Contractual Capacity in UK Law

I do not think that it is open to this court to introduce such a classification. Where a public authority acts outside its jurisdiction in any of the ways indicated by Lord Reid in Anisminic the decision is void. In the case of a decision to enter into a contract of guarantee the consequences in private law are those which flow where one of the parties to a contract lacks capacity.

Before using the phrase "ultra vires" or the words "void" and "nullity", it is necessary to pause and consider the breadth of the meaning which one is giving them. It is not correct to take terminology from administrative law and apply it without the necessary adjustment and refinement of meaning to private law. Where private law rights are concerned, as in the present case, the terminology must be used in the sense which is appropriate to private law.

Private law issues must be decided in accordance with the rules of private law. The broader and less rigorous rules of administrative law should not without adjustment be applied to the resolution of private law disputes in civil proceedings. Public law, that is to say, the law governing public law entities and their activities, is a primary source of the principles applied in administrative law proceedings.

It remains necessary to ask what amounts to a defence to a private law cause of action. Want of capacity is a defence to a contractual claim; breach of duty, fiduciary or otherwise, may be a defence depending upon the circumstances. To say that administrative law categorises all grounds for judicial review as 'ultra vires' does not assist. In civil proceedings the question is whether, after taking into account the relevant public law, there is on the facts a private law defence.

I have dealt with this point at some length because of its obvious importance and out of deference to Mr Mitchell's interesting argument. I have been particularly concerned to examine carefully a point on which Mr Milligan and Mr Railton made common cause. There is no doubt that Norwegian law looks at these matters in a way different from the English approach.

I reject the submissions of Scotts that the contract simply obligated them to deliver a plant with the inherent capacity reliably to meet specification. If the contract were wholly performed as at delivery of the plant they might be unfairly in breach; if it were performed following adjustment and, if necessary, modification in the course of a reasonable period following delivery then the plant could then fairly be demonstrated to be in accord with the contract.

The clauses in issue do not purport to limit liability for pre-contract misrepresentation. They simply say that, when the trustees enter into the Lease or the Agreement for a Lease, they contract as trustees and not otherwise. I do not understand the legal mechanism by which it is alleged that this covers pre-contract representations. I do not think that this is the true construction of the relevant clauses.