GA Estates Ltd v Caviapen Trustees Ltd
| Jurisdiction | Scotland |
| Judgment Date | 30 August 1991 |
| Date | 30 August 1991 |
| Court | Court of Session (Outer House) |
Outer House of the Court of Session
Before Lord Coulsfield
Scots contract law - warranty of fitness of land - contra proferentem not applicable
Where a contract for the development of land which had been freely negotiated between commercial parties contained a warranty of the fitness of the land for development, the principle of construction contra proferentem did not apply to the warranty.
Lord Coulsfield so held, sitting in the Outer House of the Court of Session, allowing a proof before answer in a breach of contract counterclaim by Caviapen Trustees Ltd in an action of payment brought against them by GA Estates Ltd.
Mr Nigel Emslie, QC and Mr James Campbell for the pursuers; Mr Hugh Campbell, QC and the Clerk of the Faculty of Advocates (Mr Raymond Doherty) for the defenders; Mr Neil Brailsford for the third party.
LORD COULSFIELD said that the defenders' counterclaim was founded on a warranty in a contract for the development of an area of ground which provided that the pursuers warranted that the land was fit for the purpose of constructing the planned development.
The pursuers submitted that the warranty had been conceived in favour of the defenders and founded upon by them and should therefore be construed, if it was ambiguous, contra proferentem, that is, in the manner least favourable to them: Gloag on Contract (2nd edition, pp 400-401); McBryde on Contract, para 19-2.
The principle of construction contra proferentem applied not only to standard form contracts but equally to onerous clauses affecting liability even where there was no standard form, including, for example, exemption clauses and indemnities. An onerous warranty was in a similar position.
The defenders submitted that it was a negotiated contract and there was no reason to regard the clause as conceived in favour of one party rather than the other.
Gloag stated (at p401) that in order to admit of construction contra proferentem, there had to be a proferens and that, in ordinary contracts where parties were contracting on an equal footing, it might fairly be assumed that the ultimate terms were arrived at by mutual adjustment, and did not represent the language of one party more than the other; Birrell v Dryer ((1884) 11 R (HL) 41).
On the other hand, McBryde stated that the correct rule was that an ambiguous expression would be construed against the party who relied on it, irrespective of which party or parties...
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