to start. Eventually a contract is made but by then things have moved on. A lot of work may have been done and variations may have been agreed. The contract does not reflect the current state of the works. It reads as if no work has been carried out and everything lies in the future. How is such a contract to be construed? The usual answer is that it has retrospective as well as prospective effect.
This topic was first addressed in Trollope and Colls vs Atomic Power in 1963. In that case the contractors had started work and by the time the contract was made, there had been significant variations to the works. However, the contract document included the original specification and price. As the judge put it, the contract when executed presupposed a state
of affairs that had long since ceased to be realistic
or practicable. The judge found that the parties
had acted in the course of negotiations on the understanding and anticipation that, if and whenever a contract was made, it would govern what was being done meanwhile. To make the contract work it was necessary to imply a term of retrospectiveness to reflect the common intention of the parties.
This authority has been referred to many times. The same judge returned to the topic of retrospectiveness in Westminster vs Clifford Culpin. An architect and an employer had executed a contract under seal
Whether or not a contract is capable of having retrospective effect depends on the intentions of the parties involved
after the work had been finished. The judge said that it was the plain intention of the parties that the contract should have retrospective effect and govern all the legal relationships between them from the date of the appointment. Otherwise the contract would have been a nonsense. Interestingly the judge did not refer to the need to imply a term.
A more recent case on this topic is Tameside Metropolitan Borough Council vs Barlow Securities – which went to the Court of Appeal, but not on the issue of retrospection. The judge carefully identified the factors that persuaded him that the contract must have been intended to be retrospective as
well as prospective. By the time the contract was executed most of the contract work had been carried out. The description of the work under the contract covered all work, not simply that which remained to be done. The contract wording assumed that no work had been carried out, with the obligations all being expressed in the future tense. The judge said that
this all pointed to an intention to give the contract retrospective effect. Given that most of the work had already been done, the contract would not have made sense unless it was retrospective. Read literally, the contractor was promising to do work in the future that had already been completed.
The Court of Appeal nodded its approval to Trollope and Colls and Clifford Culpin in Northern Shell vs John Laing Construction. This case was concerned with a contractor’s deed of warranty that was to come into effect on the day after practical completion. If the limitation period started to run from the date of the execution of the deed (which was some months after practical completion), the claim against the contractor was statute-barred. If it had retrospective effect to practical completion, it was not. The court emphasised that whether or not a contract is capable of having retrospective effect depends on the intentions of
the parties involved, either express or implied. It had been argued that, in the absence of express words, a contract could not have retrospective effect unless there was a pre-existing relationship between the parties. However, counsel conceded that this was not necessary, and the court agreed.
Tim Elliott QC is a barrister at Keating Chambers.