Pre-packs – administrators’ duties
March 2018 IP nicks phoenix fee: If you know you have a potential conflict of interest you should try all the harder not to be adversely influenced by it. When marking team squash matches I tend as a result to give more decisions in favour of the opposition. Playing a cricket match I once in my stint as umpire gave a hat-trick (nearly) of LBW decisions against my teammates. The last of them was a close combat instructor for the marines who gave me the 1,000 yard stare in the bar for the rest of the evening. I now try to avoid umpiring whenever I can...
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?...
How much do professional advisers have to care for their clients?
Jan 2018 Professional advisers out there will be pleased to know that a number of recent cases have confirmed that they do not have to care too much about their clients. In one recent High Court case,..
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. ..
Can someone who breaches a contract receive credit for a benefit received by the other party?
Nov 2017 A cruise ship, the New Flamenco, was chartered under a contract until November 2009. The charterer wrongly thought they could return the ship in October 2007. The owner sought damages for this breach. At about the same time the owner also sold the ship for over US $23.5m. Two years later in November 2009, when the ship had been due to be returned under the contract, it was only worth US$7m – largely because of the financial crash. So the owner was $16.5 million better off as a result of selling in 2007 rather than in 2009 – considerably more than the $7.5m of lost profits it was claiming in damages. Should the court have taken this into account and given credit for this $16.5m benefit in calculating the damages, so that the damages would have been nil? What did the court say?...
Restrictive covenants case – form over substance
July 2017 A case about what I think is quite a silly way for the law to treat restrictive covenants...If you are entering into a business deal with someone, whether they are selling their business to you as part of which you are expecting to take over their customers, or providing services to you as part of which they could get to know your customers, you might well want to add a ‘restraint of trade’ or ‘restrictive covenant’ clause to your contract saying that after your business deal has ended they must not try to steal your customers or compete with your business. There is a whole lot of law about whether such clauses will be enforceable or not...
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...
Penalty clauses – English penalties will be missed
Nov 2015 Apparently for the last 100 years we have been getting a law wrong. This law says that a clause in a contract which sets out in advance the consequences of a breach of contract will be unenforceable if it is extravagant, exorbitant or unconscionable. It is one of the few exceptions in UK law to the principle of freedom of contract...
Can’t claim damages because of a limitation of liability clause? Thought about trying for an injunction instead?
June 2015 Under normal contract law, if a party to a contract is in breach, the other party can ask a court to order the naughty party to compensate it for the loss it suffered as a result of the breach. It is common in contracts for parties to exclude and limit their liability for breaches. (For a fascinating article I have written about exclusion and limitation of liability clauses click here). They generally try to exclude liability for indirect losses and loss of profits (click here for another article I have written about this). And they try to limit the amount of liability, for example to the amount they have insurance cover for, or even the amount they have been paid under the contract. Normal contract law is based on ‘common law’. But there is a different kind of law – the law of equity...
Retention accounts – what’s the point?
June 2015 In some acquisitions the buyer will not want to pay all the money up front. It may be worried about some potential liability of the seller arising under an indemnity or warranty in the purchase agreement. It won’t want to take the risk of the seller going bust before any claim is finally resolved, which could be many years after completion. So it will want to hold some money back until this risk goes away. But...