Tales of the unexpected

A colleague told me about a conference at UCL on contract law and the unexpected saying, “Looks like a nice day out Jason”.  

When I was emailed 12 hefty draft papers by way of pre-reading, I realised it was a rather different conference to the sort I am used to. Each draft paper was an original contribution that, at the conference, the distinguished author formally presented, followed by an equally distinguished “commentator” who formally commended the paper with a commentary, sometimes with suggestions for improvement and occasionally with outright, but very polite, disagreement. Welcome, for the uninitiated, to academia.

Here's my report on those papers, which will in due course be published as a compendium.  

1. John Cartwright – Contract law and the unexpected: a comparative perspective. This paper had many observations, but one that particularly stuck with me. When you appreciate the value that civil law systems, like France, place on performance and that French contract law has a strong justice element to it, it makes much more sense that the French courts may re-write the bargain in cases of hardship (Art 1195 of the Code Civile). Whereas English law, which favours party autonomy and invariably awards damages (rather than specific performance), has a much harsher concept of frustration. Parties to English law contracts need to draft in provisions to deal with force majeure; parties to French law contracts need to think about excluding the default law on hardship.
2. Paul MacMahon – Constructing frustration. This paper argued that while frustration can be seen as a matter of interpretation, it is informed by economics.
3. Catherine Mitchell – Interpreting the contract in the light of unexpected events. This paper explored the “bad bargain”, literal interpretation, approach that we saw in relation to leases during COVID-19 where courts said to the tenants who couldn't use their premises but were still being charged rent, “Tough, that's what you agreed to!” and compared it to the “rescue” approach where a more purposive approach to interpretation is adopted (see e.g. the minority in FCA v Arch).  Andrew Twigger, the formal commentator, explained that in many cases there is no clear meaning to contractual provisions.  While doing so he noted that when he was making submissions in Wood v Capita and there was a discussion about whether anything special was meant by “registering a complaint” he referred to the Dead Parrot sketch in support of the argument that it just meant “to complain” (only to be met by a stony silence). His view was that while the pendulum had swung towards literalism with Arnold v Britton, it was still effectively in the middle as described by Wood v Capita. And there was a difference between when you have dealt with something, but got it wrong (e.g. inflation in Arnold v Britton) and where what has happened was “unthinkable” (e.g. Lloyds TSB Foundation).
4. Niamh Connolly – Contractual silence, risk allocation and the interplay between contract and unjust enrichment. This paper argued that permitting recourse to unjust enrichment where the bargain is silent is analytically very different from (and easier to justify than) modifying the bargain itself (for instance, by implying terms).
5. Sarah Green – Smart contracts and the unexpected. This paper asked whether the doctrines of mistake and frustration may become more relevant in the context of smart contracts (i.e. contracts that are in code and meet the legal requirements for a contract) and how they should operate. Deterministic code will have a theoretically knowable output but even very experienced coders won't know exactly what will happen.  Should an error be characterised as a mistake (made at the time of entering into the contract) or a supervening frustrating event?  Charles Kerrigan, the commentator, questioned whether referring to the coder's mind (as the court did in Quione v B2C2) was the right model. He also noted that if coder's release and then de-bug their software, why don't lawyers have a method for debugging their contracts (post-execution)?
6. Jo Braithwaite – Managing the unexpected in global markets: LIBOR transition, the capacity of contracts and the role of third parties. This asked whether there was something to be learned from the remarkable success of the LIBOR transition given its complexity.  Some of the tools to achieve the transition, which perhaps could be used elsewhere, were: the shock absorption function performed by central counterparties, the use of protocols (e.g. by ISDA), widespread sharing of drafting solutions, pressure from regulators (with e.g. Dear CEO letters) and in some cases legislation (e.g. the US LIBOR Act).
7. Ewan McKendrick – Hardship clauses. This asked whether English law should adopt a hardship rule and concluded it is unlikely in practice but suggested that maybe courts should be (or are already) more willing to recognise the validity of express obligations to renegotiate contracts. Part of the rationale for this being that what we learnt from COVID was that, in general, parties wanted their agreements to continue. 
8. Jordan English – “Hell or highwater” clauses. This looked at whether contracts with these clauses, common to finance leases, should ever be capable of being frustrated, concluding that they should not.
9. Richard Calnan – Material adverse change clauses.
10. Charles Mitchell and Magda Raczynska – Variation clauses and variation agreements. This discussed what variation means: if you replace the timbers of a boat as they need fixing and eventually none of the original timbers remain, is it still the same boat?  As the Cobalt Data case shows, this is sometimes more than academic.
11. Miriam Goldby – Suspension or termination of obligations in charterparty contracts: should we rely on contractual interpretation to achieve certainty? This paper argued for a more purposive approach to interpretation and possibly more willingness to imply good faith. As James Leabeater, the commentator, observed, litigation follows a crisis like seagulls do a trawler and these approaches are unlikely to reduce disputes.
12. Solène Rowan – specific performance clauses. This looked at clauses which say that the parties agree damages are not an adequate remedy and that neither party (or the appropriate party) will not object to specific performance being sought as a remedy.  There was no clear agreement in the room as to the enforceability of these provisions.  Some argued they ought to be effective as a form of contractual estoppel; others noted the court was not party to the agreement so how could it be bound by it.