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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.

Implied duty not to prevent performance

Jason Rix

There was an implied duty in a lease that the lessor would not prevent a management company from performing its obligations, but not one that it had to positively cooperate with the company (Wild Duck v Smith [2017] EWHC 1252 (Ch)). The dispute related to the development of holiday homes in the Cotswolds by the Read More

Renegotiation clause in long-term contract – what if parties cannot agree?

Alex Hiendl

In Associated British Ports v Tata Steel, the court upheld a provision in a 25-year licence which referred a failure to renegotiate terms in certain circumstances to arbitration. The clause in question, provided that either party could serve notice on the other to renegotiate the agreed terms “in the event of any major physical or Read More

Contra proferentem rule when interpreting commercial contracts

Po-Siann Goh

In Persimmon Homes v Ove Arup, the Court of Appeal declined to apply the contra proferentem rule to an exemption clause in a major construction contract. The contra proferentem rule, set out by the Privy Council in Canada Steamship in the context of excluding liability for negligence, requires any ambiguity to be resolved against the Read More

Implied terms – not easy where the details haven’t been ironed out yet

Samantha Holland

In Baturina v Chistyakov the High Court refused to imply a term into a joint venture general framework agreement, which contained only outline terms, that the funding advanced by the claimant be used only for the purposes of the joint venture projects. The decision relates to a “bitter” commercial dispute between two wealthy Russian entrepreneurs over Read More

Contractual interpretation – setting an example

Alexandra Pedder

The Court of Appeal has applied the tests in Rainy Sky (business common sense) and Arnold v Britton (natural meaning of the words) to interpret a construction contract. On the facts, figures for minimum acceptable performance levels described as “examples” were found to be binding (Sutton v Rydon). Although the court did not refer to the most Read More

Contracting and Contract Management: All Change … or Business as Usual?

Chantal Du Toit

A number of A&O colleagues from the London arbitration team recently attended the Annual Energy Disputes Seminar hosted by Quadrant Chambers, entitled “Energy Disputes: Lawyering Your Way to a Solution”. During the evening Simon Rainey QC gave his take on the emerging principles of contractual interpretation in energy disputes. He ran through the following examples: Read More

Plus ça change: both commercial common sense and the natural meaning of the words matter

Stacey McEvoy

In Wood v Capita, the Supreme Court has looked again at the principles of contractual interpretation. To recap, the Supreme Court in Arnold v Britton had cautioned against commercial common sense overriding the natural meaning of a provision. In Rainy Sky, it had explained that, if there were two possible constructions, the court was entitled to prefer the construction Read More

Is this the promised end? Implied variation of a contract which has been expressly varied

Jason Rix

The Court of Appeal has held that an express variation of some terms in a contract did not create an implied variation of another term in the same the contract (Ilkerler v Perkins). Perkins had entered into a distributorship agreement with Ilkerler, a Turkish company. Perkins gave notice to terminate the agreement and Ilkerler sued for wrongful Read More

Reasonable endeavours to reach agreements with third parties: are they enforceable?

Samantha Holland

A clause undertaking to use all reasonable endeavours to make an agreement with a third party is enforceable (Astor Management v Atalaya Mining). Astor argued that two of the defendants had breached an undertaking to use “all reasonable endeavours” to obtain a debt facility. The defendants raised a number of arguments in defence, including that Read More

Boilerplate: Standard form, standard failings?

Jason Rix

This week Lawson Caisley and Richard Farnhill hosted an event for General Counsel looking at boilerplate provisions in contracts. Richard noted that, while contracts are being interpreted more literally, the treatment of certain boilerplate provisions by the courts has not followed the natural meaning of the words. According to Richard, there are three types of Read More