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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.

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

Devil’s in the detail: is your notice of breach good enough?

Megan Betts

In Teoco  v Aircom, the Court of Appeal found that letters sent by the purchaser, Teoco, to the sellers, Aircom, under a share purchase agreement did not constitute valid notice of intention to bring a claim for breach of warranty and accordingly the claim had been correctly struck out. The relevant provision specified that the Read More

Civil unrest, frustrated performances and a thrilling decision – you just cannot beat it

Sherin Bhasker

In The Flying Music Company v Theatre Entertainment, the High Court considered whether a contract to put on “Thriller Live” in Greece had been frustrated by civil unrest. It also covered whether a personal guarantee was supported by consideration and/or voidable for duress. A counterclaim for unjust enrichment and quantum issues were also considered. In Read More

Powder-tools for construction and termination

Alex Woolgar

The Court of Appeal decision in Kason Kek-Gardner Limited (KKG) v Process Components Limited (PCL) covers, first, what extrinsic evidence is relevant to construction and, second, what limitations can be implied into a confidentiality undertaking? PCL bought assets (including intellectual property) relating to certain businesses of Kemutec Powder Technologies, as Kemutec entered administration. Ten days Read More

Limiting liability under your contract

Jason Rix

Last month, a group of us (Erwan Poisson, Joost Everaert, Julie Metois, James Freeman and I) gave some training on limiting liability in commercial contracts. So far so unsurprising. The sting in tail was that we were covering the topic under Belgian, French and English law. This served to highlight some legal and cultural differences Read More

Implying an obligation to indemnify: the Jersey law perspective

William Palmer

In First Names v IFG, the English High Court determined that, under Jersey law, a company’s implied obligation to indemnify an employee will arise where it is considered necessary to ensure the employee’s employment contract is not futile, inefficacious or absurd. First Names was incorporated in Jersey and provided corporate and trust-management services. As part Read More

A (conditional) free for all?

Lucy Judge

Budana v Leeds Hospital is about Conditional Fee Agreements and how they may be transferred. Ms Budana’s original solicitors, Baker Rees, represented her in a personal injury claim under a CFA with a 100% success fee, entered into under the pre-Jackson reform regime. Baker Rees purported to assign its book of personal injury claims, and CFAs, Read More