Introduction
The meaning of words is the essence of contract law, whether those words are contained in contracts or in legal principles. Does there come a point, however, where differences between disputed meanings are too subtle to be of practical relevance?
Consider for example the High Court's consideration last year of 'remoteness' in contract law. In the tort of negligence, losses are too remote if they are not reasonably foreseeable. There is however no settled test for remoteness in the law of contract. The High Court referred to tests that had been suggested in earlier cases, such as: 'on the cards', 'not unlikely', 'quite likely', 'a serious possibility', 'a real danger' or even the tortious 'reasonably foreseeable'.
The Court adopted the test of 'serious possibility', citing a judgment of Lord Reid, but possibly overlooking the fact that Lord Reid rejected this test as being much too wide (because, in his view, it included the chance of picking 1 specific card from a full deck of 52 cards). What are we to make of this? Has the High Court held that losses which have a probability of less than 1 in 50 are not too remote – which would seem to be a radical change in the law - or does the High Court use 'serious possibility' in a different way from Lord Reid? If so, is the High Court's 'serious possibility' equivalent to Lord Reid's 'not unlikely'?
Even if this issue is one day resolved, different judges will still apply these tests in different ways; and arguably that difference in application is more significant than any differences between legal tests.
This is not to deny the importance of legal principles. In many cases in this year's update – such as those concerning the formation of contracts, the interpretation of contracts or the doctrines of repudiation and frustration – the orthodox application of the principles of contract law was determinative of the outcome. It is those principles which lawyers need to understand, and this update helps with that understanding.
Key themes from 2024
Ambiguities around timing, formality, and signing capacity can turn informal agreements into unexpectedly enforceable contracts.
Terms introduced after formation may not be binding, while implied duties, such as the duty to co-operate, will be enforced where necessary to uphold the parties' legitimate contractual expectations.
While courts may avoid rigid or unfair readings they will not override unambiguous language, and rectification for mistakes remains available only in cases of proven mutual error.
Factual causation requires showing a substantial contribution to loss, not sole causation.
Courts reaffirmed that the doctrine of frustration only applies when a supervening event fundamentally alters contractual obligations beyond what was contemplated by the parties.