13th January 2014

Who are you dealing with?

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13th January 2014

Who are you dealing with?


When contracting with group companies, or companies with trading names, do you always check the company’s name? It sounds obvious but inserting the incorrect name into a contract could leave you without redress if things go wrong.

The recent case of Liberty Mercian v Cuddy provides a cautionary tale.

The facts

  • Liberty signed a letter of intent with “Cuddy Group” to undertake some construction work. “Cuddy Group” was a trading name of Cuddy Demolition (CDL).
  • Work was commenced by CDL.
  • Liberty then obtained a warranty from Cuddy Engineering (CEL), a dormant company with the same shareholders and directors as CDL.
  • Some time after work began, the agreement was signed between Liberty and Group. Realising that Group was merely a trading name, Liberty’s solicitors asked for the contract to be amended naming CEL as the contracting party. The requested change was made.

Problems occurred and Liberty attempted to terminate the contract and commence proceedings. As a dormant company, CEL was worthless. Liberty claimed that the naming of CEL in the contract had been a mistake and that their claim should be against CDL.

The decision

On the facts, the court was unwilling to find that the naming of CEL had been a mistake and Liberty did not have a contractual claim against CDL.

Guidance

It is important to understand the legal identity of any party you are contracting with. Groups often have companies with very similar names and even swap those names around from time to time. If in doubt, raise the question during negotiations and carry out your own checks at Companies House. If you remain unsure, please contact us for assistance.