Rectification – last resort (or, the ruthless world of property development…)
July 2018 A recent case is a rare example of where the contract was quite clearly worded, so the courts couldn’t use their powers of interpretation to get a fair result, but managed to do it using the equitable remedy of rectification.
Court backs clawback clause
July 2018 Where a clause in a business contract is badly worded, judges will generally try to reach a decision as to what it intended to say. They would prefer to do this than to rule that the clause is meaningless and should be ignored completely. After all, presumably the parties to the contract meant it to mean something, otherwise they wouldn’t have put the clause in...
Meaning of ‘good faith’
28/6/18 Whilst it might make things a bit less commercially certain, my personal preference would be to insert a general duty of good faith into any contract. You can then rely on the English courts’ sense of fair play as to what this means. As with anything else, the case law on this (ie the law set out by a succession of cases in courts over time) will keep developing. The most important case law is set out by the Supreme Court and below that the Court of Appeal, because precedents they set have to be followed by lower courts. Cases at the Commercial Court are less important, but still help to set the tone...
What has good faith to do with a legal business contract?
28/6/18 English law has traditionally favoured the ability of businesspeople to negotiate whatever contracts they want in pursuance of their commercial interests, even if they manage to get the wording of the contract done in such a way as allows them to shaft the other guy. The argument is that it is better to have a contract which gives commercial certainty even if it might be unfair or has loopholes which can be abused...
The importance of checking your contracts
12/6/18 3 related articles here...Whilst it’s nice to be able to put a written business contract away in a drawer once it’s been negotiated and signed, a few recent cases highlight the importance of making sure you carefully read and follow any procedures they may provide for.
How discretionary is a discretion?
March 2018 In this recent case, Watson was a director of a company which provided services to Watchfinder, which trades luxury pre-owned watches. Watchfinder granted Watson an option to buy shares in it. The option said that ‘The Option may only be exercised with the consent of a majority of the board of directors of the Company’ (ie Watchfinder). Watchfinder said that this meant that the board had an unconditional right to veto the exercise of the option. What did the court say?...
Unfair contract terms – or not
Jan 2018 A syndicate of lenders used an industry standard facility agreement provided by the Loan Market Association (‘LMA’) with a borrower (a Nigerian oil explorer and producer). Some of the terms were changed by negotiation. One that wasn’t was a clause saying that the borrower had no right of set off against amounts claimed by the lenders. Things went wrong and the borrower wanted to set off claims it had against the lenders against the monies the lenders wanted to recover. ..
Drafting: A pedantic article about commas
March 2016 Years ago, legal documents didn’t have much punctuation, and they didn’t use commas and stops, let alone colons, to draft things. I’ve no idea how they managed. More recently (like, in the last century or so) things have changed and punctuation has become important. So, how important are commas? Some commas aren’t really needed and are just a matter of style and you can do without them (like when I wrote ‘like, in the last century or so’, above, (or when I wrote ‘century or so’, above’ above…), or when I wrote ‘so, how important are commas’ above) (brackets can be quite important too). Others are rather important. There are rules as to how to read commas (and the lack of them), but they can be rather grey. Confusion over commas (and the lack of them) is now probably the biggest cause of dispute over the interpretation of contracts. A recent case is a good example...
The importance of well-worded exclusion clauses
Dec 2014 The law relating to exclusion and limitation of liability clauses is quite difficult. Many people (including many good lawyers I have known) have been confused by it. One area which causes confusion is that the law says that there are two broad categories of loss which you can seek to recover as damages for breach of contract – direct and indirect losses. But some types of loss, eg physical damage, loss of profit, economic loss, and loss of reputation and goodwill, are capable of falling into either category. Broadly, direct losses are those which are the direct and natural consequences of a breach. Indirect losses (also known as consequential losses) are those that do not arise naturally in the course of events, but are still contemplated by the parties at the time the contract is entered into because of the particular circumstances. This recent case is an example of confused drafting (or possibly of a party trying to wangle a different result from clear drafting…)...
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?...