The parties disagreed as to the curial law of an arbitration agreement. The proper law of the building contract and the arbitration agreement was English but the reference was conducted in Scotland.
Held: Evidence of behaviour after a contract had been made is inadmissible to assist in the construction of an entirely written contract. An application for the appointment of an arbitrator stated that there was a submission to arbitration within the meaning of the Arbitration Act 1950, but the arbitration was held to be subject to the law of Scotland. While evidence of subsequent conduct is admissible to determine the existence of a contract, it is not admissible to determine the terms of a contract.
Lord Reid: ‘It has been assumed in the course of this case that it is proper, in determining what was the proper law, to have regard to actings of the parties after their contract had been made. Of course the actings of the parties (including any words which they used) may be sufficient to show that they made a new contract. If they made no agreement originally as to the proper law, such actings may show that they made an agreement about that at a later stage. Or if they did make such an agreement originally such actings may show that they later agreed to alter it. But with regard to actings of the parties between the date of the original contract and the date of Mr. Underwood’s appointment I did not understand it to be argued that they were sufficient to establish any new contract, and I think they clearly were not. As I understood him, counsel sought to use those actings to show that there was an agreement when the original contract was made that the proper law of that contract was to be the law of England. I must say that I had thought that it is now well settled that it is not legitimate to use as an aid in the construction of the contract anything which the parties said or did after it was made. Otherwise one might have the result that a contract meant one thing the day it was signed, but by reason of subsequent events meant something different a month or a year later.’
Lord Hodson: ‘I should add that I cannot assent to the view which seems to have found favour in the eyes of the Master of the Rolls and Widgery LJ. that as a matter of construction the contract can be construed not only in its surrounding circumstances but also by reference to the subsequent conduct of the parties.’
Viscount Dilhorne: ‘I do not consider that one can properly have regard to the parties’ conduct after the contract has been entered into when considering whether an inference can be drawn as to their intention when they entered into the contract, though subsequent conduct by one party may give rise to an estoppel.’
Lord Wilberforce said: ‘once it was seen that the parties had made no express choice of law, the correct course was to ascertain from all relevant contemporary circumstances including, but not limited to, what the parties said or did at the time, what intention ought to be imputed to them on the formation of the contract. Unless it were to found an estoppel or a subsequent agreement, I do not think that subsequent conduct can be relevant to this question.’
Lord Reid, Lord Hodson, Viscount Dilhorne, Lord Wilberforce,
[1970] AC 572, [1970] 1 Lloyds Rep 269, [1970] 1 All ER 796, [1970] AC 583
England and Wales
Citing:
Appeal from – Whitworth Street Estates (Manchester) Ltd v James Miller and Partners Ltd CA 1969
The parties, one in England and one in Scotland agreed to perform certain actions in Scotland. Any dispute was to be settled by arbitration, but it was not said whether this would be in England or Scotland. The curial law of arbitration would decide . .
Cited by:
Cited – Montgomery v Johnson Underwood Ltd CA 9-Mar-2001
A worker who had strictly been employed by an agency but on a long term placement at a customer, claimed to have been unfairly dismissed by the customer when that placement ended.
Held: To see whether she was an employee the tribunal should . .
Cited – Halpern and Another v Halpern and others ComC 24-Mar-2006
The deceased parents, being orthodox Jews, had first made standard wills and then made provision accoding to Jewish law. A dispute after the second death was referred to a Beth Din arbitration. After an initial resolution, various distributions were . .
Cited – Beale v Harvey CA 28-Nov-2003
Land had been divided into three lots on its development, but the site plan did not match the line of a fence actually erected.
Held: The court was not bound by the Watcham case, and would not follow it to allow reference to the later . .
Cited – F L Schuler AG v Wickman Machine Tools Sales Limited HL 4-Apr-1973
The parties entered an agreement to distribute and sell goods in the UK. They disagreed as to the meaning of a term governing the termination of the distributorship.
Held: The court can not take into account the post-contractual conduct or . .
Cited – AB and others v British Coal Corporation (Department of Trade and Industry) QBD 27-Jun-2007
The parties disputed the effect of the Claims Handling Agreement (CHA) which regulated claims for compensation for respiratory diseases incurred by people working for the defendant as regards the circumstances for claimants with chronic bronchitis. . .
Cited – Sattar v Sattar and Another ChD 20-Feb-2009
The parties disputed the effect of a Tomlin order settling litigation between them. Under the order, if certain sums were not paid, the company was to be sold.
Held: Later behaviour could not be used to help interpret an agreement, and in this . .
Cited – Lexington Insurance Co v AGF Insurance Ltd HL 30-Jul-2009
The respondent insurers had been held liable in Washington, and had been granted indemnity against the appellants by the Court of Appeal. The insurance contract had been under the law of Pennsylvania, but that of the re-insurance under the law of . .
Cited – Radford and Another v Frade and Others QBD 8-Jul-2016
The court was asked as to the terms on which solicitors and Counsel were retained to act for the defendants. The appeals did not raise any issues concerning costs practice, and were by way of review of the Costs Judge’s rulings, and not by way of . .
Lists of cited by and citing cases may be incomplete.
Contract, Arbitration
Leading Case
Updated: 01 November 2021; Ref: scu.194302