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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.

Right to demand early repayment not a contractual discretion

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

Parental guidance: how to guarantee the construction of an indemnity clause

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

Pay less notice valid despite only cross-referencing basis of sum

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

Terminations 2: Summary Judgment Day

Georgina Thomson

In Vannin Capital v RBOS Shareholders Action Group the court held, by way of summary judgment, that Vannin’s termination notice extended to both the litigation funding agreements in place with the shareholders and not just one as Vannin contended. Litigation funder Vannin Capital  had entered two funding agreements with the RBOS shareholders: one for GBP 1.5m and Read More

Licence to kill: football merchandising agreement “undone” by High Court

Natasha Rao

In SDI Retail v Rangers Football Club, the High Court held that Rangers FC should not have entered into a merchandising agreement with a third party without giving Sports Direct, the existing licensee, an opportunity to match the third party’s offer (under the terms of the licence). The main question was whether a requirement that Read More

Italian aviation claim grounded following High Court jurisdiction ruling

Becky Valori

In Airbus v Generali Italia, the High Court held that Alitalia’s insurers were bound by an exclusive jurisdiction clause in favour of the English courts in an agreement between Alitalia and Airbus. The proceedings arose out of an incident in 2013 where an aircraft leased by Alitalia was required to make an emergency landing due Read More

A question of construction: liability caps and building contracts

Leah Fisher

In Arcadis v AMEC, the Court of Appeal held that a liability cap had been incorporated into a letter of instruction. AMEC, a specialist concrete contractor, employed Arcadis, an engineering outfit, to help design two construction projects: the Wellcome Building and Castlepoint car park. A detailed Protocol Agreement was exchanged but never finalised. Work was Read More

No general principle of interpretation for shareholders’ agreements

Kerry Chan

In Rusal v Crispian and Whiteleave, the High Court held that the principle of interpretation which applied to a private company’s articles of association – that the right to transfer shares could only be restricted by clear words – would not generally apply to shareholders’ agreements. The central issue was whether Crispian had validly commenced Read More

Oil be the judge of that: continuing misrepresentation leads to increased damages

Taly Dvorkis

In Inter Export v Lasytsya, the Court of Appeal held that the correct measure of damages for fraudulently misrepresenting the ability to pay the contract price is to put the aggrieved party in the position it would have been in had the deceit not occurred. Lasytsya was the company director of Nerida which had entered Read More

Force Majeure and Causation: iron-ing out the issues

Laurence Ridgway

In Classic Maritime v Limbungan, the High Court held that a contractual force majeure clause incorporated a “but for” test of causation. Limbungan, a charterer, contracted to provide iron ore for shipment by Classic Maritime, a ship owner. Limbungan failed to do so after a burst dam forced the mine that supplied the iron ore Read More