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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.

Termination based on company being struck off not affected by restoration

Samuel Webb

In Bridgehouse v BAE Systems, a termination notice based on a company being dissolved remained effective despite the company being restored to the register. BAE agreed to procure the sale, by one of its subsidiaries, of two airfields for GBP 93m to Bridgehouse. BAE was able to terminate the agreement if Bridgehouse was struck off Read More

Innominate or condition? Check the consequences or you’ll wreck termination

Senem Cilingiroglu

In Ark Shipping v Silverburn Shipping, the Court of Appeal had to deal with the law school classic: when is a term a condition, the breach of which entitles the innocent party to terminate, and when an innominate term, where the ability to terminate depends on the gravity of its breach? While the case was Read More

Force majeure, causation and damages – a “Classic” conundrum

Laurence Ridgway

In Classic Maritime v Limbungan, the Court of Appeal overturned the High Court and awarded substantial damages for breach even though performance ultimately would not have been possible. Limbungan failed to deliver iron ore to Classic Maritime when a flood shut down the mine producing the ore. The High Court, had held that to rely on Read More

Damages under SPA capable of being more than purchase price

George Wilders

In 116 Cardamon v MacAlister, the court ordered the full purchase price be paid by way of damages for breach of accounting warranties in a share purchase agreement, having found that the value of a company “as warranted” was greater than the purchase price. Cardamon, an investment company, purchased all the shares in Motorplus, an Read More

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