Corporate and commercial | 01 December 2014

Contracting parties have increasingly been agreeing to commit themselves to some form of inter partes discussion prior to the issuance of formal proceedings. This is despite the courts’ historic lack of inclination to find such dispute resolution clauses to be enforceable. However, this looks set to change: in Emirates Trading Agency LLC v Prime Mineral Exports Private Ltd [2014] the Commercial Court distinguished the case from leading case law in this area and held that an obligation on the parties to enter into ‘friendly discussions’ before commencing formal proceedings was an enforceable term 
of the contract. [Continue Reading]

Corporate and commercial | 01 September 2014

When drafting a commercial agreement, it is prudent to think carefully about the potential issues that may lie ahead once the agreement has been signed and governs your commercial relationship with another party. In particular, where a certain event may trigger an onerous obligation on your part, you should think about whether the clause requires the protection of a condition precedent.
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Corporate and commercial | 01 July 2014

In a contractual dispute involving a written agreement, parties can face difficulties in proving the effect they originally intended particular words of the agreement to have, perhaps because the wording is ambiguous or fails to adequately express the intention of the contracting parties. In such circumstances, the court will analyse the agreement and the intention of the parties to determine the meaning of a particular word or clause, and consequently its legal effect. The existing case law is clear that this is an objective assessment, designed to establish what a reasonable person in the position of the parties would have understood the words in question to mean. This was concisely put by Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society [1997]:

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Corporate and commercial | 21 February 2014

Companies and organisations depend on the notion of agency to conduct their business: they require natural persons to make decisions and enter into agreements on their behalf. So who can enter into binding transactions on behalf of a company?

Generally speaking, a company will be legally bound by a contract where it is entered into by a person, or people, who are duly authorised by the company to make such decisions and/or conduct the type of business to which the contract relates. This type of authority is often labelled as ‘actual authority’. Certain employees of a company may be granted actual authority to contract on its behalf, but it is commonly a responsibility given to directors. Of course, there will still be limits as to what a director or employee has the authority to do and it is only when acting within the authority given that the company will be bound by their actions.
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Corporate and commercial | 01 December 2013

It is often difficult to predict what will be recoverable as damages for breach of contract. To provide some certainty, parties will often seek to agree the sum that will be payable in the event of specified breaches.

It is well established that such an approach does not present a problem if the sum agreed is a genuine pre-estimate of the probable loss (often referred to as a liquidated damages clause), in which case the claimant will only need to prove that the relevant breach has occurred and not the actual loss. The problem lies where the clause does not represent a genuine estimate of loss but instead is designed to deter a party from breaching the contract, in which case it will be deemed to be a penalty clause and will be unenforceable, leaving the claimant to rely upon normal contractual principles for establishing the damage caused, including the requirement on it to mitigate its losses (see Jobson v Jobson [1989]). It is for this reason that defendants, when faced with contractual claims, will often seek to argue that such clauses are penalties. 
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Corporate and commercial | 01 November 2013

Correctly recording the name of a contracting party within written documentation sounds elementary. However, the reality is that in the modern corporate age, where companies within the same group often use very similar names to one another and further compound confusion by using generic trading names, identifying the appropriate contractual party is not so straightforward. Naming the wrong party in a contract can be very problematic, as it could well mean the counterparty is unable to enforce contractual rights and in certain circumstances can completely transform the nature of the bargain they believed they were entering into. However, if such a mistake proves beneficial to the counterparty, they will likely seek to uphold the agreement as recorded.
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Corporate and commercial | 01 October 2013

Exclusion clauses are a key mechanism for managing risk in contractual arrangements. In particular, exclusion clauses are commonly used to exclude liability for breaches of the contract, or other contractual claims arising out of it, although they may also seek to exclude liability more widely. 
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Corporate and commercial | 01 September 2013

It really happens, apparently, in the world of international high finance: a broker is so keen to close the deal that they somehow forget to get their fee agreed. More realistically, of course, they are looking to time their agreement to the point at which the principal is in the best mood to agree the highest fee, often at closing, and they miscalculate and miss their opportunity. What happens when no agreement has actually been made with the broker?
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Corporate and commercial | 01 July 2013

In the July 2012 edition of The In-House Lawyer, our colleagues discussed the importance of the first instance decision inCompass Group UK and Ireland Ltd (t/a Medirest) v Mid Essex Hospital Services NHS Trust [2012]. On 15 March, the Court of Appeal reversed Cranston J’s judgment. 
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Corporate and commercial | 01 June 2013

The doctrine of frustration was developed in Taylor v Caldwell (1863). In that case, the plaintiff had agreed to hire a music hall for concerts on four specified evenings. A fire destroyed the music hall before the concerts took place. The 
plaintiff sought damages from the owner 
of the hall on the basis that he was in breach of his contractual obligation to 
make the hall available. The Court of Queen’s Bench rejected the claim on the basis that:
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