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Jersey's Royal Court has recently clarified a key aspect of local contract law, with the Bailiff pointing out where he thought previous judgements had erred.
Express columnist, Advocate Olaf Blakeley, takes a look at what is, and isn't, a contract: "A recent Royal Court decision has made clear a particular aspect of Jersey contract law which over the last 50 years has been a bit of a movable feast.
"A contract is an agreement between two or more people which imposes obligations, and is legally enforceable so if a party fails to comply with the terms, the court can provide a remedy.
"While the definition of a contract may appear simple, deciding whether one actually exists can be difficult. This is particularly so because contracts need not be in writing, but can be created by spoken words alone: a verbal contract is as enforceable as one penned by the written word, although proving the existence of an oral contract is normally more difficult often being a question of ‘he said/she said.’
"Under Jersey contract law (which is different from English law) there are four essential elements if a contract is to exist. If one or more are not present, there can be no contract. One ingredient is ‘consent’: each party must consent to the contract.
"For example, if I (foolishly) sign a blank piece of paper and another person later types contract terms to make it appear I am a party to a contract there is no contract; I have not given consent. I’ve been ‘tricked.’ I’ll return to this example when I come to
congratulate the Royal Court on its judgment.
Pictured: One of the ingredients that make a contract under Jersey Law is consent.
"The thorny problem that has arisen in cases since 1960(ish) is whether existence of consent should be tested subjectively or objectively. In English law, the test is objective: does it appear to an ‘outsider’ consent exists? I have always argued throughout my legal career under Jersey law the test is subjective: what was really in the minds of the parties?
"I maintained this argument in a case last year and the court rejected it (much to my horror and dismay); I didn’t change my position, however, and in this most recent case, presided over by the Bailiff, the court this time agreed: the test is subjective and the previous decision of the Royal Court was wrong.
"For my part, the test must be subjective, and the judgment is very welcomed. If (real) consent is an ingredient to a contract, but you test its existence objectively, then you may conclude a contract has been agreed when in reality it has not. Going back to the example I gave above: if you look at the piece of paper signed by me, objectively it appears I have consented. An outsider would read it, see the terms, see the signature and say, “…it looks like Mr Blakeley has consented.”
"But, if the truth be known – that the terms were typed in after I had signed a blank sheet – it would be clear I had not consented at all. If the objective test is applied, then the essential ingredients for a contract change; one is not looking for consent but instead looking for something that looks like consent. With respect to the previous court judgment, this is absurd.
Pictured: It's only recently that the court "started to meander and lose its way by introducing an objective test," says Advocate Blakeley.
"The absurdity doesn’t end there. For centuries Jersey law has adopted and followed the subjective approach and it is only since about 1960 that the court started to meander and lose its way by introducing an objective test. Those were sad times for Jersey law in my opinion.
"The Bailiff in the most recent case highlighted the mistaken detour of the courts: “…The law of contract ought to be – and used to be – a cohesive whole, and while it is unfortunate that the Jersey law of contract, which was certain for centuries and rested on the writings of the commentators expounding the customary law…it is only a series of judgments from the mid 1960s…that have substantially caused the problem….”
"So, why did courts jettison the subjective approach and introduce the English objective one instead? There are probably many reasons but a key one appears to be a desire to have commercial certainty: if consent is to be tested subjectively then no-one really knows if a contract exists. That’s not a good enough argument in my mind, not least because it is very unlikely that arguments over consent in commercial contracts will arise very often.
Pictured: Advocate Blakeley was glad to see the Bailiff agree with him in a recent judgment.
"I’m in good company as the Bailiff said, “…In our judgment, it is not open to the courts of Jersey simply to move away from centuries of Jersey contract law simply because most, if not all, advocates and judges were trained in English rather than French law or because it is no longer considered convenient to stay with it…It is regrettable that on a number of occasions the Royal Court, as apparently the Court of Appeal, has given contrary indications as to what the law is in such a fundamental area…”
"So, there you have it: settled…until the next Royal Court departure."
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