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GOOD FAITH IN CONTRACT AND PROPERTY GOOD FAITH IN CONTRACT AND PROPERTY Edited by A. D. M. Forte OXFORD – PORTLAND OREGON 1999 Hart Publishing Oxford and Portland, Oregon Published in North America (US and Canada) by Hart Publishing c/o International Specialized Book Services 5804 NE Hassalo Street Portland, Oregon 97213-3644 USA Distributed in the Netherlands, Belgium and Luxembourg by Intersentia, Churchillaan 108 B2900 Schoten Antwerpen Belgium Distributed in Australia and New Zealand by Federation Press John St Leichhardt NSW 2000 © The contributors severally 1999 The contributors have asserted their right under the Copyright, Designs and Patents Act 1988, to be identified as the authors of this work Hart Publishing Ltd is a specialist legal publisher based in Oxford, England. To order further copies of this book or to request a list of other publications please write to: Hart Publishing Ltd, Salter’s Boatyard, Oxford OX1 4LB Telephone: +44 (0)1865 245533 or Fax: +44 (0)1865 794882 e-mail: [email protected] British Library Cataloguing in Publication Data Data Available ISBN 1 84113–047–8 Typeset by Hope Services (Abingdon) Ltd. Printed in Great Britain on acid-free paper by Biddles Ltd, Guildford and Kings Lynn. CONTENTS Table of Cases xi Table of Legislation and Delegated Legislation xix Table of International Conventions and Principles xxiii Preface The Right Honourable the Lord Rodger of Earlsferry, Lord President xiv 1. Introduction 1 A.D.M. Forte 2. Good Faith in the Scots Law of Contract: An Undisclosed Principle? 5 Hector L. MacQueen 3. Good Faith: A Matter of Principle? 39 Ewan McKendrick 4. Good Faith in Contracting: A Sceptical View 63 Joseph M. Thomson 5. Good Faith and Utmost Good Faith: Insurance and Cautionary Obligations in Scots Law 77 A.D.M. Forte 6. Good Faith in Scots Property Law 103 D.L. Carey Miller 7. Good Faith and the Doctrine of Personal Bar 129 J.W.G. Blackie 8. Good Faith: A Principled Matter 157 Scott C. Styles 9. Good Faith in Consumer Contracts: Rule, Policy and Principle Chris Willett 181 Index 205 EXPANDED TABLE OF CONTENTS Table of Cases xi Table of Legislation and Delegated Legislation xix Table of International Conventions and Principles xxiii Preface The Right Honourable the Lord Rodger of Earlsferry, Lord President xiv 1. Introduction 1 A.D.M. Forte 2. Good Faith in the Scots Law of Contract: An Undisclosed Principle? 5 Hector L. MacQueen Introduction 5 What is good faith in contract law? 7 Scots law 12 The utility of recognising a good faith principle 17 Culpa in contrahendo 20 Scots law on pre-contractual liability 22 Conclusion 33 3. Good Faith: A Matter of Principle? 39 Ewan McKendrick Introduction 39 Good faith in other jurisdictions 40 Is English law really so different? 41 An aversion to general principles? 44 Contracting for good faith 48 The global economy 52 Challenging rules which do not presently conform with good faith 54 The need for clarity 59 viii Contents 4. Good Faith in Contracting: A Sceptical View 63 Joseph M. Thomson Introduction 63 What is good faith? 66 Good faith and consumers 70 Conclusions 74 5. Good Faith and Utmost Good Faith: Insurance and Cautionary Obligations in Scots Law 77 A.D.M. Forte Introduction 77 Insurance and the concept of utmost good faith 81 Cautionary obligations and the principle of good faith 87 Good faith beyond insurance and caution 96 6. Good Faith in Scots Property Law 103 D.L. Carey Miller Introduction 103 Common law contexts 104 Statutory contexts 120 Conclusions 123 7. Good Faith and the Doctrine of Personal Bar 129 J.W.G. Blackie Introduction 129 The ambit of personal bar 129 The first model: an original pure principle of personal bar 130 English law as a solution? 136 Consent based models 138 The reliance on representational model 141 The equity model 142 A good faith model 143 Negligence 144 Fraud 145 The instinctual nature of good and bad faith 145 Three party cases and their resolution 147 Good faith shields have spikes 152 Conclusion 156 8. Good Faith: A Principled Matter 157 Scott C. Styles Introduction 157 Existence and absence of a good faith principle: 157 institutional reasons Contents ix Existence and absence of a good faith principle: 160 legal cultural reasons Parliamentary or judicial law reform? 161 Good faith: imposition or impled term? 162 Contracts and community values 165 Good faith: an uncertain principle? 168 Contractual certainty and the limits of language 169 Exclusion clauses 171 Undue influence and duress 172 Equity: a less certain principle than good faith? 174 Good faith: an undisclosed but weak principle? 176 Conclusion 178 9. Good Faith in Consumer Contracts: Rule, Policy and Principle Chris Willett 181 Introduction 181 The good faith rule: some introductory comments 183 European consumer policy 184 The good faith rule revisited 195 Objective or subjective good faith? 199 A general principle of good faith 199 Concluding comment 203 Index 205 TABLE OF CASES AEG (UK) Ltd v Logic Resource Ltd [1996] CLC 265 ..............43, 44 Alexander v Pinkerton (1826) 5 S 185..............................................150 Allan v Gilchrist (1875) 2 R 587 ..........................................27, 29, 155 Allan and Others v Young, Ross, Richardson & Co (1803) Mor 7092.....86 Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd [1982] QB 84.............................................45 Andrew v Henderson and Dimmack (1871) 9 M 554.........................71 Angus v Bryden 1992 SLT 884 ...................................................92, 97 Arcos Ltd v E A Ronaasen and Son [1933] AC 470 ..........................55 Auld v Glasgow Working-Men’s Provident Investment Building Society (1887) 14 R (HL) 27..........................................................68 Australia in Legione v Hately (1983) 152 CLR 406 ...........................57 Avintair Ltd v Ryder Airline Services Ltd 1994 SC 270 ...................25 Balfour Beatty Civil Engineering Ltd v Docklands Light Railway Co (1996) 78 BLR 42...........................................................................54 Bank of East Asia v Scottish Enterprise 1997 SLT 1213 (HL)..........14 Bank of Lisbon and South Africa Ltd v De Ornelas 1988 (3) SA 580 (A)................................................................................82, 83 Bank of Scotland v 3i PLC 1990 SC 215.....................................31, 98 Bank of Scotland v Brunswick Developments (1987) Ltd 1997 SC 226..................................................................................136, 152 Banque Financiére de la Citié SA v Westgate Insurance Co Ltd [1991] 2 AC 249 .....................................................................85, 100 Barclays Bank plc v O’Brien [1994] 1 AC 180............6, 18, 42, 91, 174 Barr v Lions Ltd 1956 SC 59 ............................................................16 Baylis v Bishop of London [1913] 1 Ch 127 ......................................62 Bell v Bell (1841) 3 D 1201..................................................27, 29, 155 Bell Brothers (HP) Ltd v Aitken 1939 SC 577 ..................................65 Bell Brothers (HP) Ltd v Reynolds 1945 SLT 229............................71 Blackpool & Fylde Aero Club Ltd v Blackpool Borough Council [1990] 1 WLR 1195..................................................................36, 60 xii Table of Cases Boustany v Pigott (1995) 69 P & CR 298...........................................42 Boyd v Robertson (1854) 17 D 159 ..................................................144 Bradford & Bingley Building Society v Thorntons plc 1998 GWD 40-2071................................................................................16 Braithwaite v Bank of Scotland 1999 SLT 25..............................75, 95 Bristol and West Building Society v Mothew [1997] 2 WLR 436......60 British Movietone News Ltd v London and District Cinemas Ltd [1952] AC 166 ................................................................................43 British Steel Corporation v Cleveland Bridge and Engineering Co Ltd [1984] 1 All ER 504..................................................................36, 61 Broatch v Jenkins (1886) 4 M 1030....................................................97 Brooker-Simpson Ltd v Duncan Logan (Builders) Ltd 1969 SLT 304.........................................................................................97 Brown v Baty 1957 SC 351 ..............................................................133 Brown v Boreland (1848) 10 D 1460..................................................79 Brown v British Linen Co (1863) 1 M 793 ......................................146 Buchan v Forbes and Others (1683) Mor 10440...............................145 Cadzow v Lockhart (1876) 3 R 666....................................................70 Cairncross v Lorimer (1860) 3 MacQ 827 ........................................137 Campbell v Cochran (1747) Mor 10456............................................133 Caparo Industries plc v Dickman [1990] 2 AC 605............................46 Carter v Boehm (1766) 3 Burr 1905.......................................45, 79, 85 Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130 ...................................................................................45, 179 Charity v Riddell 5 July 1808 FC.............................................133, 151 CIBC Mortgages plc v Pitt [1994] 1 AC 200 .....................................42 Clark v Wink (1847) 10 D 117.........................................................132
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