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.

Court of Appeal artfully navigates questions on agency and privity

Alexandra Pedder

In Fairlight v Sotheby’s, the Court of Appeal considered whether a line of authorities relating to sub-agency could be applied to preclude privity of contract between the parties, and to excuse Fairlight from returning proceeds received from the sale of a painting which had been rescinded on authenticity grounds. The facts were as follows: Fairlight Read More

The force of “subject to contract”

Natalie Kaminski

The Court of Appeal has held that a judge had “seriously undervalued” the force of using “subject to contract” wording in written correspondence between solicitors. Joanne Properties v Moneything Capital echoes what the courts have held for over a hundred years; the effect statement is that the matter remains in negotiation until a formal contract Read More

Judge hadn’t erred by referring to pre-contractual negotiations

Aashna Agarwal

The Court of Appeal has briefly considered the old chestnut of the admissibility of pre-contractual negotiations as an aid to interpreting an agreement: Morris Homes v Cheshire West and Chester Council. Morris and the Council had entered into an agreement under which Morris had to pay the Council a percentage of its sales revenue in Read More

Harsh but fair? Implied terms won’t save you if written agreement clear

Hannah Pye

The Court of Appeal has confirmed, if confirmation were needed, that no term may be implied into an agreement where that implied term conflicts with the express wording of that agreement, even if the result may seem harsh: Joseph v Deloitte. Joseph was an equity partner at Deloitte and had been issued, by the board, Read More

Should I include an express and general duty of good faith in my shareholders’ agreement?

Philippa Richards

Should I include an express and general duty of good faith in my shareholders’ agreement? The answer to this depends, of course, on the circumstances and who you’re acting for. What is important is to appreciate the consequences of doing so. This may be demonstrated by a High Court decision from the summer relating to an Read More

Covid, crises and legally what we may be able to learn

Jason Rix

Back in March, Karen Birch and I seemed to spend much of our waking hours fielding urgent and complex Covid-related legal queries. In the wake of that immediate surge, Karen reflected that, at least from a legal perspective, there seemed to be a number of themes to what happens in crisis, and that we ought Read More

A waste of energy? Assignment, novation and contribution

Claudia Barry

In Energy Works v MW High Tech Projects the court examined the distinction between assignment and novation, and considered whether “damage” was the “same” for the purposes of the Civil Liability (Contribution) Act 1978. Energy Works, the purchaser, and MW High Tech, the main contractor, signed an EPC contract relating to a “fluidised bed gasification Read More

No need to waive goodbye to your rights

Rhona Egerton

A party did not waive its right to rely on a “performance relief” provision by temporarily continuing to perform by alternative means: Delta Petroleum v BVI Electricity Corp. BVI Electricity contracted to buy fuel from Delta. The agreement contained a “performance relief” provision, allowing Delta to claim relief from further performance should the refinery from Read More

MAE the MAC return? COVID-19 and Material Adverse Effect

Elizabeth Wall

Last week a judgment on preliminary issues was handed down in Travelport v WEX, the first Covid-related Material Adverse Effect, or MAE, dispute to come before the English courts. The judge found in favour of the buyer, and interpreted “industry” widely (as the entire B2B payments industry, rather than “travel payments industry”) for the purpose Read More

Testing the limits of the reflective loss rule post-Marex

Tomasz Hara

In BIG, Burgess and others v Smith and others, the court applied the reflective loss rule, as recently restated by the Supreme Court in Marex: in circumstances where a shareholder and their company have concurrent claims in relation to the same loss, the shareholder’s loss is not recognised in law as having an existence distinct Read More