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

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

No damages if proven breach is not an effective cause of loss: “bitter truth” for innocent parties

Ella Wardlaw

In determining whether a breach of contract operates as an effective cause of the loss claimed, the court must apply “common sense”. Although there is a “moral asymmetry” where one party is at fault and the other an innocent victim of wrongdoing, some breaches, however reprehensible, result in no loss that can be recovered by Read More

All is fair (value) in love and war … and minority shareholder acquisitions

Aaron Jones

“Fair value” means the value of the shares on a sale between a willing buyer and a willing seller, discounted to reflect the fact that shares represent a minority holding (Re Euro Accessories Ltd). Monaghan, the minority shareholder, claimed he was entitled to a pro rata proportion of the total value of company’s issued share Read More

Change in law can reduce management fee to zero: the sport straw

Khush Kotecha

A change in law provision engaged by the Covid-19 pandemic can reduce the management fee payable to zero: Westminster City Council v Sports and Leisure Management. A management company were awarded a 10 year contract in 2016 to provide sport and leisure facilities to a Council. The contract was modelled on similar ones used by Read More

Damages-based agreement doesn’t exclude costs on early termination in retainer: DBA A-OK!

Robert Steele

In Zuberi v Lexlaw, the Court of Appeal held that “damages-based agreement” should be construed narrowly, comprising only the particular provisions of a retainer dealing with payments out of recoveries, not the retainer as a whole. It also held that the Damages-Based Agreements Regulations 2013 do not regulate fees payable to lawyers in the event Read More

Is possession of a contract nine-tenths of the law?

Max Sherrard

In Solaria v Department for Business, the Court of Appeal held that a signed and part-performed commercial contract was, prima facie, a “possession” for the purpose of Article 1, Protocol 1 of the European Convention for the Protection of Human Rights. That a contract is assignable is not the legal test to apply, simply a Read More

Exemption and non-reliance clauses

Jason Rix

Richard Hooley spoke to us this lunchtime about exemption clauses. Interpretation He began by quoting from Andrew Burrows’ A Restatement of the English Law of Contract (which has recently been updated) and its excellent summary of contractual interpretation. Paraphrased it says: Ask what the clause, “viewed in the light of the whole contract, would mean Read More

The ABCs of default

Charlotte Page

In ABC v Network Rail, the Court of Appeal confirmed that “default” simply means a failure to comply with contractual obligations where the context does not call for an alternative construction. ABC was contracted to upgrade a Network Rail power supply. It was entitled to payment under a “total costs” provision, where Network Rail could Read More

Court of Appeal artfully navigates questions on agency and privity

Alexandra Pedder

In Fairlight v Sotheby’s, the Court of Appeal considered whether a line of authorities relating to sub-agency could be applied to preclude privity of contract between the parties, and to excuse Fairlight from returning proceeds received from the sale of a painting which had been rescinded on authenticity grounds. The facts were as follows: Fairlight Read More