Top Contract Law Cases Of 2019 For Scots Lawyers

2019 brought some interesting and important case law of relevance to Scottish commercial contract lawyers. Summarised below are our pick of 2019's top contract law cases from north and south of the border.

Contractual Notices

Our Generation Limited v Aberdeen City Council [2019] CSIH 42 Cases concerning the service of contractual notices arise regularly in the Scottish courts. The matter to be decided in Our Generation v Aberdeen City Council was whether an email sent on behalf of Our Generation to an employee of the Council attaching a document headed "Statement of Account" constituted a written notice requiring payment in terms of the contract between the parties.

The Inner House concluded that the email and its attachment did not constitute such a notice, commenting that, whatever language is employed, it must be seen as drawing the recipient's attention to something which will happen if he or she does not react.

The Inner House otherwise went on to reinforce the applicability of the two stage approach set out in Hoe International v Anderson 2017 SC 313. Firstly, do the terms of the notice convey the necessary information to the recipient? Secondly, has the notice been issued in accordance with the contractual provisions? Here the Inner House endorsed the view in Hoe that, the more drastic the consequences of the notice, the greater the need for strictness.

Once again, we have a reminder of the need to consider the drafting of contractual notices very carefully.

Collateral Warranties

British Overseas Bank Nominees Limited v Stewart Milne Group Limited [2019]CSIH 47 In British Overseas Bank v Stewart Milne, it was held that no new prescriptive period (within which any claim must be brought) is commenced when a collateral warranty is granted. The Inner House focused on the commercial purpose of the collateral warranty which it regarded as being to provide the beneficiary with the same rights as those enjoyed by the employer under the original building contract. The existence of both a "no greater liability" clause and an "equivalent rights of defence" clause within the collateral warranty supported this conclusion.

Contract Interpretation

British Overseas Bank Nominees Limited v Stewart Milne Group Limited [2019] CSIH 47 Burnett v International Insurance Company of Hanover Limited [2019] CSIH 9 Scanmudring AS v James Fisher MFE Limited [2019] CSIH 10 EOP II Prop Co III SARL v Carpetright Plc [2019] CSOH 40 Drum Income Plus Limited v LS Buchanan Limited [2019] CSOH 94 The Lord President and Lord Drummond Young promoted a purposive approach to contract interpretation in the cases outlined below in 2019, with commercial common sense regarded as playing a key role. However, this has not been embraced by all of the Scottish judiciary.

In British Overseas Bank (discussed above) it was, stressed that commercial common sense should be central to the interpretative exercise, which should be purposive, as well as contextual.

Similarly, in Burnett v International Insurance Company of Hanover Limited, which concerned the interpretation of an insurance policy, the Inner House indicated...