A Subjective Question: What To Do About The Jersey Law Of Contract?

A recent plea by the Jersey Court of Appeal for greater certainty in the Jersey law of contract has highlighted differences of opinion amongst the judiciary and the need for a way forward. Now, a new judgment from the English Court of Appeal could provide support for one side of the debate.

What is it all about

The debate centres on whether a subjective or an objective approach should be taken to contract law, particularly when it comes to setting aside a contract because of a mistake or a lack of consent when the parties entered into the contract. A subjective approach looks at what was in the minds of the parties to the contract; an objective approach looks at what an independent observer would have concluded was the case.

Why does it matter

In most cases, it doesn't matter which approach is taken. As the Jersey (and English) courts have said, the result is frequently the same whether an objective or a subjective approach is taken. It is the few cases where the result would be different which are problematic and where certainty on which is the correct approach would be appreciated by lawyers and anyone entering into a contract.

There is also a wider point here; to what extent should Jersey law follow modern English or French concepts? This goes to the heart of Jersey's legal identity, as a system based on Norman customary law is adapted to modern commercial reality.

What has been said

Over the last few decades, the approach taken by the Jersey courts has varied between objective and subjective, leading to a lack of certainty and making it difficult to know what the outcome of a case might be.

Matters recently came to a head in Booth v Viscount [2019] JCA122, where the Court of Appeal's decision – adopting a subjective approach – was followed by an extraordinary 27-page appendix on the issue. After delivering the Court's decision, Martin JA reviewed all the previous cases – as well as a considerable amount of legal commentary – and declared the current situation "wholly unsatisfactory" for two main reasons. First, the current lack of certainty about a fundamental principle of commercial law does not befit Jersey as a modern, developed jurisdiction. Second, making everything worse, the senior members of the Jersey judiciary are split between the two camps. The latter was illustrated by what followed: further commentary from the current Bailiff of Jersey disagreeing with several of the points Martin JA made.

Both the Bailiff and Martin JA...