Contract – Parties – Respondent’s company selling furniture under trading name – Appellant engaged to carry out engineering services in connection with construction of new showroom for business on land owned by respondent – Respondent claiming damages for defective work – Appellant denying liability on ground that contract made with company not respondent personally – Correct approach to construction of contract – Respondent held to have contracted personally not as agent for company – Appeal dismissed
The respondent was the sole director and shareholder of a limited company that sold furniture under the trading name “Moon Furniture”. In 2003, the respondent purchased land in his own name with a view to transferring the company business there. He then assembled a team to design and construct a new showroom for the company on the land; the appellant was engaged to provide engineering services in that connection. The contract of engagement was partly oral and partly written, being made in March 2004 in two conversations between the respondent and the appellant, followed by a letter setting out the terms. The letter was on Moon Furniture headed notepaper and was signed by the respondent, above his printed name and the words “Moon Furniture”.
After the works were completed in 2007, the respondent’s company took possession of the new showroom and began trading there. In 2009, the respondent brought a claim against the appellant for damages in respect of losses that he claimed to have suffered as a result of defects in a piled retaining wall built at the rear of the site where it sloped upwards. The appellant contended that it was not liable since it had no contract with the respondent but only with his company, which had suffered no loss since it did not own the property.
That matter was decided against the appellant on a trial of a preliminary issue. The judge held that the respondent had been acting personally, rather than as agent for his company, when he had engaged the appellant. In that connection, the judge found that, inter alia: (i) the appellant had not been told that the client was a limited company but had instead been told that the respondent owned the Moon Furniture business; (ii) a reasonable person reading the March 2004 letter, including its use of the pronoun “we”, would have concluded that Moon Furniture was the respondent; (iii) the respondent had signed that letter without making it clear that he was not contracting personally; and (iv) the appellants were unaware that Moon Furniture was the trading name of the respondent’s company. The appellant appealed.
Held: The appeal was dismissed.
Where there was a written contract, the parol evidence rule prohibited the receipt of oral evidence to add to, subtract from or vary the written terms. One of the recognised exceptions to that rule applied where the identity of a party referred to in a deed or contract parties was in issue; in such cases, extrinsic evidence could be admitted to assist the resolution of that issue. In determining the identity of the contracting party, the court would take an objective, nor a subjective, approach; the question was what a reasonable person, furnished with the relevant information, would conclude. The private thoughts of the protagonists as to who was contracting were irrelevant and inadmissible. If the extrinsic evidence established that a party had been misdescribed in the document, the court could correct that error as a matter of construction, without any need for formal rectification of the contract. By contrast, the parol evidence rule was not automatically relaxed where an issue arose as to whether a party had signed as principal or as agent for someone else. In such cases, the person who signed the document was the contracting party unless: (i) the document made clear that that person signed as agent for a sufficiently identified principal or as the officer of a sufficiently identified company; or (ii) extrinsic evidence established that both parties knew that the person was signing as an agent or company officer. A principal or company would be sufficiently identified where there was an inconsequential misdescription of the entity on behalf of which the person was signing: Fung Ping Shan v Tong Shun [1918] AC 403, Badgerhill Properties Ltd v Cottrell [1991] BCC 463, Internaut Shipping GmbH v Fercometal SARL [2003] EWCA Civ 812; [2003] 2 Lloyd’s Rep 430, Shogun Finance Ltd v Hudson [2003] UKHL 62; [2004] 1 AC 919 and Estor Ltd v Multifit (UK) Ltd [2009] EWHC 2565 (TCC) applied.
Applying the foregoing principles, the central issue in the instant case was not one of identity but one of capacity, namely whether the respondent had signed the March 2004 letter personally or as agent for his company. In those circumstances, the respondent’s signature at the foot of the letter made him a contracting party unless he had qualified his signature or otherwise made it plain that the contract did not bind him personally. He had not done so. The mere reference to Moon Furniture, without any indication that it was the trading name of a limited company, was not an effective qualification. In that regard, the test was the same whether the respondent was claiming to have signed as agent or as company officer. The extrinsic evidence did not assist the appellant in showing that the company was the contracting party. At no stage before the contract was concluded had anyone told the appellant that Moon Furniture was the trading name of the company. It made no difference that the appellant could probably have ascertained that fact had it made enquiries. When construing a document, the court was not required to take into account matters that the parties might have discovered but had not in fact discovered: Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 applied.
Jeremy Nicholson QC and Kate Livesey (instructed by Hill Dickinson LLP, of Liverpool) appeared for the appellant; Adrian Williamson QC and Gideon Scott Holland (instructed by Pinsent Masons LLP, of Manchester) appeared for the respondent.
Sally Dobson, barrister
Contract – Parties – Respondent’s company selling furniture under trading name – Appellant engaged to carry out engineering services in connection with construction of new showroom for business on land owned by respondent – Respondent claiming damages for defective work – Appellant denying liability on ground that contract made with company not respondent personally – Correct approach to construction of contract – Respondent held to have contracted personally not as agent for company – Appeal dismissedThe respondent was the sole director and shareholder of a limited company that sold furniture under the trading name “Moon Furniture”. In 2003, the respondent purchased land in his own name with a view to transferring the company business there. He then assembled a team to design and construct a new showroom for the company on the land; the appellant was engaged to provide engineering services in that connection. The contract of engagement was partly oral and partly written, being made in March 2004 in two conversations between the respondent and the appellant, followed by a letter setting out the terms. The letter was on Moon Furniture headed notepaper and was signed by the respondent, above his printed name and the words “Moon Furniture”.After the works were completed in 2007, the respondent’s company took possession of the new showroom and began trading there. In 2009, the respondent brought a claim against the appellant for damages in respect of losses that he claimed to have suffered as a result of defects in a piled retaining wall built at the rear of the site where it sloped upwards. The appellant contended that it was not liable since it had no contract with the respondent but only with his company, which had suffered no loss since it did not own the property.That matter was decided against the appellant on a trial of a preliminary issue. The judge held that the respondent had been acting personally, rather than as agent for his company, when he had engaged the appellant. In that connection, the judge found that, inter alia: (i) the appellant had not been told that the client was a limited company but had instead been told that the respondent owned the Moon Furniture business; (ii) a reasonable person reading the March 2004 letter, including its use of the pronoun “we”, would have concluded that Moon Furniture was the respondent; (iii) the respondent had signed that letter without making it clear that he was not contracting personally; and (iv) the appellants were unaware that Moon Furniture was the trading name of the respondent’s company. The appellant appealed.Held: The appeal was dismissed. Where there was a written contract, the parol evidence rule prohibited the receipt of oral evidence to add to, subtract from or vary the written terms. One of the recognised exceptions to that rule applied where the identity of a party referred to in a deed or contract parties was in issue; in such cases, extrinsic evidence could be admitted to assist the resolution of that issue. In determining the identity of the contracting party, the court would take an objective, nor a subjective, approach; the question was what a reasonable person, furnished with the relevant information, would conclude. The private thoughts of the protagonists as to who was contracting were irrelevant and inadmissible. If the extrinsic evidence established that a party had been misdescribed in the document, the court could correct that error as a matter of construction, without any need for formal rectification of the contract. By contrast, the parol evidence rule was not automatically relaxed where an issue arose as to whether a party had signed as principal or as agent for someone else. In such cases, the person who signed the document was the contracting party unless: (i) the document made clear that that person signed as agent for a sufficiently identified principal or as the officer of a sufficiently identified company; or (ii) extrinsic evidence established that both parties knew that the person was signing as an agent or company officer. A principal or company would be sufficiently identified where there was an inconsequential misdescription of the entity on behalf of which the person was signing: Fung Ping Shan v Tong Shun [1918] AC 403, Badgerhill Properties Ltd v Cottrell [1991] BCC 463, Internaut Shipping GmbH v Fercometal SARL [2003] EWCA Civ 812; [2003] 2 Lloyd’s Rep 430, Shogun Finance Ltd v Hudson [2003] UKHL 62; [2004] 1 AC 919 and Estor Ltd v Multifit (UK) Ltd [2009] EWHC 2565 (TCC) applied.Applying the foregoing principles, the central issue in the instant case was not one of identity but one of capacity, namely whether the respondent had signed the March 2004 letter personally or as agent for his company. In those circumstances, the respondent’s signature at the foot of the letter made him a contracting party unless he had qualified his signature or otherwise made it plain that the contract did not bind him personally. He had not done so. The mere reference to Moon Furniture, without any indication that it was the trading name of a limited company, was not an effective qualification. In that regard, the test was the same whether the respondent was claiming to have signed as agent or as company officer. The extrinsic evidence did not assist the appellant in showing that the company was the contracting party. At no stage before the contract was concluded had anyone told the appellant that Moon Furniture was the trading name of the company. It made no difference that the appellant could probably have ascertained that fact had it made enquiries. When construing a document, the court was not required to take into account matters that the parties might have discovered but had not in fact discovered: Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 applied.Jeremy Nicholson QC and Kate Livesey (instructed by Hill Dickinson LLP, of Liverpool) appeared for the appellant; Adrian Williamson QC and Gideon Scott Holland (instructed by Pinsent Masons LLP, of Manchester) appeared for the respondent.Sally Dobson, barrister
