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.

Allocating risk: detailed specification vs. fitness for purpose

Jason Rix

The Supreme Court has held a constructor liable for the failure to ensure a life of 20 years for the foundations of offshore wind farms it designed and installed despite the fact that the foundations were required to meet an industry standard that contained an error that caused the failure: MT Hojgaard v EON. The Read More

Implied terms and umbrella agreements don’t shelter clients from CFAs

Megan Betts

In Stevensdrake v Hunt, the Court of Appeal has provided yet another reminder of the stringency of the test for implied terms affirmed by the Supreme Court in Marks and Spencer v BNP Paribas. It also held that an apparent “umbrella agreement” could not govern or impact the terms of a subsequent Conditional Fee Agreement Read More

What is repudiation?

Rainer Evers

Whether your counter-party has actually repudiated its contract is a big question. If you wrongly treat a contract as having been repudiated and so stop performing that contract yourself, you may face a claim for breach of contract. In Vitol v Beta Renowable, Vitol had agreed to buy biofuel from Beta, but Beta had then Read More

Wishful thinking – when is an agreement a binding contract?

Jason Rix

During a conversation, in the Horse and Groom, Mr Ashley said he’d pay Mr Blue £15 million if Mr Blue could get the price of Sports Direct shares to £8. Mr Blue agreed and those present laughed. Thirteen months later the Sports Direct share price had risen from £4 to £8. In Blue v Ashley Read More

Reasonable endeavours: have you done enough?

Daniel Grimwood

In Minerva v Greenland, the court provides some useful pointers as to when a party has met an obligation to use reasonable endeavours to secure a particular outcome. Minerva sold a development site to Greenland. The sale agreement provided that if Minerva was successful in obtaining enhanced planning permission within a certain time, Greenland would pay Read More

The suspense is killing us – will the recitals show they’re out of time?

Alexandra Pedder

In Russell v Stone the court considered the interpretation of standstill agreements and found that they operated to suspend, rather than extend, time for the purposes of limitation. The Russells engaged Stone to manage a construction project. The project was beset by difficulties, for which the Russells blamed Stone. The parties entered into three standstill Read More

Restitution of enrichment by mistake – AstraZeneca recovers $2 million for candidate drugs mistakenly interpreted to be ‘Collaboration Compounds’

Robyn Trigg

In Astex Therapeutics v AstraZeneca, AstraZeneca were able to recover $2 million by way of restitution of enrichment for two milestone payments made to Astex by mistake under a collaboration agreement. Astex and AstraZeneca entered into an agreement to develop a BACE inhibitor for treatment of Alzheimer’s disease.  After expiry of the collaboration term, the Read More

Blessings in disguise: when does the law require you to give credit to a contract-breaker?

Richard Farnhill

If a breach of contract allows the non-breaching party to save money or avoid a loss, must it give credit for that saving to the contract breaker? That was the issue considered by the Supreme Court in Globalia v Fulton Shipping. The facts were straightforward enough, although as we shall see they split judicial opinion Read More

Is it worth negotiating? Clarification of “written standard terms of business” under UCTA section 3

Po-Siann Goh

In African Export-Import Bank v Shebah Exploration & Production Company, the Court of Appeal confirmed the test for when negotiation and amendment of “written standard terms of business” will preclude application of the reasonableness requirement in section 3 of the Unfair Contract Terms Act 1977 (UCTA). Section 3 of UCTA subjects certain exclusion clauses to Read More

Discretion: you actually own it and you have to exercise it properly

Jason Rix

In Watson v Watchfinder.co.uk, a refusal to consent to a share option entailed an improper exercise of a contractual discretion. Watchfinder buys and sells luxury pre-owned watches. It granted an option in its shares to Watson and others who were directors of a company that was providing services to Watchfinder. The relevant provision stated “The Read More