Court of Appeal breathes new life into ‘private dictionary’ principle

16/07/19

The Court of Appeal today handed down judgment in NHS Commissioning Board v Dr Vasant and others, dismissing the NHS’s appeal and accepting the Respondent dentists’ case that the written variation of their General Dental Services Contract with the NHS to include Intermediate Minor Oral Surgery (IMOS) services, was sufficiently certain to give rise to a valid contract.  The practical effect is that the contract to provide the IMOS services is of indefinite duration and cannot be terminated by the NHS without cause.  The NHS had argued that the variation which consisted solely of the addition of the words “Providing an Advanced Mandatory Service in the form an of Intermediate Minor Oral Surgery (IMOS) service” was too uncertain to give rise to a valid contract because it failed to specify the nature of the service and any of the arrangements for its provision, including price.  Recourse could not be had – so the NHS argued – to extrinsic material either to incorporate or imply terms into the contract because this was precluded by a combination of a No Oral Modification Clause and an Entire Agreement clause.

Lewison LJ (with whom the other members of the Court agreed) held that the effect of the No Oral Modification Clause in conjunction with the Entire Agreement Clause was indeed to preclude further terms being incorporated by a previous course of dealing into the contract.  However, Lewison LJ accepted the Respondents’ argument that the phrase “IMOS service” was well-known to the parties because the dentists had provided the service pursuant to an earlier contract and that, according to the private dictionary principle, this extrinsic evidence was admissible to give meaning to the phrase.  This applied in particular to the description of what constituted an IMOS service which was contained in the appendix to the parties’ earlier contract as well the statement in the same document that a fee would be negotiated between the parties.  This principle was not affected either by the No Oral Modification Clause or the Entire Agreement Clause.  Nor did the provision stating that fees would be negotiated render the description void for uncertainty as the courts will readily imply a term that a fair price will be paid for services into a continuing contract for services.

The judgment is here.