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Contractual rectification – where are we now?

Michael Uberoi explores where we are with contractual rectification in light of FHSC Group Holdings Limited v GLAS Trust Corporation Limited [2019] EWCA Civ 1361.

It has now been a little over a year since Leggatt LJ (as he then was) gave the Court of Appeal’s judgment in FHSC Group Holdings Limited v GLAS Trust Corporation Limited [2019] EWCA Civ 1361, which altered the test for common intention when one party seeks to rectify a contract as a result of what it alleges was a mistake which was common to both parties.

The (high level) test for rectification means any party must demonstrate (i) that the parties had a common intention, which (ii) by mistake was not recorded in the contract, and that (iii) this is demonstrated by an “outward expression of accord”[1].

FSHC altered the test for assessing the parties’ common intention (i.e. the first requirement, above). This assessment had previously been by way of an objective test, as a result of the judgment of Lord Hoffman in Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, meaning that (as with contractual construction) the court would look at the language used in the documents and determine what that language should reasonably be understood to mean (rather than enquiring what, if anything, the parties subjectively meant).

After a detailed exposition of the preceding case law and academic commentary, in FHSC Leggatt LJ rejected the objective test articulated by Lord Hoffman in Chartbrook (which Leggatt LJ said had been obiter). He found instead that it was necessary to show that “each party to the contract had the same actual intention with regard to the relevant matter”.

Michael explores what Leggatt LJ meant by the parties’ “actual” intention and why it matters in his article which can be read here.

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Michael Uberoi practises in commercial litigation with a focus on pensions and financial services law. The legal directories describe him as “an excellent senior junior” (Pensions, Legal 500)  and as “technically outstanding, and very hard working and responsive” (Financial Services Regulation, Legal 500). He regularly advises and acts in rectification proceedings and recently appeared in Univar v Smith & Ors [2020] EWHC 1596.

Legal Blog & Publications, Commercial 23 Oct, 2020

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Michael Uberoi

Call: 2004

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