Entire agreement clauses intend to restrict all potential liability that can arise from an agreement to the terms of the contract itself. This means that any collateral statements made during the negotiation of an agreement should become irrelevant. And that, if in dispute, the parties should look only to the contractual terms (entire agreement) for relief. Such clauses have become standardised boilerplate clauses found in most contracts. They are subject to caveats and in some instances complex ongoing legal debate. This blog intends to give a practical view of the effectiveness of such claus ..read more

Liability caps are usually negotiated. Whether that be in commercial contracts, share purchase agreements or any contractual relationship where liability is created. A recent case, Equitix EEEF Biomass 2 Ltd v Fox [2021] EWHC, shows how the specific wording in liability caps is particularly important. The issue here concerned whether or not ancillary liabilities, such as litigation costs and interest on damages, were deemed capped. The facts of this case are complicated, relevant and perhaps prescient. The legal side more common. A company had been sold and a share purchase agreement signed. T ..read more

Subcontracting is seen in a number of sectors including construction, transportation, manufacturing and information technology. A subcontract will always be related to another contract, what is often called the ‘main contract’. Two parties will have entered the main contract and then one of those parties will wish to subcontract some of their obligations. The scope of these subcontracted obligations can be as wide as the parties wish (subject to any subcontracting rules in the main contract). The key point here is that, as opposed to novation where the original contracting party to the main co ..read more

Liquidated damages clauses exist to create certainty around how much can be claimed when a contract is breached. Put another way, they are introduced to deal with the difficulty of predicting the amount potentially recoverable as damages for breach of a contract. A recent ruling by the Supreme Court in Triple Point Technology Inc v PTT Public Company [2021] UKSC 29, explored liquidated damages clauses effectiveness in the context of the failed delivery of a software system. The case also explored the effectiveness of exclusion clauses and the definition of negligence. Liquidated damages clause ..read more

Varying a contract (changing it) can be done orally or in writing. However, most commercial contracts contain a clause which states that any changes made to a contract are ineffective unless made in writing and signed by or on behalf of both parties. This is called a variation clause or no oral variations clause. This generally means, therefore, that in the majority of cases when varying a contract, a written agreement needs to be in place between the parties to effect such a change. Read this blog to find out more about the law concerning varying a contract. Varying a contract – consideration ..read more

When scanning a contract it is common to encounter schedules, annexes, appendices that are incorporated by reference to other documents, additional contracts and supplementary terms and conditions. Often this referenced material is essential to the form and consequences of a legal agreement. And too often it is overlooked. But when can this additional material be insufficiently incorporated into a contract, rendering it of no legal consequence? Reasonable notice must be given if terms are to be incorporated by reference Terms and conditions which are not immediately visible will be effectively ..read more

When buying a company, heads of terms (also known as letters of intent, memoranda of understanding and heads of agreement) are by and large contained in a short document that sets out the principle terms of an agreement. Heads of terms constitute serious intent, and may have moral power, yet are not necessarily binding. This will rely upon the substance of the heads of terms and the goals of the parties. Heads of Terms Purpose Heads of terms will not always be valuable with regards to arranging an exchange and they might be of more use to one side than the other, yet heads of terms can assist ..read more

The principal (but not the only) remedy in English law for breach of contract is an award of damages. This blog focuses on the law of damages for breach of contract where damages are awarded by a court to compensate for the injured party’s loss. This blog does not cover “liquidated damages”, which are defined by the parties under the terms of the contract as specific amounts payable in the event of a party’s default. Damages for breach of contract: the general rule for compensation In English law, the purpose of an award of damages for breach of contract is to compensate the injured party for ..read more

Best endeavours, reasonable endeavours, all reasonable endeavours – how are these terms used in a legal sense and what do they mean? Contractual obligations are normally absolute and failure to satisfy an obligation will be a breach of contract. Endeavours clauses are therefore used when a party is only prepared to “try” to fulfil an obligation, rather than commit to it absolutely. For example, in the case Jet2.com v Blackpool Airport the clauses under scrutiny created an obligation for Blackpool Airport to use its “best endeavours to promote Jet2.com’s low cost services” and “all re ..read more

On 7 May 2020, the UK Cabinet Office published guidance that parties to contracts should act responsibly and fairly, support the response to Covid-19 and protect jobs and the economy. Being non-statutory it is unclear how the courts might apply this message. Such expectations call to mind the concept of good faith. The government is encouraging businesses to act in the interest of public health, the job market and other businesses rather than just their own. In contract law this roughly translates as a duty of good faith to the other party of a contract. History of good faith The concept of go ..read more