- Rectification, common mistake and execution of deeds (FSHC Group Holdings Ltd v Glas Trust Corporation Ltd)
- What are the practical implications of this case?
- What was the background?
- What did the court decide?
- Case details
Commercial analysis: The Court of Appeal has clarified the correct test to be applied in deciding whether the written terms of a contract may be rectified because of a common mistake, and in particular whether the relevant test for the intention of the parties should be purely ‘objective’, or whether it should be based on the parties' subjective intentions. The dispute arose out of the execution of two deeds by which FSHC Group Holdings Ltd (FSHC) was to provide security to a security agent. However, the deeds also imposed onerous and additional obligations on FSHC. FSHC sought to rectify the deeds on the basis of common mistake. As a question of law, which test should be applied to determine the intention of the parties when executing the documents? The Court of Appeal re-affirmed that rectification for common mistake should be based on the parties' actual intentions at the time they entered into the relevant contract. Written by Charlotte Clayson, senior associate, at Trowers & Hamlins LLP.
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