The law of Contractual Promise revisited by the Inner House
28 February 2013
The First Division has issued its decision in the case of Regus (Maxim) Ltd v Bank of Scotland  CSIH 12. In that case, the pursuers sought damages from the defending bank, based on what was alleged to be a promise contained in what the Bank described as a "letter of comfort". The letter stated inter alia:
It may assist the proposed tenant to have confirmation from us that, on behalf of the landlord … we hold the sum of £913,172 to meet the landlord’s commitment to fit-out costs. These funds will be released in accordance with the drawdown procedure agreed between the parties, whereby the proposed tenant’s contractors will issue monthly certificates.
The pursuers alleged that the letter either amounted to a binding promise, or alternatively a negligent misrepresentation. Lord Menzies, in the commercial court, had dismissed the claim as irrelevant. The First Division adhered, ruling that the letter amounted to no more than "clear and precise notice that an acknowledgment that the Bank holds the funds to meet the capital contribution, subject to the qualifications that it sets out, is the only assurance of payment that the pursuer is to get". As it was not suggested that the Bank had misrepresented the present holding of funds, or its future intention to pay over those funds, the claim in misrepresentation also failed.
The case involves the First Division reviewing and explaining the issue of binding promise in Scots law, and has relevance for the construction of "letters of comfort" or other similar documents issued by banks and others.
All counsel involved were from Axiom, with the pursuers and reclaimers represented by Jonathan Lake QC, and the defenders and respondents represented by Roddy Dunlop QC and Paul O'Brien, Advocate.
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