The Practical Lawyer

In 2007 Safeway admitted its involvement in anti-competitive practices involving the price paid by consumers for milk. The penalties could run into many millions of pounds. In response, it has now started proceedings against former employees and directors, including the chairman of one of its subsidiaries.

If security is taken over shares, then it is possible that any subsidiary company will no longer be a subsidiary.

That is the result of a CA decision where a parent company had charged its shares to the Bank of Scotland, with the shares being registered in the name of the Bank of Scotland’s nominee. It was held that this meant that a company that had previously been a subsidiary was no longer a subsidiary under s736 CA 1985 (now s1159 CA 2006).

Claims farmers have been very active in promoting the ‘missing agreement’ defence for credit agreement defaulters. Section 78 of the Consumer Credit Act 1974 requires the credit company to produce a photocopy of the original agreement or a copy directly derived from it.

The Remedies Directive came into force on 20 December 2009, with a view to encouraging greater transparency in the procurement process (in particular, to reduce the number of ‘direct awards’, where contracts are awarded without an OJEU advert). This has been done by giving greater remedies to aggrieved bidders and encouraging them to litigate in the case of a breach. In particular there are:

enhanced notice requirements: the old ‘two-stage’ approach where bidders could ask for more information within two working days has been scrapped. Now, all information has to be given up-front by the issue of an ‘award-decision notice’ to everyone who submitted a bid. This will include the award criteria, the reasons for the decision, and the score of the winner (and of the person sent the notice);

What do you do if you think the other side are guilty of a fundamental breach of contract, therefore entitling you to repudiate the contract?

The ECJ has rewritten the law on compensation for airline delays.

2004 Regs introduced a system whereby passengers would be compensated if flights were cancelled, but merely be given care and assistance (typically free drinks, meals and two phone calls) if a flight was delayed. Now, however, the ECJ has said that the Regs should be interpreted so that passengers are entitled to compensation if a flight is delayed (for ‘a loss of time equal to or in excess of three hours... where they reached their final destination three hours or more after the arrival time originally scheduled by the air carrier’).

A reminder of the main rules on the scope of indemnities that companies can give to directors:

If you act on behalf of clients who have had to pay Phonographic Performance Limited (PPL) licence fees for playing background music in public, then advise them that they may be eligible for a refund.

It is not unusual for a commercial contract to require the parties to conduct negotiations in good faith, generally to settle matters that had not been sorted out at the time of drafting. In the US, such agreements are largely enforceable, since they have been held to be similar to agreements to use best endeavours, and are thus binding. In the UK, however, there has long been concern that an agreement to negotiate is unenforceable, because it lacks the necessary certainty.

The courts have no power to imply a term so as to ‘improve’ a contract, or to make it fairer or more reasonable. The task of the courts is simply to discover what the contract means, not to alter the agreement to the parties. The classic approach adopted by the court is the ‘business efficacy’ test (ie that the proposed term is necessary to give business efficacy to the contract). There is also the ‘officious bystander’ test (ie that the proposed term must be so obvious that it goes without saying).