The penalty for seeking a penalty
Dec 2014 You have to be very careful if you want to say in a contract that the other party must pay a pre-determined sum if it doesn’t do what it agreed to. The law says that if this sum is a genuine estimate in advance of the loss you might suffer it will be called ‘liquidated damages’, whereas if it is designed to scare the other party from committing a breach it will be called a ‘penalty’. And under English law a clause which seeks to impose a penalty is unenforceable. The general rule has always been that a court will decide things based on the situation at the time you entered into the contract...
Misrepresentation – something to grouse about
Aug 2014 In this case a Mr Erskine was looking to hire a grouse moor for commercial shooting. The hirer (‘VR’) overstated the number of grouse (or grouses; but not grice). Mr Erskine later set up a separate entity, Cramaso LLP, which entered into the contract. The grouse shortage was discovered and Cramaso sued VR for misrepresentation. Did it succeed, bearing in mind that it didn’t even exist when the representation was made?...
Anti-embarrassment clauses – what is the meaning of the purpose?
Aug 2014 No, really, what is the meaning of ‘the purpose’? This isn’t a deep philosophical question. It is an important question if it appears in an elephant clause in a non-embarrassment agreement, as in this recent case. Does ‘the purpose’ mean the sole purpose? The most important purpose? Any one of the purposes? Or something else?...
Late payment – interested in recovering interest and recovery costs?
Jan 2014 I thought it would be topical (seeing as I have quite a few overdue bills owing to me at the moment) to pen a quick article about the late payment legislation. In particular, did you know that since March 2013 you can recover ‘reasonable costs’ in recovering the debt?..
A guarantee precedent
Jan 2014 here’s a precedent you could use for a clause to slot into an agreement between you and a customer. Get legal advice on it before you use it. And of course make sure that it fits the agreement (eg getting the parties’ details right; you, for example, are ‘us’)....
What comfort is a comfort letter?
Jan 2014 If you are doing business with any company you want to know they’ll be good for their obligations and won’t go bust on you. If you’re dealing with a subsidiary of a large successful company you might be prepared to overlook the subsidiary’s weak-looking financial position (assuming you’ve checked it out in the first place) provided that you are given what is known as a ‘comfort letter’ from the parent company. But are comfort letters worth the paper they’re written on? Shouldn’t you be asking for a proper guarantee instead? Check out this case from last year...
Patent Box: things to think about
Nov 2013 Whilst I promised not to write too much about tax – it’s really not my specialist area – there are one or two things worth thinking about in relation to how you can go about business to take advantage of the new Patent Box regime...
Restrictive covenants – just another case on not asking for too much from your employees
Nov 2013 As an employer you don’t like training an employee up, giving him access to customers and confidential information, letting him develop relationships with other staff, and paying him a nice salary, only to see him leave you to set up a competing business, take some of your staff with him, solicit your customers using your customer lists and use your confidential information to help him compete with you. So you put restrictive covenants in his employment contract saying he can’t do any of this for a few years after he leaves. Seems fair enough? A recent case helps to remind us that it is not as simple as this...
Duties of care to joint venture partners
Nov 2013 This is the first case in which the Court of Appeal has ruled on the potential duties owed by a director of a joint venture company directly to one of the contractual joint venture parties (one which is not a shareholder in the joint venture company)...
The importance of having well-worded exclusions and limitations of liability in your contracts: recent case
Oct 2013 This case is a good reminder of the usefulness and effectiveness of having well-worded exclusions and limitations of liability in your contracts. It also flags the point that it is perfectly possible and acceptable in contracts for supply of goods or services to set out time limitations on bringing claims under contracts. (Such time limitations are very common in the context of business sales, but are seen less often in other contracts.)...