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.

When the activities of a public law body (or individual) are relevant to a private law dispute in civil proceedings, public law may in a similar way provide answers which are relevant to the resolution of the private law issue. But after taking into account the applicable public law, the civil proceedings have to be decided as a matter of private law. The issue does not become an administrative law issue; administrative law remedies are irrelevant.

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.

The above analysis of the CRTA is further supported by the way in which the relevant concepts were expressed through the process of amendment. The phrase ‘maximum rates of delivery of Non-Capacity Gas notified by the CATS Operator pursuant to clause 4.6(a)(vii)’ was, in the unamended CRTA, adopted as the definition of ‘Booked Capacities’. The contractual purpose of the phrase ‘Booked Capacities’ was in determining matters of allocation, under Schedule XIII.

Cornwall relies on the reasoning of Neill LJ in Credit Suisse v Allerdale Borough Council [1997] QB 306. I agree with the different analysis of Hobhouse LJ in Credit Suisse, particularly his comments at pages 355, 356 and 357 as follows:

Identification of norms as having that character indicates the strong international public policy which exists to ensure that they are respected and given effect. Domestic public policy recognises and gives similar effect to that strong public policy. There is no norm more fundamental to the system of international law and the principle of the rule of law than that set out in Article 2(4) of the UN Charter.