Trade names, shortened names, nick names – in our world of quick fire communications and informality, often the full and correct legal name of a company is hard to find.
Although regulations under the Companies Act 2006 require that a company include its registered name on its business letters, website and other communications, how many companies either fail to include their legal title on their website or it’s so hard to find you need to be IT expert to locate it?!
You may think that a correct legal name is not key in everyday business, and so often contracts are made business to business which do not clarify this key legal point. However, the case of Liberty Mercian Limited v Cuddy Civil Engineering Limited and Cuddy Demotion and Dismantling Limited should be a lesson for all in business that it can be crucial and should always be verified.
Liberty entered into a contract for the construction of a supermarket. The question arose of whether they had entered into that contract with Cuddy Demolition and Dismantling Limited, (“Cuddy Demolition”), or with Cuddy Civil Engineering Limited, (“Cuddy Engineering”). Both were part of the Cuddy group of companies but unbeknown to Liberty, Cuddy Engineering was a dormant company.
The pre-contract communications were with “Cuddy group”. This was in fact the trading name of Cuddy Demolition. When a contract was drawn up, it referred to the Cuddy Group. However during the negotiations the name on the contract was changed to Cuddy Engineering as that was erroneously believed to be the company behind the “Cuddy group”. When Liberty subsequently sought to claim damages for breach of contract against Cuddy Engineering, it discovered it had no value. It sought a declaration that the party it had contracted with was Cuddy Demolition.
The Court decided that the dormant Cuddy Engineering rather than Cuddy Demolition was the relevant contracting party. This was not a case where on an objective reading of the contract having regard to the relevant background or context it would be said that there was a mistake since. It could not plainly be seen that the parties were intending to refer in the written contract to Cuddy Demotion rather than Cuddy Engineering so the case could not come within the test of misnomer. Liberty therefore found itself with no valuable remedy in its damages claim.
This case reinforces how important it is to ensure that the correct legal party you intend to contract with is identified in the contract and indeed that commercially, it is verified as being the appropriate one in the circumstances and its commercial standing is as perceived.