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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.

Default interest rate of one-month LIBOR plus 12% is no problem

Bianca Vasilache

In Cargill International Trading v Uttam Galva Steels, the High Court decided by summary judgment that a default interest rate of one-month LIBOR plus 12% was valid and enforceable. It did not amount to a penalty, it was validly incorporated into the contract and it was not illegal under Indian law. In 2015, Cargill entered Read More

Inducing breach of contract? Don’t “discount” knowledge and intention!

Muir MacKean

Can a party tortiously induce a breach of contract without sufficient knowledge and intention? “No”, as confirmed in The Beans Group v MyUniDays – but liability may arise if activity continues knowingly and after notification of the breach. MyUniDays, which offers “Student Verification Technology” to companies providing student discounts, entered into contracts with an online Read More

Discretion is the better part of valour – navigating contractual decision-making

Jason Rix

In this article for the Commercial Litigation Journal I run through the recent cases looking at decision-making provisions in contracts and I suggest how best to interpret them and also offer some tips for drafting.   (Also available at www.lawjournals.co.uk.) Read More

Brexit does not mean exit for the EMA

Oliver Rule

Nearly three years after the referendum, Britain still hasn’t decided what sort of Brexit it wants. For the European Medicines Agency, however, the prospect of Brexit has already meant a departure from its shiny new headquarters in London, its relocation to Amsterdam even being written into EU law in 2018. Just as Britain has struggled Read More

Estate agent’s commission: Supreme Court on binding agreements and implied terms

Jason Rix

This morning the Supreme Court found, overturning the Court of Appeal, that a short telephone call was enough to create a binding agreement between an estate agent and his client, even though the trigger event for the commission had not been specified (Wells v Devani). There were very different accounts of the crucial phone call. Read More

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