THE JERSEY LAW COMMISSION

 

 

 

 

 

 

 

 

 

CONSULTATION PAPER

 

THE JERSEY LAW OF CONTRACT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

JERSEY LAW COMMISSION

CONSULTATION PAPER No 5                                                       October 2002

 

 

 

 

The Jersey Law Commission was set up by a Proposition laid before the States of Jersey and approved by the States Assembly on 30 July 1996.

 

The Commissioners are:

 

            Mr David Moon, Solicitor, Chairman

            Mr David Lyons, English Solicitor

            Advocate Alan Binnington

            Mr Clive Chaplin, Solicitor

            Advocate John Wheeler

 

The Jersey Law Commission invites comments on this consultation paper before 31st December 2002 in writing addressed to:

 

 

 

The Jersey Law Commission

PO Box 87

St Helier

Jersey

JE4 8PX

 

Fax no: 01534 609333

 

 

THE JERSEY LAW COMMISSION

 

CONSULTATION PAPER

 

THE JERSEY LAW OF CONTRACT

 

 

CONTENTS

 

 

            PART I - Background

 

1.                   The origins of Jersey law

2.                   The development of Jersey Customary Law

3.                   Contract law in the Norman Coutume

4.                   The further French influence

PART II - Recent Practice

5.                   The use of French authorities

6.                   The influence of the English law of contract

7.                   French influence v. English influence

8.                   Other influences

9.                   Recent judicial comment on sources of law

10.               A case in point: the remedy of "résolution"

11.               A comparison with the law of tort

12.               Summary of present difficulties

PART III - Proposals

13.               Possible solutions

CONSULTATION PAPER

THE JERSEY LAW OF CONTRACT

 

PART I - Background

 

1.                   The origins of Jersey law

 

In order to understand the development of Jersey contract law it is necessary first to examine the origins of Jersey law as a whole.

 

The common law (or customary law) of Jersey is based upon the customary law of the ancient Duchy of Normandy. Despite the fact that the English sovereigns ceased to be Dukes of continental Normandy in 1204, the Channel Islands remained attached to the English Crown.  However, Jersey still retained its ancient Norman law, except in so far as it had in the course of time been modified or corrupted by subsequent enactments or usages.

 

The loss by the English Crown of its French possessions in 1204 was the time when Jersey was historically regarded as "separated" from France.  It is at this time that many writers also talk of Jersey law developing independently and separating from Norman law. In reality, for a significant time after 1204, developments in Norman law were in fact, wholly adopted into the law of Jersey.

 

The Jersey commentator Le Geyt, writing in the 17th century, explains that Jersey originally turned to the adjacent province of Normandy because its law was most in accordance with that of its own. Prior to 1204 Jersey practitioners had little or no written law to which to refer. In contrast, Norman law had been formed into a definitive oral body by 1090 and was finally expressed in written form around 1200 in a text entitled Le Trés Ancien Coutumier de Normandie (the "Trés-ancien Coutumier").  It was this written customary law text to which the Jersey practitioners of the time would refer.

 

2.                   The development of Jersey Customary Law

 

The customary law of Normandy continued to evolve through to the sixteenth century and was contained in a number of works. Fifty years after the Trés-ancien Coutumier, a second version of the Norman Coutumier, Le Grand Coutumier de Normandie (The "Grand Coutumier") or the Summa de Legibus, was produced. These "coutumiers" (ie. unofficial compilations which did not receive the Royal assent) are collectively referred to as the "Ancienne Coutume". Finally, the Coutume Reformée was produced in the 1580's which, unlike the Coutumiers, received Royal assent.

 

Not all writers are in agreement as to the importance and reliability of each of the works. Certain writers place a high degree of significance on the fact that the Coutume Reformée received Royal assent. Routier argued that because the Coutume Reformée had official status it was a safer authority. He argued that because customary law always changes without the Royal assent the coutumiers would constantly change to reflect the customary law. As far as Jersey is concerned it is arguable that only the Trés-ancien Coutumier is a true indication of Jersey law.

 

It may therefore be argued that unless a Jersey common law authority can be traced back prior to 1204, then its value as an authority is limited. However, in practice there is in fact little difference between the Coutume Reformée, the Trés-Ancien Coutumier and the Grand Coutumier and any differences that there are, can be detected[1].

 

What is apparent, is that after 1204 Jersey began to develop its law independently from that of the law of Normandy.  The Jersey commentator Poingdestre pointed out in the 17th Century that four hundred years earlier his ancestors could rely on the Grand Coutumier but that as time had passed its reliability in certain areas was questionable. He added that Jersey’s separation from Norman Law was assisted by the fact that Norman law began to move towards a more mainstream French or civil law which was modelled on the law prevailing in Paris at that time, whereas Jersey did not adopt the same approach.

 

This particular point, in relation to the development of Jersey law as a whole was emphasised by the Jersey Court of Appeal in Maynard -v- Public Services Committee of the States of Jersey[2] where the court warned:-

 

" ..care has to be taken when referring to French legal texts in connection with the law of Jersey.  After the Channel Islands were severed from the rest of the Norman territories in what is now France, Norman Customary law continued to develop in Jersey, Guernsey and Normandy in parallel but not with identical developments. In Normandy development was naturally affected by doctrines prevailing in other parts of France…"

 

Furthermore, as Jersey law developed as a whole, Jersey contract law did not develop in the same way as other areas of Jersey law. This may have been as a result of the fact that although the Coutumiers and Coutume Reformée contained sections devoted to certain aspects of contract law their contents were not sufficiently comprehensive to determine all contractual issues. 

 

3.                   Contract law in the Norman Coutume

 

In areas of contract law where the Norman Coutume was found lacking the general practice was to turn to the ius commune.  The ius commune has been described as a "complex result of the coming together …of local custom with feudal law, Roman law in modified and elaborated form, canon law and the law merchant".[3]

 

It has been suggested that despite contrary belief, Jersey law was not restricted to pre-1204 customary law and "Le Geyt and Poingdestre make it clear that Jersey law had, by the seventeenth century, quite pragmatically, moved on: in some respects Jersey had developed its own law, but in other respects it continued to follow developments in Normandy and this included looking into the ‘ius commune’ on matters of contract law ... It is thus with the sanction of local and Norman commentators on the Norman Coutume that Jersey law looks to mainstream civil law for its law of contract." [4]

 

In practice, when looking at mainstream civil law for the purposes of contract, it means looking to Pothier, the well-known jurist of the 19th century who wrote on the Coutume d’Orleans.

 

4.                   The further French influence

 

It is not immediately apparent precisely which French authorities should be referred to when discussing the continued French influence. In the Law Commissioners Report of 1861, the Commissioners reported as follows:-

 

"The principal authority as to the ancient customary laws of Normandy is "Le Grand Coustumier du Pays et Duché de Normandie", a work to which different dates have been assigned, but which was compiled probably late in the reign of Henry III.

 

The Coutume Reformée, a French compilation of a much later period (circa 1585), representing the then existing state of the law of continental Normandy, and the commentaries thereon of Basnage, as well as the works of other French writers, are constantly referred to by the Jersey lawyers.  The latter declare, it is true, that such works are not of authority on Jersey law; yet in point of fact they are frequently used as books of reference, and this has naturally, perhaps unavoidably, led to the gradual introduction of much foreign matter, so that what is now practically received as the common law of Jersey, may be described as consisting of the ancient Norman law, with subsequent accretions, some of which are mere development of the earlier customs, and others interpolations of French law.  It may be added, that the circumstance of the Jersey lawyers receiving their legal education chiefly in France, helps to impart a modern French complexion to the Jurisprudence of the Island."

 

The French jurist Pothier seems to be a consistent and favoured authority in the Jersey courts. It is not altogether clear why Pothier is so frequently preferred but his influence cannot be underestimated. A statistical analysis shows that Pothier has been cited in almost 50% of the contract cases which have become before the Royal Court and therefore with reference to Jersey case law, it appears safe to say that the works of Pothier on Obligations "provide the backbone to Jersey’s law of contract".[5]

 

The Code Civil

 

The introduction of the Code Civil in France has had its own influence on Jersey contract law. 

 

The French revolution marked the end of the customary law system in France.  On the 5th July, 1790, the Assemblée Nationale decided –

 

"… that a code of laws simple and clear and appropriate to the Constitution should be drawn up"

 

This resulted in the Code Civil of 21 March 1804, which drew heavily on pre-existing law, including the works of Pothier. Much of this pre-existing law had already taken root in Jersey.

 

The Code Civil itself has frequently been referred to and used as an authority in Jersey contract cases. It is however a foreign statute and should therefore be treated with care.

 

Perhaps the most notorious cases which referred to the Code Civil are Kwanza Hotels -v- Sogeo Co. Ltd.[6] and Selby -v- Romeril[7].  At first instance in Kwanza -v- Sogeo[8] the court stated as follows:-

 

"Although the "Code Civil" represents the law of modern France and not the "Ancienne Coutume" of Normandy from which the law of Jersey is drawn, I feel that, on a question such as the one I now have to decide, he [sic] and the other authorities quoted are a surer guide to the discovery of the Law of Jersey than is the Law of England, where, as here, the Laws relating to real property have diverged to a real extent."

 

The Royal Court in Selby -v- Romeril went one step further than Kwanza.  The court was considering the requirements for a valid contract under Jersey law and noted that Pothier referred to 3 requirements.  It went on to look at Article 1108 of the French Civil Code, which provides for an additional requirement, stating that:

 

"It is true that Pothier has often been treated by this court as the surest guide to the Jersey law of contract.  It is also, however, true that Pothier was writing two centuries ago and that our law cannot be regarded as set in the aspic of the 18th century. Pothier was one of those authors upon whom the draftsman of the French Code Civil relied and it is therefore helpful to look at the relevant article of that code…..In our Judgment it may now be asserted that by the law of Jersey, there are four requirements for the creation of a valid contract, namely, consent, capacity, objet and cause."

 

No doubt by extending the three requirements of a valid contract referred to by Pothier in this way, counsel will in future cases argue that further articles of the Code Civil should be relied upon.  Whether following the Code Civil’s lead will pose future problems remains to be seen.  It is clear that some members of the legal profession believe that the prospect of following France’s lead would leave Jersey unattractive as an offshore jurisdiction which has close links to England.  However, it has equally been suggested that if reference to the Code Civil "makes the Jersey law of contract clearer and more accessible, and if it allows the Royal Court to tap into the vast amount of French jurisprudence and doctrine, this can only be in the interests of justice." [9]

 

There is, of course, the practical problem that the vast majority of Jersey lawyers now receive their legal training in England and French law is therefore to them an alien concept.

 

            PART II - Recent Practice

 

5.                   The use of French authorities

 

The following summary of cases provides an illustration of the continued use of French authorities to decide modern day contract issues.  These cases can be contrasted with those cases referred to later in this paper that make reference to English law (albeit that English law was not always preferred).

 

Ewart -v- Satchwell[10]

This was an action to recover unpaid rent.  The court cited Pothier (French authority) and Le Gros (Jersey authority) in relation to the principle of "tacite reconduction" (by which a new lease is formed by reason of a presumed tacit agreement).  The Plaintiff also argued for the existence of a "tenancy on sufferance" (a concept under English law).  Neither Counsel were able to cite any Jersey authorities showing this to be a part of the law of Jersey and the court, accordingly, held that it was not. 

 

Scarfe -v- Walton[11]

This was an action to set aside a contract on the grounds of error induced by misrepresentation.  The court referred to Terrien (Norman customary law authority) and Poingdestre (Jersey authority) to the effect that civil law may be referred to where Norman law is silent.  The court therefore considered Domat (French authority) on the civil law on error.  The court also had regard to English law (see further comments on the use of English law below).

 

Groom et uxor -v- Stock et uxor[12]

The court held on the authority of Pothier (French authority) that an obligation to pay a bonus in a contract of employment, which was entirely discretionary, was unenforceable.

 

Wallis -v- Taylor[13]

With regard to a restraint of trade clause in a contract of employment, the court referred to the customary law maxim "la convention fait la loi des parties" and to Pothier (French authority) on the enforceability of contracts.  The court also referred to English authorities on restraint of trade (see further comments on the use of English law below).

 

Golder -v- Société des Magasins Concorde[14]

This was an action to set aside a disposition made by a debtor in fraud of his creditors.  The court referred to Pothier (French authority) on the enforceability of contracts and stated that: "The principles stated by Pothier we believe to be the principles of our law".  The court also referred to Pothier (French authority) and Dalloz (French authority) with regard to the "Pauline action" of Roman Law (i.e. an action to set aside dispositions in fraud of creditors).  The court stated that: "the principles of the civil law speak for us when the custom of the Duchy of Normandy is silent".

 

Arbaugh -v- Leyland[15]

With regard to the interpretation of the terms of a contract, the court referred to the rules of interpretation cited by Pothier (French authority).

 

H.M. Viscount -v- Treanor[16]

The Viscount brought this action to enforce a debt, transferred to him in bankruptcy, for monies due from the defendant in respect of the en désastre company having built a house for him. The defendant counter-claimed, relying on a penalty clause in the contract for late completion.  The court cited Pothier (French authority) on ‘obligation pénale’ (i.e. penalty clause) and the court stated that it believed "Pothier to be a surer guide to the Jersey law of contract than are the English authorities".

 

Wood -v- Wholesale Electrics (Jersey) Ltd.[17]

This was an action for breach of contract by reason of defective goods.  Both counsel referred to English authorities on the question of warranty, but the court stated that "We think that on this issue Pothier is to be preferred in this jurisdiction."  The court referred to Pothier on 'vices redhibitoires' and the conditions necessary to found an 'action redhibitoire' (i.e. an action to set aside the contract on the ground of defects).  The court held that there is no reason why this type of action should not apply to the sale of manufactured goods, and cited Dalloz (French authority) in support of this view.  The court felt that this was simply an extension of the principle into modern society and accordingly found for the plaintiff on liability.

 

Channel Hotels and Properties Ltd. -v- Rice[18]

The plaintiff sued for damages, in relation to an agreement to purchase the share capital in the controlling company of a hotel, on the basis of misrepresentation, express or implied warranty, and negligence.  The court declined to apply the English doctrine of negligent misrepresentation, and instead applied the Jersey law on misrepresentation as set out in McIlroy -v- Hustler [19].  The court also referred to Domat (French authority) on contracts of sale and "vices redhibitoires".

 

La Motte Garages Ltd. -v- Morgan[20]

This was an action to recover the balance due in respect of the purchase of a car.  The court stated that "mistake has long been accepted as negativing agreement" and referred to Pothier (French authority) on "erreur".  In this regard the court observed that: "It is perhaps somewhat disappointing that neither party chose to mine the rich lodes of our ancient French law but to rely on English law.  It may well be that their conclusions would have been the same if they had".  The court similarly stated in relation to the equitable assignment of a debt that: "Had we had an opportunity to examine Pothier, Domat and the doctrines of novation we feel that our conclusion [sic] would have led us by more familiar paths to this conclusion". 

 

Fort Regent Development Committee -v- Regency Suite[21]

This was an application for a contract lease to be cancelled for breaches of covenant.  The court stated that: "We do not think ... that in the circumstances it is necessary to examine English case law in any depth.  We are quite satisfied that we can draw sufficient from the French authorities which have been stated time and time again in this court to be preferred".  The court referred to Dalloz (French authority) and to Nicholas on the French Law of Contract (1982) with regard to the remedy of "résolution" under French law (i.e. the setting aside of a contract for non-performance).

 

Le Cornu -v- Heat Pump Bureau[22]

This was an application for a contract lease to be cancelled for breaches of covenant.  The court criticised counsel for relying almost exclusively on English authorities rather than Jersey authority. The court itself cited Pothier (French authority) on the obligations of a tenant, Dalloz (French authority) on the cancellation of leases, and Halsbury (English authority) on repair.

 

Dempster -v- City Garage Ltd.[23]

This case concerned a contract for the sale of a car.  The question was whether the car was roadworthy when sold and whether there was a vice caché (a hidden defect).  Norman French authorities were referred to in preference to English authorities.  The court said: "It is enough, I think, to refer to our own Court of Appeal and, although I am not saying one ignores the English authorities, where we have our own authorities and our own Norman French authorities, those are to be preferred in cases of this nature, in contract."  The court referred to Kwanza Hotels v Sogeo (1983), and Pothier on "vice cachés".

 

Maynard -v- Public Services[24]

The court considered the customary law maxim of "a qui est empeché d'agir la préscription ne court point" (i.e. prescription of an action does not run against a person who is impeded from acting) and referred to Terrien (Norman customary law authority) and Pothier (French authority) in this regard.

 

6.                   The influence of the English law of contract

 

During the nineteenth century there are signs that English law was regarded as of relevance, if not as authority, with regard to contract law itself.  Indeed, it is a popular misconception on the part of the layman that the law of Jersey does in fact derive from English law.

 

During that period it was however recognised that there was a need to protect Jersey’s Norman origins.  For example, the Privy Council, which until the latter part of the twentieth century was the only court of appeal from the Royal Court, was by and large careful not to import English law gratuitously into the Jersey system:-

 

"If their Lordships were to reverse these decisions without being able clearly to show that they were contrary to the Norman law, we might not only refuse the Respondent a right to which he is by the law of his country entitled, but might raise a suspicion that we were desirous of changing the laws of Jersey, by forming our decisions, not according to those laws, but according to our English notions of justice …".[25]

 

Whatever the reason, it cannot be ignored that in many of Jersey’s contract cases, counsel have quoted English authority.  As Stephanie Nicolle QC wrote:-

 

"at times..[it] was difficult to escape the feeling that this owed as much to the inability or disinclination of counsel to cite proper authority to the courts as to any considered conviction that English law was the appropriate authority to cite, as in College -v- Little Grove Hotel Ltd[26] [master and servant] and Denny -v- Hodge[27] [breach of contract], where the judgments record that the parties agreed that the principles of English law applied but not why.  In other cases English law was simply cited without comment, as in United Dominions Corporation -v- Pinglaux[28] [hire purchase]".[29]

 

It is interesting to note that prior to the time that English influence became particularly marked in Jersey law, local lawyers trained in France.  Today, the majority of Jersey lawyers study law in England and obtain a professional qualification in that jurisdiction prior to training locally.  The influence of English law today is therefore explicable on the same basis as the influence of French law referred to by the Commissioners of 1861 (supra).

 

There are few areas of contract law where it can be said with confidence that English law will definitely be followed. It appears that English law will be followed in cases which are regarded as of a "specialist nature", for example actions arising out of building disputes where the Royal Institute of British Architects contract has been used, as in Jersey Steel Co. Ltd. -v- Holdyne Ltd.[30].  This only serves as another example of the confusion the Jersey courts have created with regard to their random acceptance of English principles.

 

The use of English authorities

 

Scarfe -v- Walton[31]

As has been observed above, in this action to set aside a contract on the grounds of error induced by misrepresentation, the court referred to Terrien (Norman customary law authority) and Poingdestre (Jersey authority) to the effect that civil law may be referred to where Norman law is silent.  The court added that: "It has been the practice of the court for many years, in extension of the principles enunciated by Terrien and Poingdestre, to have regard also to the law of England where no clear precedent is to be drawn from the law of Jersey ... and, in arriving at our judgment, we have had regard to both the civil law and to the law of England."  In this case, the court justified its reliance on English law on the grounds that the principles expounded by Domat (French authority) had much in common with the English law of misrepresentation and mistake although it is difficult to see how the court came to that conclusion.

 

Wallis -v- Taylor[32]

As stated above, the court referred to English law with regard to the validity of a restraint of trade clause in a contract of employment.  The court simply stated that "by reason o