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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.

Failure to use reasonable endeavours: skating on thin ice

Bethany Gregory

In Gaia v Abbeygate, Abbeygate, a development company, was required to pay to Gaia GBP 1.4m, for a failure to use reasonable endeavours to enable a commercial site to be redeveloped. Abbeygate contracted with Planet Ice to purchase leases relating to an ice rink. Abbeygate was required to make an additional payment to Planet Ice Read More

Pre-contractual negotiations: rarely a gold mine

Tomasz Hara

The Court of Appeal in Merthyr (South Wales) Limited v Merthyr Tydfil County Borough Council provides a concise restatement of the circumstances in which pre-contractual negotiations may (and may not) assist in construing a contract. The case concerned the interpretation of an escrow agreement under which the mining company had to pay funds into an Read More

Lawful pressure in contractual negotiation: Duress-t in peace

Senem Cilingiroglu

In Times Travel v Pakistan International Airlines, the Court of Appeal held there was no duress where an airline used lawful pressure to achieve a result to which it genuinely believed itself to be entitled, even when it lacked objectively reasonable grounds for that belief. Times Travel sold tickets to flights operated by the airline. Read More

Express or implied? High Court rejects “market practice” term

Godwin Tan

In CFH Clearing v Merrill Lynch, the High Court held that there was neither an express nor an implied term requiring Merrill Lynch to act in accordance with market practice and reprice or cancel foreign exchange spot trades that were entered into at a time of market disruption. In 2015, CFH Clearing entered into FX Read More

Will your liquidated damages survive termination?

Jon Turnbull

In Triple Point v PTT, the Court of Appeal considered to what extent liquidated damages continue to be payable when a project falls into delay and the contract is subsequently terminated or the contractor replaced. This situation is common in construction projects – where liquidated damages clauses are ubiquitous (albeit this case was in relation Read More

Triumph v Primus: A case study on breach of warranty

Elizabeth Wall

Triumph v Primus included all the usual elements of a warranty dispute: an attempt to avoid the limitations by arguing a claim was not a “warranty claim”; an argument over disclosure; and, a defence around the service and contents of the notice of breach. Ultimately though, it was a warranty about the careful preparation of Read More

A (small) matter of construction: whether a breach was material

Deekshitha Swarna

In Mears v Costplan, the Court of Appeal looked at the question of material breach. Pickstock contracted with Plymouth to build two blocks of student accommodation. Mears entered into an agreement for lease of the property with Plymouth. The agreement for lease prohibited Plymouth from making any variations to the building that “materially affect the Read More

Breach of warranty: claim for hypothetical indemnity? Don’t bank on it.

Flo Wang

In Oversea-China Banking Corporation v ING, the court held that damages based on a hypothetical indemnity were not recoverable for breach of warranty of quality on a share sale. OCBC entered into a sale and purchase agreement with ING to purchase shares in ING Asia. Subsequently, ING Asia paid USD 14.5m to Lehman Brothers to Read More

You’ve got mail: the High Court puts a stamp on good faith and relational contracts

Jason Rix

In Bates v Post Office the court has implied a duty to act in good faith into a contract on the basis of it being relational. This dispute is between 550 claimants, most sub-postmasters, and the Post Office. It concerns Horizon, an electronic point of sale and accounting system. The claimants say defects in Horizon Read More

What you don’t know can help you – contracts and rights of third parties

Richard Farnhill

The Court of Appeal has found that a third party beneficiary under the Contracts (Rights of Third Parties) Act 1999 can enforce an agreement entered into for its benefit, even if it was unaware of that agreement at all relevant times prior to commencing proceedings under it (Chudley v Clydesdale Bank). Arck LLP was incorporated Read More