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Lloyd's Maritime and Commercial Law Quarterly

LIMITS OF CONTRACTUAL ESTOPPEL

Alexander Trukhtanov*

Procter & Gamble v Svenska Cellulosa Compass Group v Mid Essex Hospital Services Dubai Islamic Bank v PSI Energy
A trio of recent High Court cases is instructive in exploring the limits of contractual estoppel, a concept endorsed by the Court of Appeal in Springwell Navigation Corp v JP Morgan Chase Bank 1 as a means of giving effect to non-reliance clauses and apparently extended to entire agreement clauses in Axa Sun Life Services Plc v Campbell Martin Ltd. 2
In The Procter & Gamble Co v Svenska Cellulosa Aktiebolaget SCA,3 a claim for rectification was resisted on the basis of an entire agreement clause. Following a number of earlier first instance decisions,4 Hildyard J concluded that the clause would exclude a collateral warranty but was no bar to rectification. The judge referred to established authority5 showing rectification’s underlying nature as a tool for reforming an instrument intended as a record of a bargain and not for varying, modifying or extending the bargain itself. Rectification brings out the true common accord, and an entire agreement clause guards the four corners of that accord from “side, collateral or additional agreement qualifying or adding to” it.6 The difficulty is in determining whether the relief is sought to correct a mistake in expressing the accord which remains “the sole source of obligations between the parties” or to give effect to a different “compact or understanding not intended to be expressed by words the parties have used”.7

1. [2010] EWCA Civ 1221; [2010] CLC 705.
2. [2011] EWCA Civ 133; [2011] 2 Lloyd’s Rep 1, [34], where the Court of Appeal proceeded on the basis of a concession that Springwell applied to and determined the effect of entire agreement clauses. However, the judgment maintained an essential difference between the two types of clause: see A Trukhtanov, “Exclusion of Liability for Pre-Contractual Misrepresentation: A Setback” (2011) 127 LQR 345.
3. [2012] EWHC 498 (Ch).
4. JJ Huber Ltd v The Private DIY Co Ltd (1995) 70 P & CR 33; Surgicraft Ltd v Paradigm Biodevices Inc [2010] EWHC 1291 (Ch).
5. At [105].
6. At [106].
7. At [107].

CASE AND COMMENT

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