Tuesday, 16 November 2010

Oceanbulk Shipping v TMT Asia

A big boat, yesterday.
This case, decided recently in the Supreme Court, makes useful reading for Contract Law students.

The court can consider the objective facts of the parties pre-contractual negotiations when trying to work out the true intentions of the parties - but NOT those negotiations entered into on a "without prejudice" basis.

Until now, that is. It appears that "without prejudice" negotiations may now be admissible if it helps the judge work out the intentions of the parties in order to rule on exactly how the contract should be constructed.

It may help A2 students to think of such negotiations as representations, but ones that carry a rider effectively saying "don't rely on this". This allows the parties to speak freely when negotiating.

So is it a good idea to create an exception to the without prejudice rule? Is this fair, or not? What's the impact on certainty? Have a think! 

Oceanbulk is also a case where the Court took into account the (persuasive) decision of a lower Court - namely the Court of Appeal in Unilever v Proctor & Gamble [2000] 1 WLR 2436.

If this case seems dry to you, you might want to consider the damages at stake - between three and four hundred million dollars. Yikes!

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