances.

60% 60%

40% 40%

20%
20%

0%
0%
Crude but usually Impractical. I need Too expensive and Unpleasant but the No responses
Crude but usually Impractical. I need Too expensive and Unpleasant but the No responses
effective. proper doesn't solve the best solution in the
effective. proper doesn't solve the best solution in the
reassurance. problem. circumstances.
reassurance. problem. circumstances.

XXVIII
Minimal variance Some variance Variance – too few responses Variance in one answer Outlier
to draw conclusions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Question  Code M/F Culture
4.4 o/sour
finance

I selected graphs for industry, seniority, gender and relationists.

XXIX
120%
80%

100%

60%
80%

60% 40%

40%

20%
20%

0% 0%
Crude but usually Impractical. I need Too expensive and Unpleasant but the No responses
effective. proper reassurance. doesn't solve the best solution in the
Crude but usually Impractical. I need Too expensive and Unpleasant but the No responses
problem. circumstances. effective. proper doesn't solve the best solution in the
reassurance. problem. circumstances.

80% 80%

60% 60%

40% 40%

20% 20%

0% 0%
Crude but usually Impractical. I need Too expensive and Unpleasant but the No responses Crude but usually Impractical. I need Too expensive and Unpleasant but the No responses
effective. proper doesn't solve the best solution in the effective. proper doesn't solve the best solution in the
reassurance. problem. circumstances. reassurance. problem. circumstances.

XXX
Minimal variance Some variance Variance – too few responses Variance in one answer Outlier
to draw conclusions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Question  Code M/F Culture
4.5

I selected graphs for company codes, seniority, gender and profession.

XXXI
80% 80%

60% 60%

40% 40%

20%
20%

0%
Crude but usually Impractical. I need Too expensive and Unpleasant but the No responses 0%
effective. proper doesn't solve the best solution in Crude but usually Impractical. I need Too expensive and Unpleasant but the No responses
reassurance. problem. the circumstances. effective. proper doesn't solve the best solution in the
reassurance. problem. circumstances.

80% 80%

60% 60%

40% 40%

20% 20%

0% 0%
Crude but usually Impractical. I need Too expensive and Unpleasant but the No responses
Crude but usually Impractical. I need Too expensive and Unpleasant but the No responses
effective. proper reassurance. doesn't solve the best solution in the
problem. circumstances. effective. proper reassurance. doesn't solve the best solution in the
problem. circumstances.

XXXII
Minimal variance Some variance Variance – too few responses Variance in one answer Outlier
to draw conclusions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Question  Code M/F Culture
5.1
5.2 17

I selected graphs for company code, profession, gender and legal culture.

XXXIII
80%
80%
60%
60%

40% 40%

20% 20%

0%
Helpful and Helpful but Insufficient No response
0%
sufficient insufficient Helpful and Helpful but Insufficient No response
sufficient insufficient

60% 60%

40% 40%

20% 20%

0% 0%
Helpful and Helpful but Insufficient No response Helpful and Helpful but Insufficient No response
sufficient insufficient sufficient insufficient

XXXIV
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup Co Code Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
➢ M/F Culture

Question 

5.3 4+14 1-10M

I selected graphs from portfolio, seniority, legal culture and company code.

XXXV
80% 60%

60% 40%

40%
20%
20%
0%
0% Helpful and Helpful but Insufficient No response
Helpful and Helpful but Insufficient No response sufficient insufficient
sufficient insufficient

60%
60%

40%
40%

20%
20%

0%
0% Helpful and Helpful but Insufficient No response
Helpful and Helpful but Insufficient No response sufficient insufficient

sufficient insufficient

XXXVI
Minimal variance Some variance Variance – too few re- Variance in one answer Outlier
sponses to draw conclu-
sions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Cul- Relational Familiarity Profession
Question  Code M/F ture
5.4 US Legal
Commercial

I selected graphs from industry, portfolio, gender and legal culture.

XXXVII
80% 60%
60%
40%
40%

20% 20%

0%
Helpful and Helpful but Insufficient No response 0%
sufficient insufficient Helpful and Helpful but Insufficient No response
sufficient insufficient

80% 60%

60%
40%
40%
20%
20%

0% 0%
Helpful and Helpful but Insufficient No Helpful and Helpful but Insufficient No response
sufficient insufficient response sufficient insufficient

XXXVIII
Minimal variance Some variance Variance – too few responses Variance in one answer Outlier
to draw conclusions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture
Question 

5.5

I selected graphs from seniority, profession, gender and portfolio.

XXXIX
60% 60%

40% 40%

20% 20%

0% 0%
Helpful and Helpful but Insufficient No response Helpful and Helpful but Insufficient No response
sufficient insufficient sufficient insufficient

80% 60%

60%
40%

40%
20%
20%
0%
0% Helpful and Helpful but Insufficient No response
Helpful and Helpful but Insufficient No sufficient insufficient
sufficient insufficient response

XL
The name George Reynolds was chosen because I once had a very memorable meeting at the George Reynolds Stadium (now the Darlington Arena), with
George, industrialist and safe blower, who had bought two Gas Turbines from the business of which I was Legal Director.

XLI
Vignette 2 – Decision Making/Discretion - detailed graphs

Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture
Question 

7 Others <1M

I selected graphs from portfolio, experience, gender and relationists.

XLII
60% 60%

40% 40%

20% 20%

0% 0%
A B C D E
A B C D E

60% 60%

40% 40%

20% 20%

0% 0%
A B C D E A B C D E

XLIII
Vignette 3 – the Blackmailing Subcontractor - detailed graphs

Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Code Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
M/F Culture
Question 

8.1

I selected graphs from familiarity, company code, industry and profession.

XLIV
80% 80%

60% 60%

40% 40%

20% 20%

0% 0%
I wish I had asked This causes major This is a temporary This may be a No response I wish I had asked This causes major This is a temporary This may be a No response
for this in the problems for both solution which only practical shared for this in the problems for both solution which only practical shared
beginning. parties. delays matters. solution. beginning. parties. delays matters. solution.

80% 80%

60% 60%

40% 40%

20%
20%

0%
0%
I wish I had asked This causes major This is a temporary This may be a No response I wish I had asked for this This causes major This is a temporary This may be a practical No response
for this in the problems for both solution which only practical shared in the beginning. problems for both solution which only shared solution.
parties. delays matters.
beginning. parties. delays matters. solution.

XLV
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture
Question 

8.2 P Man
Legal

I selected graphs from portfolio, profession, company code and gender.

XLVI
40% 40%

20% 20%

0%
I wish I had asked for This causes major This is a temporary This may be a No response 0%
this in the beginning. problems for both solution which only practical shared I wish I had asked This causes major This is a temporary This may be a No response
parties. delays matters. solution. for this in the problems for both solution which only practical shared
beginning. parties. delays matters. solution.

60% 80%

60%
40%

40%

20%
20%

0%
0%
I wish I had asked This causes major This is a temporary This may be a No response I wish I had asked This causes major This is a temporary This may be a No response
for this in the problems for both solution which only practical shared for this in the problems for both solution which only practical shared
beginning. parties. delays matters. solution. beginning. parties. delays matters. solution.

XLVII
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture
Question 

8.3

I selected graphs from industry, portfolio, legal culture and familiarity.

XLVIII
80% 80%

60% 60%

40% 40%

20% 20%

0% 0%
I wish I had asked for This causes major This is a temporary This may be a No response I wish I had asked This causes major This is a temporary This may be a No response
this in the beginning. problems for both solution which only practical shared for this in the problems for both solution which only practical shared
parties. delays matters. solution. beginning. parties. delays matters. solution.

60% 80%

60%
40%

40%

20%

0%
I wish I had asked This causes major This is a temporary This may be a No response 0%
for this in the problems for both solution which only practical shared I wish I had asked This causes major This is a temporary This may be a No response
beginning. parties. delays matters. solution. for this in the problems for both solution which only practical shared
beginning. parties. delays matters. solution.

XLIX
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture
Question 

8.4 3 Civil Comm

I selected graphs from profession, legal culture, gender and seniority.

L
80% 80%

60% 60%

40% 40%

20% 20%

0%
0%
I wish I had asked for This causes major This is a temporary This may be a No response
I wish I had asked for This causes major This is a temporary This may be a No response
this in the beginning. problems for both solution which only practical shared
this in the beginning. problems for both solution which only practical shared
parties. delays matters. solution.
parties. delays matters. solution.

100% 100%

80% 80%

60% 60%

40% 40%

20% 20%

0%
0%
I wish I had asked This causes major This is a temporary This may be a No response
I wish I had asked This causes major This is a temporary This may be a No response
for this in the problems for both solution which only practical shared
for this in the problems for both solution which practical shared
beginning. parties. delays matters. solution. beginning. parties. only delays solution.
matters.

LI
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture
Question 

8.5 3

I selected graphs from company code, experience, legal culture and relationists.

LII
80% 40%

60%

40% 20%

20%

40% 40%

20% 20%

0% 0%
I wish I had asked for This causes major This is a temporary This may be a No response I wish I had asked This causes major This is a temporary This may be a No response
this in the beginning. problems for both solution which only practical shared
for this in the problems for both solution which only practical shared
parties. delays matters. solution.
beginning. parties. delays matters. solution.

LIII
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture
Question 

8.6

I selected graphs from company code, profession, portfolio and gender.

LIV
80% 60%

60%

40%

20%
20%

0%
I wish I had asked This causes major This is a temporary This may be a No response 0%
for this in the problems for both solution which only practical shared I wish I had asked for This causes major This is a temporary This may be a No response
beginning. parties. delays matters. solution. this in the beginning. problems for both solution which only practical shared
parties. delays matters. solution.

60% 60%

40% 40%

20% 20%

0%
I wish I had asked This causes major This is a temporary This may be a No response
0%
for this in the problems for both solution which only practical shared I wish I had asked This causes major This is a temporary This may be a No response
beginning. parties. delays matters. solution. for this in the problems for both solution which only practical shared
beginning. parties. delays matters. solution.

LV
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture
Question 

8.7 GM <1M

I selected graphs from gender, legal culture, portfolio and seniority.

LVI
80% 60%

60%
40%

40%

20%
20%

60% 60%

40% 40%

20%
20%

LVII
LVIII
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Question  Code M/F Culture

Question 9 allows multiple answers so there are more possible combinations of answer and the data are more thinly spread.
9.1
Unlikely to work. Impractical.

Unlikely to work. Impractical.,Possible that this would deter

blackmailing behaviour.
115 Unlikely to work. Impractical.,There is unlikely to be enough
time for this.
Unlikely to work. Impractical.,This might work.
179
Possible that this would deter blackmailing behaviour.

18 Possible that this would deter blackmailing behaviour.,There is

unlikely to be enough time for this.
2
13 Possible that this would deter blackmailing behaviour.,This
might work.
27 There is unlikely to be enough time for this.

5 There is unlikely to be enough time for this.,This might work.

31
70 19
This might work.
2
No Response

LIX
LX
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Code Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
M/F Culture
Question 
9.2 Others
Unlikely to work. Impractical.

Unlikely to work. Impractical.,Possible that this would deter

blackmailing behaviour.
Unlikely to work. Impractical.,There is unlikely to be enough
98 time for this.
106
Unlikely to work. Impractical.,This might work.

Possible that this would deter blackmailing behaviour.

Possible that this would deter blackmailing behaviour.,There is

unlikely to be enough time for this.
10
42 7 Possible that this would deter blackmailing behaviour.,This
might work.
2
There is unlikely to be enough time for this.,This might work.
11
2
31 75 There is unlikely to be enough time for this.
5
This might work.

No response

LXI
LXII
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Code Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
M/F Culture
Question 

9.3
Unlikely to work. Impractical.

Unlikely to work. Impractical.,Possible that this would deter

9 9 blackmailing behaviour.
17
Unlikely to work. Impractical.,There is unlikely to be enough
89 14
time for this.
16
Unlikely to work. Impractical.,This might work.

Possible that this would deter blackmailing behaviour.

Possible that this would deter blackmailing behaviour.,There is

unlikely to be enough time for this.
Possible that this would deter blackmailing behaviour.,This
69 121 might work.
There is unlikely to be enough time for this.,This might work.

There is unlikely to be enough time for this.

This might work.

No response

LXIII
LXIV
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture
Question 

9.4
Unlikely to work. Impractical.

Unlikely to work. Impractical.,Possible that this would deter

blackmailing behaviour.
32
8 Unlikely to work. Impractical.,There is unlikely to be enough
9 time for this.
98
28 Unlikely to work. Impractical.,This might work.
4
Possible that this would deter blackmailing behaviour.

Possible that this would deter blackmailing behaviour.,There is

44
unlikely to be enough time for this.
Possible that this would deter blackmailing behaviour.,This
might work.
There is unlikely to be enough time for this.,This might work.
37
120
9 There is unlikely to be enough time for this.

This might work.

No response

LXV
LXVI
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Code Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
M/F Culture
Question 

9.5

Unlikely to work. Impractical.

Unlikely to work. Impractical.,Possible that this would deter

34 blackmailing behaviour.
4
Unlikely to work. Impractical.,There is unlikely to be enough
10 time for this.

Unlikely to work. Impractical.,This might work.

4 Possible that this would deter blackmailing behaviour.

164 Possible that this would deter blackmailing behaviour.,There is

30
unlikely to be enough time for this.

Possible that this would deter blackmailing behaviour.,This

might work.
14
There is unlikely to be enough time for this.,This might work.
18

There is unlikely to be enough time for this.

This might work.

LXVII
LXVIII
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Code Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
M/F Culture
Question 

9.6
Unlikely to work. Impractical.
2 1
3 Unlikely to work. Impractical.,Possible that this would deter
6 blackmailing behaviour.
19
Unlikely to work. Impractical.,There is unlikely to be enough
91 time for this.
38
Unlikely to work. Impractical.,This might work.

23 Possible that this would deter blackmailing behaviour.

Possible that this would deter blackmailing behaviour.,There is

25 unlikely to be enough time for this.
Possible that this would deter blackmailing behaviour.,This
might work.
There is unlikely to be enough time for this.,This might work.

181 There is unlikely to be enough time for this.

This might work.

No response

LXIX
Vignette 4 – the Client making absurd deductions - detailed graphs

11.1 Others

I selected graphs from seniority, gender, legal culture and familiarity.

LXX
40% 60%

40%

20%

0% 0%
A B C D E F A B C D E F

40%
40%

20% 20%

0% 0%
A B C D E F
A B C D E F

LXXI
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Code Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
M/F Culture
Question 

11.2 <1M & 1-

10M

I selected graphs from industry, portfolio, experience and legal culture.

LXXII
80% 40%

60%

40% 20%

20%

0% 0%
A B C D E F A B C D E F

40% 40%

20% 20%

0%
0%
A B C D E F A B C D E F

LXXIII
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions

Subgroup ➢ Co Code Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
M/F Culture

Question 

11.3 100M-1Bn

I selected graphs from company code, portfolio, gender and legal culture.

LXXIV
100% 40%

80%

60%
20%
40%

20%

0% 0%
A B C D E F A B C D E F

80% 40%

60%

40% 20%

20%

0% 0%
A B C D E F A B C D E F

LXXV
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture
Question 

11.4 1-5 years

I selected graphs from industry, portfolio, gender and legal culture.

LXXVI
80% 40%

60%

40% 20%

20%

0%
0%
A B C D E F
A B C D E F

60% 40%

40%
20%
20%

0%
0%
A B C D E F
A B C D E F

LXXVII
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture
Question 

11.5 1-10M

I selected graphs from company code, experience, gender and legal culture.

LXXVIII
100% 40%

80%

60%

20%
40%

20%

0%
A B C D E F
0%
A B C D E F

60% 40%

40%
20%

20%

0% 0%
A B C D E F
A B C D E F

LXXIX
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions

Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture

Question 

12.1

I selected graphs from industry, profession, gender and legal culture.

LXXX
80%
60%

60%
40%

40%

20%
20%

0% 0%
1 - very effective 2 - quite effective 3 - helpful 4 - not very effective 5 - ineffective No response
1 - very effective 2 - quite effective 3 - helpful 4 - not very 5 - ineffective No response
effective

60% 60%

40% 40%

20% 20%

0% 0%
A B C D E F A B C D E F

LXXXI
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture
Question 

12.2

I selected graphs from legal culture, profession, gender and seniority.

LXXXII
40% 60%

40%

20%

0% 0%
A B C D E F 1 - very effective 2 - quite effective 3 - helpful 4 - not very 5 - ineffective No response
effective

40%
60%

40%

20%

0%
0% 1 - very effective 2 - quite effective 3 - helpful 4 - not very effective 5 - ineffective No response
A B C D E F

LXXXIII
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions

Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture

Question 

12.3 1-5 years

I selected graphs from legal culture, experience, seniority and profession.

LXXXIV
40% 40%

20% 20%

0% 0%
A B C D E F 1 - very 2 - quite 3 - helpful 4 - not very 5 - ineffective No response
effective effective effective

60% 60%

40% 40%

20% 20%

0%
0%
1 - very effective 2 - quite 3 - helpful 4 - not very 5 - ineffective No response
1 - very 2 - quite 3 - helpful 4 - not very 5 - ineffective No response
effective effective effective effective effective

LXXXV
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions

Subgroup ➢ Co Code Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
M/F Culture

Question 

12.4

I selected graphs from portfolio, gender, legal culture and profession.

LXXXVI
40% 80%

60%

20% 40%

20%

0% 0%
1 - very effective 2 - quite effective 3 - helpful 4 - not very 5 - ineffective No response 1 - very effective 2 - quite effective 3 - helpful 4 - not very 5 - ineffective No response
effective effective

60% 60%

40% 40%

20% 20%

0%
0%
A B C D E F
1 - very effective 2 - quite effective 3 - helpful 4 - not very 5 - ineffective No response
effective

LXXXVII
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Code Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
M/F Culture
Question 

12.5

I selected graphs from profession, company code, seniority and legal culture.

LXXXVIII
60% 100%

80%

40%
60%

40%
20%

20%

40% 40%

20%
20%

0%
1 - very effective 2 - quite effective 3 - helpful 4 - not very 5 - ineffective No response 0%
effective
A B C D E F

LXXXIX
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Code Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
M/F Culture

Question 

12.6 <1M & 1-

10M

I selected graphs from portfolio, experience, gender and profession.

XC
40% 40%

20% 20%

0%
0%
1 - very effective 2 - quite effective 3 - helpful 4 - not very effective 5 - ineffective No response
1 - very effective 2 - quite effective 3 - helpful 4 - not very 5 - ineffective No response
effective

60% 60%

40% 40%

20%
20%

0%
1 - very effective 2 - quite effective 3 - helpful 4 - not very 5 - ineffective No response 0%
effective 1 - very effective 2 - quite effective 3 - helpful 4 - not very 5 - ineffective No response
effective

How important is cooperation in managing your contracts?

XCI
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions

Subgroup ➢ Co Code Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
M/F Culture

Question 

14 Expected! Legal

I selected graphs from relationists, profession, legal culture, and gender.

4 5
Mission critical
Mission critical
Important Important
184 195
Nice to Have Nice to Have

273 Unimportant Unimportant

281
Unnecessary Unnecessary

No response
No response

5 5
Mission critical Mission critical
Important
Important
195 Nice to Have 195 Nice to Have
Unimportant
281 Unimportant
Unnecessary 281
Unnecessary
No response
No response

What does cooperation mean?

XCII
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions

Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture

Question 

Question 16 allows multiple answers so there are more possible combinations of answer and the data are more thinly spread.

The best picture of the data is in the text in Chapter 3.The data here is hard to analyse because multiple answers were
allowed. A typical slide looks like this: -

XCIII
60%

40%

20%

0%
A B C D E F G H I J K L M N 0 P Q R S T

The peaks at A & K are for those who chose either of the first two definitions alone, which are the high-level cooperation
definitions. B-I shows A in combination with others and L-Q shows K in combination with other definitions.

Which contract provisions promote cooperation?

XCIV
Minimal variance Some variance Variance – too few responses Variance in one answer Outlier
to draw conclusions

Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture

Question 

15.1 Eng Just!

I selected graphs from industry, portfolio, gender and experience.

XCV
100% 100%

80% 80%

60% 60%

40% 40%

20% 20%

0% 0%
Very likely Helpful Not very useful Unlikely No response Helpful Not very useful Unlikely No response

100% 100%

80% 80%

60% 60%

40% 40%

20% 20%

0% 0%
Very likely Helpful Not very useful Unlikely No response Very likely Helpful Not very useful Unlikely No response

XCVI
Minimal vari- Some variance Variance – too few responses Variance in one answer Outlier
ance to draw conclusions
Sub- Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
group Code M/F Culture
➢
Ques-
tion 

15.2 Legal

I selected graphs from company code, industry, portfolio, and gender.

XCVII
100% 120%

100%
80%

80%
60%
60%
40%
40%

20%
20%

0% 0%
Very likely Helpful Not very useful Unlikely No response Very likely Helpful Not very useful Unlikely No response

80% 80%

60% 60%

40% 40%

20% 20%

0% 0%
Very likely Helpful Not very useful Unlikely No response Very likely Helpful Not very useful Unlikely No response

XCVIII
Minimal variance Some variance Variance – too few responses Variance in one answer Outlier
to draw conclusions

Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture

Question 

15.3

I selected graphs from company code, experience, legal culture, and profession.

XCIX
100% 60%

80%

40%
60%

40%
20%
20%

0%
Very likely Helpful Not very Unlikely No response
0%
useful Very likely Helpful Not very useful Unlikely No response

60% 60%

40% 40%

20% 20%

0%
0%
Very likely Helpful Not very useful Unlikely No response
Very likely Helpful Not very useful Unlikely No response

C
Minimal variance Some variance Variance – too few responses Variance in one answer Outlier
to draw conclusions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture
Question 

15.4

I selected graphs from company code, experience, legal culture, and familiarity.

CI
100%
60%
80%

60% 40%

40%
20%
20%

0% 0%
Very likely Helpful Not very Unlikely No response Very likely Helpful Not very useful Unlikely No response
useful

60% 60%

40% 40%

20% 20%

0%
0%
Very likely Helpful Not very useful Unlikely No response Very likely Helpful Not very useful Unlikely No response

CII
Minimal variance Some variance Variance – too few responses to Variance in one answer Outlier
draw conclusions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture
Question 

15.5

I selected graphs from company code, seniority, legal culture, and profession.

CIII
60%
100%

80%
40%
60%

40%
20%
20%

0%
0%
Very likely Helpful Not very Unlikely No response Very likely Helpful Not very useful Unlikely No response
useful

60% 60%

40% 40%

20%
20%

0%
Very likely Helpful Not very useful Unlikely No response 0%
Very likely Helpful Not very useful Unlikely No response

CIV
Minimal variance Some variance Variance – too few responses Variance in one answer Outlier
to draw conclusions
Subgroup ➢ Co Industry Seniority Portfolio Experience Gender Legal Relational Familiarity Profession
Code M/F Culture
Question 

15.6 18

I selected graphs from company code, portfolio, legal culture, and profession.

CV
120% 60%

100%

80% 40%

60%

40%
20%
20%

0%
0%
Very likely Helpful Not very Unlikely No response
Very likely Helpful Not very useful Unlikely No response
useful

60% 80%

60%
40%

40%

20%

0%
0%
Very likely Helpful Not very useful Unlikely No response
Very likely Helpful Not very useful Unlikely No response

CVI
CVII

Common questions