Contracting parties: do you know who you're dealing with?
In the last issue of Disputes Matter we reviewed a case where the Court of Appeal had to ascertain whether an individual or his company was a contracting party. The position is often further complicated, and confusion and mistakes arise, when one of the contracting parties is part of a corporate group.
In Liberty Mercian Ltd v Cuddy Civil Engineering Ltd & Anor, the claimant (Liberty) had negotiated with a construction business known as the Cuddy Group for the construction of a new retail plateau which would, in time, house a supermarket. When it came to drafting the relevant contract, Liberty’s solicitor undertook a Companies House search and identified one of the Cuddy Group’s companies, Cuddy Civil Engineering Limited (CCEL). The solicitor wrote to the Cuddy Group’s representatives requesting that contractual references should be changed from ‘Cuddy Group’ to ‘CCEL’. The representatives did not challenge this; references were altered accordingly, and the contract was completed between Liberty and CCEL. When problems later arose with the construction project and Liberty sought to terminate the contract, it realised that CCEL was a dormant company and the contracting party should have been another Cuddy Group company, Cuddy Demolition and Dismantling Limited (CDDL).
The High Court had to decide who was the correct contracting party and, if there had been a mistake, whether it could be corrected via the contractual construction principle of misnomer (as opposed to via the more exacting requirements of the equitable remedy of rectification)…
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