Commercial law - Contract or no contract?

Global Asset Capital, Inc v Aabar Block SARL [2017] EWCA Civ 37

In this case the Court of Appeal considered when communications before and after a contract is formed or alleged to have been formed may be taken into account. In brief:

  • When deciding whether a contract has been made, the court will look at the whole course of negotiations. The rationale is that by focusing on one part of the parties' communications in isolation, eg only up to the time the contract is formed, without regard to the whole course of dealing, can give a misleading impression that the parties had reached agreement when they had not. This rationale applies regardless of whether the negotiations are conducted in writing, orally or by conduct (or by a combination of these).
  • In contrast: once a contract is formed one cannot interpret the meaning of words used in a contract by reference to what happened later. Similarly, once the contract is formed, further negotiations cannot get rid of the contract already arrived at without the consent of both parties.
  • Also, dealing on a 'subject to contract' basis negates contractual intention, in effect rendering the offer incapable of being accepted (The offer was made subject to contract. The offering party tried unsuccessfully to assert that the recipient had accepted that offer.)

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