Audio recording 14.1 transcript

Rectification is a really interesting area of law, I think. So, at one point relatively recently, some people thought that rectification would just disappear, that the equitable jurisdiction to rectify a contract would not really be necessary anymore because of the broad, or liberal approach to interpretation favoured by Lord Hoffman. Because if mistakes could be corrected at common law, through interpretation, then it seemed that there wasn't much need for an equitable doctrine to rectify contracts. But, given that we've recently seen a rowing back from the very broad approach favoured by Lord Hoffman, in cases such as Arnold v Britton in the context of implication, sorry, in the context of interpretation, that narrows the scope of interpretation. And so, increases, conversing the potential scope of rectification to correct mistakes. I think it is an important doctrine. And I think that, whereas in the context of interpretation we saw decisions like Arnold vBritton rode back from Lord Hoffman's judgments in ICS and Chartbrook. And in implication we saw Marks & Spencers grow back from Lord Hoffman's judgement in Belize. We've now got this very important court of appeal decision in FSHC, which rose back from Lord Hoffman's broad approach to rectification, which he also put forward in Chartbrook. And the law is now on a more stable footing, I think. So, rectification, I think has advantages over interpretation. In particular, because it's an equitable doctrine it's probably  better placed to protect third parties than common law rules of interpretation are. And although the law was really difficult until 2019, I think that this recent court of appeal decision of FSHC does make it clear what the approach should be. And is  a helpful and important decision to get on top of. So basically, now, in the common situation where parties are negotiating for a contract, and they say that everything is subject to contract, subject to a signed, written deal, and then there's a mistake in recording that agreement, which is signed and constitutes the contract. Then we have the very strong presumption, which I think is very sensible, that the parties intended to be bound by what they signed. But it is possible to go behind that and to rectify or change those terms if you can prove that both parties actually made a common mistake. And that's when you might have common mistake rectification. But now, after FSHC, it's clear that both parties need to have actually made a mistake. And if only one party has made a mistake, then you're not in the realm of common mistake rectification, but instead you're in the world of unilateral mistake rectification, and clearly, it's much harder to get rectification for a unilateral mistake, because by definition, one party was not mistaken. And so, by rectifying, or granting rectification, and rectifying the contract, one party will be, or rectify the document I should say, then one party will be stuck with a contract to which they didn't agree. So, for unilateral mistake rectification, you have to show that the other party, typically the defendant, acted badly in some way, they acted unconscionably, or dishonestly.