Welcome to Compact Contract, a blog where experts from Allen & Overy analyse the latest contract law themes and developments, and what they mean for your business.

When is a contract not a contract? When it’s a CVA.

Oliver Rule

A company voluntary arrangement (or CVA) – the procedure under the Insolvency Act through which companies can compromise their liabilities provided enough creditors agree – is often thought of as statutory contract. But, as Wright v Prudential Assurance shows, this does not mean that every contractual principle applies to a CVA. BHS’ stores were costing Read More

How obvious is a ‘manifest error’?

Crawford Jamieson

In Amey Birmingham Highways v Birmingham City Council, the Court of Appeal offered guidance on the meaning of the phrase ‘manifest error’. Under a PFI contract with the City Council, Amey agreed to maintain Birmingham’s road system. The roads to be maintained were defined by reference to a data set, 60% of which was based Read More

Wrongful diversion of business and the availability of springboard injunctions

Jin Ooi

In breach of express confidentiality obligations in their employment contracts, the defendants in Aquinas v Miller wrongfully diverted business from Aquinas, their former employer, to their newly set up competing business. Was Aquinas entitled to a springboard injunction? The typical purpose of springboard relief is to deprive a defendant of any head start of having, Read More

701 Aggregations. Spotting when many insurance claims are treated as a single pack

Russell Butland

In Spire v Royal & Sun Alliance the Court of Appeal held that over 700 claims of the victims of surgeon Ian Paterson should be aggregated as a single claim for the purposes of the hospital’s liability policy. Spire runs a number of private hospitals where Ian Paterson, a Consultant Breast Surgeon, operated. Over 700 Read More

Certainty prevails: cause of action accrues when work done

Megan Betts

In Ice Architects v Empowering People Inspiring Communities, the High Court held that the entitlement to payment for work by ICE arose when the work was done, not when the invoice expired. ICE provided design services to EPIC. The agreement stated that the “basis of payment” was that ICE “will invoice EPIC on a monthly basis Read More

Your exclusion clause won’t benefit from hindsight

Samantha Holland

In Nesbit Law v Acasta Insurance the Court of Appeal held that an insurer could not rely on an exclusion clause in order to avoid paying out under its policy. The claimant personal injury solicitors were members of a funding scheme run by the defendant insurer and a bank. On joining the scheme the solicitors’ Read More

No contractual duty to protect spread betters against themselves

Elizabeth Staves

The Court of Appeal in Ehrentreu v IG Index held that very clear express words are required to give rise to a contractual duty to protect parties against inflicting economic harm on themselves. Ehrentreu placed substantial spread bets on market movements through IG. Under the agreement between the parties, Ehrentreu acknowledged that if he failed Read More

Exclusion clauses work

Lucy Judge

In Interactive E-Solutions v O3B, the Court of Appeal has, yet again, held that a widely drafted exclusion clause represented the allocation of risk between the parties. A dispute arose when Interactive refused to pay service fees due to O3B under a contract, and O3B purported to terminate the contract. Interactive brought an action for Read More

Making a clean break – are your termination clauses sufficiently slick?

Samantha Holland

It is worth giving careful thought when drafting termination provisions in commercial contracts to help avoid tricky disputes about when, and in what circumstances, agreements can be brought to an end early. In Monde Petroleum v Westernzagros the Court of Appeal considered when an exploration and production agreement (EPSA) became “fully operational and enforceable” for the Read More

To assign, or not to assign: that is not the primary question

Lucinda Critchley

In First Abu Dhabi Bank v BP, the Court of Appeal held that a warranty in a purchase letter that BP was not prohibited from disposing of a receivable was not breached by a no assignment clause in the underlying contract. BP entered into a contract with SAMIR for the sale and purchase of crude Read More