Surveys

My survey would be of value to support a commercial expert giving evidence. For example, it suggests that the “ordinary reaction” of a supplier asked for a report on a once defective, apparently now repaired harrow would be to provide a report sufficient to allay the farmer’s concerns.^{[1] [2]} Market research surveys are admissible, as is²⁴ survey evidence if it is of “real

Source of the duty to cooperate 189 utility”, and Courts may review responses without much guidance from statistical experts," " although the quality of the survey and data collection will go to weight." ' A survey such as that undertaken by Lai, Yik and Jones," reviewing market participants’ opinions on the meaning of “fair wear and tear” and “vandalism”, will be useful to a Court.

As I have argued in Chapter 3.1 the use of avatars in laboratory conditions is unlikely to provide useful data on commercial expectation because, not only are the experiments themselves wholly unrealistic, but one cannot translate avatar reaction to real-world conditions. X-phi experiments, despite their popularity, tell us nothing about the commercial world, which is more nuanced and complex than one can replicate in a laboratory filled with ingenues. Experiments should be transferable and test real-world hypotheses." ' As Edmonds observes:

In the real world we are not constrained by having just two options, X and Y: we have a multitude of options, and our choices are entangled in complex duties and obligations and motives. In the real world, crucially, there would be no certainty.²

The real-world/real-people, complex nature of my survey makes its findings much more credible than those emanating from students asked unrealistic questions in laboratory conditions.

The commercial judge

When interpreting contracts judges take responsibility for determining whether an unexpressed term of the contract provides “business efficacy”, or whether a particular interpretation accords with “common-sense” or “business

• 242 A Baily p Clark Son and Morland [ 1938] AC 557 (HL), Marks & Spencer Pic v biterflora Inc [2012] EWCA Civ 1501 and see the robust decision in New Zealand in Ritz Hotel Ltd p Charles of the Ritz Ltd [ 1989] RPC 333.
• 243 James, Expert Evidence at 18.009. See also Arney LG Limited p Cumbria County Council [2016] EWCH 2856 (TCC).
• 244 Lai and others ‘Disputes’.
• 245 See also Russell Korobkin, ‘Empirical Scholarship in Contract Law: Possibilities and Pitfalls’ (2002) U IllLRev 1033 and Dennis Patterson, ‘The Limits of Empiricism’ (2000) 98 MichLRev 2738.
• 246 Edmonds, Kill the Eat Man, 100. Collins, Regulating Contracts, 131 - empirical work fails to “appreciate the presence’’ of several “normative frameworks".
• 247 Rice (t/a Garden Guardian) p Great Yarmouth Borough Council (n. 234 above) - Lady Justice Hale invoking “common sense”, “in the context of a contract intended to last for four years, involving substantial investment ... involving a myriad of obligations”, interpreted a power to terminate the contract for “any” breach as any breach which amounted to a repudiation - at [ 18].

common sense”,^{[3] [4] [5] [6] [7]} or other synonyms for multiple manifestations of the idea collected under the term “commercial common sense” by Neil Andrews.² There is an overlap between these concepts and the search for commercial expectation.²'⁰ In this subchapter I explore the role of the commercial judge in identifying commercial expectation. Although some judges have “profound and secure” commercial expertise and may be able to deal “magisterially” with certain transactions as a result, Andrews’ advice that judges “must not assume that they are master of all trades” is sensible.²' Lord Reed counsels against “an excess of confidence that the judge’s view as to what might be commercially sensible coincides with the views of those actually involved in commercial contracts”. While Lord Hodge also urges humility “about our ability to identify commercial purpose”, ^{[8] [9] [10]} Sir Kim Lewison deprecates the tendency of judges to determine commercial purpose based on their own experience²⁵ and Lord Millett claims that invoking common sense “really gives the game away”, '' Lord Steyn takes a more gnostic view: “Modern judges usually have well in mind the reason for a rule and in a contract case that means approaching the case from the point of view of the reasonable expectations of the parties.”^{[11] [12]} In Equitable Life Assurance Society v Harman²³ Lord Steyn based an implied term limiting the Society’s discretion on the parties’ “reasonable expectations” which were that contractual guarantees should not be deprived of any value. Lord Gra-biner remarks, in unusually frank criticism, that Lord Steyn’s approach is “speculative”:

It is very unclear ... where Lord Steyn found the “self-evident commercial object” ... or the “reasonable expectations of the parties”. It was certainly not from anything any of the policyholders were told or promised ...

By contrast, Sir Richard Scott VC did consider the reasonable expectations of the parties ... by reference to the relevant policy documents.²"

Evans LJ, dismissing a bank's claim that it was not bound by the conduct of a manager acting without actual authority, without reference to evidence, ruled: “It is not the practice, so far as I am aware, in normal commercial transactions for written proof eg of board decisions to be demanded ...”^{[13] [14] [15] [16] [17]} There is some evidence that the Courts take the commercial expectations of “sophisticated” parties to be that Courts should not interfere readily with the language used; Jonathan Sumption observing in a recent lecture that the “more precise the words used and the more elaborate the drafting, the less likely it is that the surrounding circumstances will add anything useful”. ’ Paul Finn says that “Judges commonly seem to regard the parties to commercial contracts as well-advised leviathans”; going on to say that for the most part neither is true.²

In Rosserlane Consultants Ltd v Credit Suisse International, despite finding the bank's conduct “reprehensible” Peter Smith J found that a “lengthy and carefully-drafted contract” drafted by experienced lawyers was “a commercial contract between sophisticated investors and the Bank”. Refusing to imply any limit on a bank’s ability to force a borrower to extend a hedge, Mrs Justice Andrews described a party as “an astute and sophisticated businessman ... capable of making an educated and informed decision on hedging”.^{[18] [19] [20]}

This attitude might cut both ways; in Thorney Park, McCombe LJ took into account the fact that the contract had been prepared by “lay people”; a curiously condescending term.²

A Court may also conclude that that the natural meaning of the words is subject to forensic examination, Lord Reid saying of termination of an “elaborate” distribution agreement:

if Schuler’s contention is right, failure to make even one visit entitle them to terminate ... This is so unreasonable that it must make me search for some other possible meaning ... If none can be found then Wickman must suffer the consequences. But only if that is the only possible interpretation.²⁶"

Ewan McKendrick refers Schuler in a discussion on how one draws the line between commercial construction and impermissible rewriting." ⁶ One can compare Rice to the Schuler case above and see that in two very similar cases senior judges reach similar conclusions with different logic; each seeming to search for a commercial common-sense meaning.

Judges appreciate the exigencies of complex matters. As case managers they read dispute resolution obligations widely and purposively. Mutuality and active cooperation lie at the heart of the Court’s approach to parties’ contractually arising obligations in arbitration; Lord Diplock saying: “The obligation is ... mutual; it obliges each party to cooperate with the other in taking appropriate steps to keep the procedure in the arbitration moving”. Coulson J observed that providing too much information in an adjudication might breach a duty to cooperate: “Unless parties and their solicitors cooperated properly and complied with the TCC guide, the court would refuse to hear cases with promiscuous and unnecessary bundling.” The dispute resolution Judgments have similarities with Judge Toulmin’s implied term, which includes the acceptance of reasonable solutions and acting reasonably where relatively unimportant items cannot be delivered, and demonstrate that the Courts can construe contracts in ways that encourage to parties to work together.^{[21] [22] [23] [24]}

In complex modern symbiotic contracts experience and expertise on which to base an analysis of what the parties would expect is, in my opinion, likely to be no more accessible to the judiciary than expertise in banking or medical cases; notwithstanding that judges know how important cooperation is once complex machinery grinds into action. It is arguable that they should have some idea of relative priorities once problems arise, once disputes become apparent and in the general hurly-burly of business.

Bringing into play commercial expectations, commercial common sense, business efficacy or synonymous aspects as a deus-ex-machina, or, worse, acting as an undeclared amiable compositeur, using judicial intuition, carries the risk of diluting the concept; allowing the claim that the “notion explains too much”.^[25] Most judges have, however, served long

Source of the duty to cooperate 193 apprenticeships at the Bar, giving them some idea of whether parties are holding back, attempting to make them “hostages of the arguments deployed by Counsel”² and the expertise of specialist Technology' and Commercial Court judges in construction and engineering contexts should not be underestimated. The parties are best placed to identify the purpose of any transaction, which identification may be well supported by evidence of negotiations. The best context is that of the performance interest. Businesspeople contract on the footing that contracts will be performed, as Lewison suggests.² " Nevertheless, Judges should restrain themselves and deliver opinion based on the documentation, witness evidence, Counsel’s views or serious and declared experience in the type of transaction under review. Judges do not normally possess sharp-end commercial experience.; their experience is normally “warped”.

• [1] Ritchie (n. 70 above).
• [2] Sidney Lovell 1’hipson and Hodge M Malek, Phipson on Evidence, vol. 18 (Sweet & Maxwell 2013) at 33.02.
• [3] Lord Clarke in Rainy Sky SA and others v Kookmin Bank [2011] UKSC 50; [2011] 1 WLR 2900 at [21] and [23]. Lord Hodge in Wood v Capita Insurance Services Limited [2017] UKSC 24 at [10]. See also Cranston J in Medirest High Court (n. 233 above) at [25] saying (correctly) that Medirest’s interpretation of the cooperation clause was more aligned to common sense.
• [4] Andrews, ‘Interpretation of Contracts’.
• [5] Rickman and another v Brudenell-Bruce [2005] EWHC 3400 (Ch) George Bompas QC -a limit on discretion under a conveyance gave effect to the “reasonable expectations” of the parties and provided "business efficacy”.
• [6] Andrews, ‘Interpretation of Contracts’, 52-53.
• [7] Grove Investments Ltd v Cape Building Products Ltd [2014] CSIH 43.
• [8] ‘Can Judges Use Business Common Sense in Interpreting Contracts?’ in Larry DiMatteo and Martin Hogg (eds). Comparative Contract Law: British and American Perspectives (OUP 2016), 283. See Paul S Davies, ‘Interpreting Commercial Contracts: A Case of Ambiguity?’ (2012) LMCLQ.
• [9] Lewison, Interpretation at 2.06.
• [10] Lord Millett, ‘The Common Lawyer and the Chancery Practitioner’ in Daniel Clarry and Christopher Sargeant (eds). The UK Supreme Court Yearbook, vol. 6 (2015) at 92.
• [11] Steyn, ‘Reasonable Expectations’, 442.
• [12] Equitable Life Assurance Society v Hyman [2000] 3 All ER961 at 971, [2002] 1 AC 408.
• [13] Lord Grabiner, ‘The Iterative Process of Contractual Interpretation’ (2012) 128 LQR 41 at 57-59.
• [14] First Energy (UK) Ltd v Hungarian International Hank Ltd (n. 95 above) at 205.
• [15] Jonathan Sumption, A Question of Taste: The Supreme Court and the Interpretation of Contracts (Harris Society Annual Lecture 2017) at 9. Leggatt J deploys the reverse argument in Tam Seng(n. 132) at [161] using the “skeletal” nature of the agreement to justify implying a term.
• [16] “Fiduciary and Good Faith Obligations under Long Term Contracts” in Dharmananda, Long Term Contracts, 137.
• [17] Rosserlane Consultants Ltd r Credit Suisse International [2015] EWHC 384 (Ch).
• [18] Greenclose Ltd v National Westminster Bank [2014] EWHC 1156 (Ch) at [ 150].
• [19] Thorney Park Golf Ltd v Myers Catering Ltd (n. 211 above) at [24].
• [20] Schuler (L) AG v Wickman Machine Tool Sales Ltd (n. 48 above) at 251.
• [21] ‘The Interpretation of Contracts; Lord Hoffmann’s Restatement’, in Worthington, Commercial Lan’, 160-161.
• [22] Bremer Vulkan Schiffbau and Maschinenfabrik >’ South India Shipping Corp Ltd [1981] AC 909 HL at 25. In The Hannah Blumenthal [1983] 1 AC 854, [1983] 1 All ER 34 (HL) The Court ruled that “The mutual obligation, to keep the arbitration moving is not merely a matter of each party co-operating with any initiative taken by the other but a positive obligation imposed on each party to take the initiative himself, with or without the co-operation of the other party”.
• [23] Deluxe Art & Theme Ltd i> Beck Interiors Ltd [2016] EWHC 238 (TCC).
• [24] See Laporte and another i> Commissioner of Police of the Metropolis [2015] EWHC 371 (QB).
• [25] Mitchell, ‘Leading a Life of its Own?’, 663.