Issue of construction of long term relational commercial contact.

20 Jun 2022

Guy Adams, instructed by Stuart Brothers of HCR Legal, appeared for the Claimant in Quantum Advisory Ltd v Quantum Actuarial LLP [2022] EWHC 1423 (Ch).  The case raises an issue as to the applicable principles of contractual construction in relation to long term relational contracts, which is a relatively new and developing topic.  

 

The contract establishes a bespoke business relationship with a term of 99 years.  It was previously considered and upheld by the High Court in Quantum Advisory Ltd v Quantum Actuarial LLP [2020] EWHC 1072 (Comm), which considered issues of novation and restraint of trade.  The Defendant appealed on the point restraint of trade, but the judgment was upheld by the Court of Appeal: Quantum Advisory Ltd v Quantum Actuarial LLP [2022] 1 All ER (Comm) 473.

 

In this case the issue was whether the Defendant, to whom the Claimant's business had been outsourced, was required to tender for new or repeat business.  The Claimant argued that the court should respect the parties' mutual intention to enter into a long-term workable relationship and, relying on observations made by Peter Jackson LJ in Amey Birmingham Highways Ltd v Birmingham City Council [2018] EWCA Civ 264, should construe the contract in accordance with its long term purpose.  Despite acknowledging that the overall purpose of the agreement, which was to ensure the efficient operation of Quad's business, favoured the Claimant's construction, the judge preferred the Defendant's construction.  The Claimant intends to appeal. 

Contributors

Guy Adams