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

A waste of energy? Assignment, novation and contribution

Claudia Barry

In Energy Works v MW High Tech Projects the court examined the distinction between assignment and novation, and considered whether “damage” was the “same” for the purposes of the Civil Liability (Contribution) Act 1978. Energy Works, the purchaser, and MW High Tech, the main contractor, signed an EPC contract relating to a “fluidised bed gasification Read More

No need to waive goodbye to your rights

Rhona Egerton

A party did not waive its right to rely on a “performance relief” provision by temporarily continuing to perform by alternative means: Delta Petroleum v BVI Electricity Corp. BVI Electricity contracted to buy fuel from Delta. The agreement contained a “performance relief” provision, allowing Delta to claim relief from further performance should the refinery from Read More

MAE the MAC return? COVID-19 and Material Adverse Effect

Elizabeth Wall

Last week a judgment on preliminary issues was handed down in Travelport v WEX, the first Covid-related Material Adverse Effect, or MAE, dispute to come before the English courts. The judge found in favour of the buyer, and interpreted “industry” widely (as the entire B2B payments industry, rather than “travel payments industry”) for the purpose Read More

Testing the limits of the reflective loss rule post-Marex

Tomasz Hara

In BIG, Burgess and others v Smith and others, the court applied the reflective loss rule, as recently restated by the Supreme Court in Marex: in circumstances where a shareholder and their company have concurrent claims in relation to the same loss, the shareholder’s loss is not recognised in law as having an existence distinct Read More

When is it unreasonable to withhold consent?

Jason Rix

In Apache North Sea v Ineos, the court considered a provision that a party must “not unreasonably withhold its consent”. Apache wanted to amend part of an agreement with Ineos for transporting and processing hydrocarbons. It asked for Ineos’ consent to do so. Ineos said it would agree if Apache changed a tariff under the agreement. Read More

Hunting goodwill – what does it mean and was it excluded?

Aladdin Benali

In Primus v Triumph, the Court of Appeal looked at whether claims brought by Triumph were claims “in respect of lost goodwill” and so excluded under a share purchase agreement. We covered the first instance decision, offering a case study in breach of warranty claims, last April. By way of summary, having bought shares in Read More

You haven’t bought my silence: confidentiality not a condition of settlement.

Abigail Holmes

In Duchy Farm v Steel the High Court upheld a County Court decision that a confidentiality clause in a settlement agreement was not a condition of the agreement, and a breach of confidentiality by Steel therefore did not absolve Duchy Farm of the obligation to pay settlement monies. Duchy Farm and Steel settled an employment Read More

On notice – SPA tax claim unenforceable as inadequate notice given

Edward McCullagh

A tax indemnity claim under a share purchase agreement was unenforceable because inadequate notice was given (Dodika v United Luck). The buyers gave notice of their claim by solicitors’ letter. However, that notice was inadequate, as it did not provide reasonable detail of the matter giving rise to the claim. The letter (sent shortly before Read More

Oh no, not another case on good faith and rationality

Jason Rix

In Cathay Pacific v Lufthansa, the High Court found that an option in an engine maintenance agreement: (1) was not subject to an implied duty to be exercised rationality, (2) even if it were, there was no breach, (3) nor was the agreement a “relational contract” subject to an implied duty to act in good Read More

Money down the drain? How to avoid damages being sunk by remoteness.

Richard Farnhill

The fact that your contract has been breached and the breach has caused you losses is not enough for you to make a recovery. Remoteness is the often overlooked third leg of the damages stool. In AG of the Virgin Islands v Central Water Associates the Privy Council gave more guidance on how the rules Read More