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CONTRACT: Never trust a lawyer

29 July 2011  

Sam Coulthard and Bryony Pawsey investigate whether lawyers’ opinions on legal capacity continue to have any value following a recent Court of Appeal decision

Prudent contracting parties often seek advice from lawyers or foreign lawyers about the capacity of the other side to enter into an agreement. The Court of Appeal’s finding in Haugesund Kommune v Depfa ACS Bank [2010] suggests that, if the advice is negligent, there may be no substantial right to damages from the lawyers. Only if the lawyers advised the client to enter into the transaction, or specifically agreed to take the risk if the transaction was invalid, will they have to compensate their client.

Additional Info

  • Case(s) Referenced:

    Haugesund Kommune v Depfa ACS Bank [2010] EWCA Civ 579

    South Australia Asset Management Corporation v York Montague Ltd [1996] UKHL 10

    The Liverpool Steamship Enterprises of Panama Inc, Liverpool (Owners) v Ousel (Owners) & ors [1960] 3 WLR 597