The case of Mr Alan Bates v the Post Office electrified the United Kingdom in the opening weeks of 2024. It has belatedly brought into the full public consciousness the miscarriage of justice where hundreds of sub-postmasters were wrongly convicted of fraud, as a result of computer software errors. The issues which the case raises are wide ranging, profound and stretch beyond the law. Paul Patterson, who leads Fujitsu Europe, the company behind the faulty software, has spoken of their moral obligation to contribute to the compensation of those who were wrongly convicted.
One striking aspect of the case is that it took the broadcast of a television drama to bring attention to the case. It is not as if what happened was a particular surprise. The problems had been reported in certain avenues of the media such as the magazine Private Eye, and Computer Weekly (as well as the more mainstream media), for a number of years. Indeed, the case of Bates v Post Office in 2019, which marked Alan Bates’s first significant breakthrough in the cause for justice, was well known in academic circles (even internationally) and in legal practice. It has been cited in numerous judgments and commentaries.
It should give academics pause for thought in terms of what more could have been done to bring more public awareness to this outrage. For my own part, having written about Bates from an academic perspective, I assumed that if I was familiar with the case then so also would many others, and that all that could be done was being done in terms of remedying the wrongs. In that, I was mistaken.
Fresh perspectives and new contextualisation
For the present, the extra emphasis on the wider case has caused me to reflect once again on the legal academic aspects of Bates. David Allen Green, a legal commentator for the Financial Times and a law blogger recently said of this case:
“And then there was [a]… game-changing stroke of luck. The case was allocated to a High Court judge called Sir Peter Fraser. This is not a sweary blog, and so forgive the following characterisation. Mr Justice Fraser was not going to take any of the Post Office’s s**t.” [expletive deleted]
This simple characterisation of the approach of Fraser J goes to the core of the matter and helps put the contractual theory which underpins the decision in its context.
In short, Bates assists in our understanding of the concept which the case has helped bring to the forefront of academic contract law: the relational contract. This concept is really useful when it comes to exploring and explaining not just what our legal duties should be under a contract but how they interact with our wider duties to ourselves and to each other.
Conceptual context
The idea of the relational contract has been around in academic circles since it was put forward by Iain McNeill, a Scottish law professor, working in the US in the 1960s. The core of the idea is that the basic understanding of a contract as being a neutral, standalone transaction between independent parties does not reflect the reality. That reality sees the parties to the contract as being in a relationship and that the nature of this relationship impacts on how the contract is formed and performed. The extent of that impact depends on the type of contract and the nature of the relationship. MacNeill coined the term “relational contract” originally to capture the idea of a longstanding contract which envisaged a degree of change to the scope of the contract over time. This idea later become refined so as to see these sort of contracts as being on a spectrum and all contracts as having a degree of “relationality”.
It was not until the decision of Yam Seng v International Trading in 2013 that the academic idea really gained a foothold in common law doctrine. In that case, Leggatt J (as he then was – he is now a UK Supreme Court justice) held that where there was a relational contract, then the parties had implied duties of good faith to each other. The tenor of the judgment on this point is striking. The context of David Allen Green’s remark (above) comes across clearly: Fraser J finds that there were relational contracts in place between the Post Office and the sub-postmasters. This meant:
“that both the parties must refrain from conduct which in the relevant context would be regarded as commercially unacceptable by reasonable and honest people. Transparency, co-operation, and trust and confidence are, in my judgment, implicit within the implied obligation of good faith.
Moreover, the clarity of this view comes across not simply because Fraser J states it to be the case but because he goes through the authority and arguments at significant length to explain why that is the case. This demonstrates that Fraser J considers the point to be of significant importance and that he does not want his judgment to be weakened by not addressing it in full (he even set the parties further reading on the subject by reference to an important academic intervention by Professor Hugh Collins).
His doing so marks a significant development of the law of relational contracts, with Bates becoming the first judgment to fully develop the idea of the relational contract in case law.
That said, there has been little subsequent development and deeper entrenchment of the idea by the courts, but neither has the concept been overturned or rejected.
This status reflects on the one hand, judicial reticence to develop what would be a new concept further but on the other hand it demonstrates a prevailing desire that contracts should contain a requirement for parties to do something “more” or something “different” from the underlying self-interested tradition of contract law. In my research and work with others, we have looked at the construction industry and its drive to change to a more collaborative and cooperative culture which could be reflected in the interpretation of construction contracts. This aspiration can also be observed in commercial contracts more generally and in response to the COVID-19 pandemic.
Conclusion
In the context of all that has been discussed and publicised so powerfully since the broadcast of Mr Bates v the Post Office, it becomes easier to see what motivated Fraser J in his judgment. Parties in relational contracts need to do more than avoid acting in bad faith; they also need to avoid acting in a completely self-interested way. There is a growing thread within contract law academia about the need for parties to be more “other regarding”, as Peter Gerhart has put it in his book Contract Law and Social Value. The positive obligation of good faith in Bates which Fraser J sets out has the potential to help achieve this. It requires the parties to be more positively cooperative, to be transparent and to be honest. These values all reflect on the relationship between the parties rather than the approach taken by each of those parties on their own behalf.
The problem for blackletter lawyers will always arise when it comes to teasing out the boundaries of that good faith obligation into legal rules of adequate clarity and certainty. However, research which Professor Severine Saintier, Dr Jessica Viven Wilksch and I have undertaken argues that this understates what is already embedded in the case law. When this is considered, there is a consistent focus on doing what the parties have agreed to do. In doing so, parties should not just look at their own purpose but also look at the purpose of the relationship.
If parties do that and interpret their obligations accordingly, it means that they are acting in a positive and constructive way towards the shared aim. That does not understate the contract but instead centres the contract. Moreover, it does not require parties to take significant account of the other parties’ own interests (which would be a correction too far in the other direction). The project and the purpose of it can be interpreted from the parties’ agreement, so it is not a case of lawyers or judges having to create fictions or impose their own view on what the parties’ shared purpose is.
If the Post Office had looked more constructively at the relationships which they had with the sub-postmasters, rather than at its own self-interest, then this might have avoided some of the current issues which are being faced, and the misery which was imposed on the postmasters. Fraser J’s endorsement of the idea of the relational contract can be easily understood in that context.
When it is contractually appropriate, the project focused approach makes sense, fits within the strands of the existing law and would generate positive benefits. There are lots of lessons to take away from the Bates case. This should be the lesson for contract law, and for contract lawyers.
