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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.

The High Court’s dance with an implied term of natural justice

Bethany Gregory

In Dymoke v Association for Dance Movement Psychotherapy, the court held that an organisation breached an implied duty of procedural fairness by terminating an individual’s membership without informing them of the substance of criticisms made against them or providing any opportunity to respond or to address the potential termination. Dymoke taught an MA course which Read More

“Reasonably considers” meant acting rationally

Saniya Sharma

In Lord Chancellor v Blavo & Co, the court held that “reasonably considers” meant acting rationally. Blavo had entered into a contract with the Lord Chancellor under a scheme to provide legal aid services to clients in relation to mental health law. Blavo could claim its legal fees from the Lord Chancellor and the Legal Aid Read More

Of turbulent relationships, aircraft financing and frustration

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

A Wolff in lamb’s clothing: procuring a breach of contract – an economic tort with teeth

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

Take care: is your “agreement” only an agreement to agree?

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

EUR wrong: when sterling means euros

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

contractual Interpretation: check your Capitals to protect Your capital!

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

Be careful when you race to perform an agreement

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

Is de-Hoffmannisation now complete?

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

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