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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.
09 January 2019 Tomasz Hara
The risk of contracts becoming impossible to perform is increasingly a topic of discussion in boardrooms as the Brexit uncertainty intensifies. Can the doctrine of frustration offer a way out for those who find themselves unable to perform their obligations? In APFL v CAI the answer was “no”. APFL’s business model was to buy aircraft from › Read More
08 January 2019 Laurence Ridgway
In Wolff v Trinity Logistics USA, the Court of Appeal considered the elements of the tort of procuring a breach of contract. Wolff was a director of a company that imported clothing. Shipments from the manufacturers were carried out under a contract between Trinity Europe and Trinity Bangladesh (both connected to Trinity USA). Under this › Read More
02 January 2019 Bethany Gregory
In Morris v Swanton Care, the Court of Appeal held that an earn-out provision in a share purchase agreement contained an unenforceable agreement to agree. When Morris sold shares in a residential care business to Swanton, the parties included an earn-out mechanism in the share purchase agreement to enable him to receive deferred consideration. This › Read More
20 December 2018 Kerry Chan
In McDonagh v Bank of Scotland, there was a loan for “Seven Million Five Hundred Pounds [sic] (£7,500,000) to be drawn down in Euros”. The High Court used interpretation rather than rectification to fix the unhappily drafted agreement, since to “remove words from a written contract and then to interpret the contract without those words › Read More
18 December 2018 Claudia Barry
In Hopkinson v Towergate, the Court of Appeal deployed correction by way of interpretation to fix drafting errors. Hopkinson and Howard sold a company to Towergate. The company gave financial advice to retail customers. Following FCA reviews, significant compensation was payable to the customers for the period where the sellers owned the company. Towergate claimed › Read More
17 December 2018 Kerry Chan
In CRS v McLaren, the High Court, quoting RTS, reiterated that the court should not impose binding contracts on parties which they have not reached. CRS and McLaren entered into a heads of agreement, which envisaged that a more detailed, formal contract would be agreed. This never happened, but the project, for a GT4 racing car based › Read More
07 December 2018 Jason Rix
Last month Edwin Peel came to talk to us about developments in contract law. A chunk of the presentation was about interpretation and what he coined its “de-Hoffmannisation”.* We now know, following Wood v Capita, that: “The court’s task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement. › Read More
07 December 2018 Jason Rix
In UBS AG v Rose Capital the court held that a bank’s entitlement to call for repayment of a loan was an absolute right and not a contractual discretion. Rose Capital had mortgaged a property to UBS as security for a loan. The agreement stated “…we [UBS] shall be entitled at our absolute discretion to require repayment › Read More
03 December 2018 Claudia Barry
In GPP v Solar the court offers guidance on distinguishing a guarantee from an indemnity, and holds that two equitable principles of guarantee law do not apply to indemnities. GPP, as employer, entered into Engineering, Procurement and Construction contracts with a (now insolvent) contractor. Solar, parent of the contractor, was sued by GPP as guarantor › Read More
20 November 2018 Nathalie Burn
In S&T v Grove Developments the Court of Appeal held that Grove’s “pay less notice” was valid despite it only cross-referencing, rather than attaching, a spreadsheet detailing its sum. The court felt this could not give rise to any misunderstanding in the mind of a reasonable recipient standing in the shoes of S&T. Section 111 (4) of › Read More