Welcome to Compact Contract where Allen & Overy litigators analyse contract law and what it means for your business.

Yoo can design but yoo can’t imply

Aaron Jones

An agreement between a designer and property developer for the interior design of a luxury residential development did not require an implied term that the developer would sell the apartments within a reasonable time as a matter of business efficacy or obviousness: Yoo Design Services v Iliv Realty. A luxury designer, Yoo, entered into a Read More

Compact Contract is getting a make-over

Jason Rix

Compact Contract is moving to the main A&O website. It will hopefully be easier to find and generally look a bit more A&O. The content and ethos will be the same. If you are currently a subscriber, you will be migrated to the new site. This process is currently scheduled to start on 28 April, Read More

Exclusion me, is that a wilful breach in our airspace?

Lawrence Clare

Exclusion clauses are to be construed by reference to the normal rules of contractual interpretation even in cases of alleged deliberate, fundamental or wilful breach: Mott Macdonald v Trant Engineering. Under a settlement and services agreement Mott Macdonald provided consultancy services about work being carried out by Trant Engineering at an RAF military base in Read More

Restraint of Trade: Nothing retro about restrictive covenants as retailer gets shirty over losses

Tom Lort

Following breach of a restrictive covenant, Score Draw applied to the court for damages and injunctive relief claiming PNH’s breach had caused Liverpool FC’s refusal to renew a retail licence: Score Draw v PNH International. Score Draw were a licensed retailer of retro football shirts for Liverpool FC. The shirts were sourced from PNH, who Read More

COVID: no cure for claims of frustration or force majeure

Helen Biggin

The English Court has twice rejected claims by aircraft lessees who wanted the return of their security deposits because of the COVID-19 pandemic: Salam Air v Latam Airlines and Fibula Air v Just-US Air. [Ed: the cases are interesting beyond aircraft finance since, for the moment, there’s still not much case law discussing COVID.] In Read More

No good faith or reasonable care obligation re mortgage: You can’t have Morley

Jason Rix

Following a borrower default, when a bank was considering whether to enforce its security, a statutory implied term of reasonable care in a loan was of no consequence and it was not right to imply the term into a mortgage (which wasn’t a contract for services anyway): Morley v RBS. Nor had the bank acted in Read More

Penalty clause VAR: “extremely harsh” but still enforceable

Danielle Tullett

The court in Permavent v Makin determined that although the provision before it was “extremely harsh” it was not “out of all proportion” to the claimants’ legitimate business interests and so was not an unenforceable penalty. Makin and Yeremeyev had operated a business which supplied roofing products to the construction industry through several companies, including Read More

Liquidated damages payable on termination not unenforceable penalty

Sophie Orwell

The law around unenforceable penalty clauses is well-known but the question of how to apply it in practice is notoriously tricky. The court has recently looked at this issue again in De Havilland v Spicejet. The Indian airline Spicejet agreed to purchase aircraft from the Canadian manufacturer De Havilland. Spicejet failed to pay some of Read More

Best Reasonable Efforts to end a global pandemic

AOCompactContract

Now that the COVID-19 vaccine contract between the EU and AstraZeneca has been published, we take a look at it and the “Best Reasonable Efforts” provisions. The production issues facing the roll-out of the EU vaccination programme have led some to question the centralised approach taken by the European Commission in its procurement of the Read More

Inducing a subsidiary’s breach of contract: Parental Misguidance

Mohamed Sacranie

Is a parent company liable if it restructures its operations and a now disused subsidiary is prevented from meeting its own contractual obligations? In Kawasaki v Kemball, the Court of Appeal held that the parent neither induced nor intended its subsidiary’s breach and reaffirmed this economic tort’s restricted scope. Kawasaki formed a joint venture and Read More