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.)...
Importance of the expression ‘subject to contract’
Oct 2013 Whether you are negotiating a commercial agreement or the settlement of a commercial dispute, if you don’t want your offer or acceptance to be legally binding unless and until various other issues are addressed and agreed, you should make it very clear in writing. But you do not need to go into great detail setting out the kinds of things that still need to be agreed. All you need to do is use the magic expression ‘subject to contract’...
Guarantees: are they enforceable if your co-guarantors don’t all sign?
Oct 2013 When banks ask for guarantees, their documents tend to be pretty watertight so they are hard to escape from. But did the bank here manage to slip up?...
Seller’s members voluntary liquidation can bugger up buyer’s chance of recovery under indemnity: recent case
Sept 2013 A buyer will always be concerned about the risks of a seller going bust, because warranties and indemnities are only worth what the seller is eventually able to pay. But in this recent case the buyer was put at risk of not recovering under a tax indemnity even though the seller was meant to be solvent...
Do directors have a duty to avoid paying tax?
Sept 2013 What with all the recent press and public criticism of some well-known companies’ tax avoidance arrangements, company directors might be getting confused as to where their duties lie. Are they allowed to try to find legal means to minimise their tax bill? Do they have to?! Do they owe duties to their shareholders to try to distribute fewer profits by arranging their company affairs to pay as much tax as HMRC would clearly like them to pay?...
Share sales: what’s the difference between a warranty and a representation?
May 2013 Most share sale agreements contain a raft of warranties (statements relating to the company and the business that the sellers promise are correct) and then say that if a warranty proves to be incorrect the buyer can only make a claim for breach of contract and cannot make a claim for the tort of misrepresentation. What’s the difference?...
Knowledge and warranties – and how warranty negotiations can pan out
May 2013 A share sale agreement had a clause which said that the sellers wouldn’t be liable under the warranties to the extent that the buyer, having made due enquiries of certain members of the MBO team, was actually aware at completion of facts which would give it a claim for breach of warranty. Some of the MBO team members who became directors of the buyer did know of facts which would give the buyer a claim. So, the question was, did the knowledge of those MBO team members constitute ‘actual knowledge’ of the buyer, so that the buyer couldn’t bring a claim?...
One of several sellers giving warranties? Be careful!
May 2013 This case has a cautionary message for minority shareholders who sign up to agreements by all shareholders to sell their company...