Legal commentary

摘要

Purpose – The purpose of this paper is to report and comment on a High Court ruling where the Court had to decide certain preliminary issues of law arising out of a mis-selling claim brought against Royal Bank of Scotland Plc (hereafter “the Bank”) by Titan Steel Wheels Ltd (hereafter “Titan”) following losses incurred on two Euro/Sterling derivative products provided to Titan by the bank in June and September 2007. Design/methodology/approach – The paper outlines the facts surrounding the case and comments on the decision. Findings – The Judge's decision is given on three issues. The first issue – was Titan a “private person”? The second issue – did the Bank act in an advisory role to Titan on the two transactions in issue and hence owe a common law duty of care? The third issue – whether the Bank's terms of business were subject to the Unfair Contract Terms Act 1977? Originality/value – This case offers interesting insights into the changing nature of the relationship between major corporate users of the derivatives markets with the products traded and business transacted in those markets. It also represents a classic attempt to use the legal system to reallocate losses resulting from the ultimate uncertainty that besets every market place and simply reasserts that ex ante contractual loss allocation agreed between commercial parties will not be lightly set aside.