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Limitation of liability – commercial agreements

To what extent will the courts interfere with clauses that exclude or limit liability in commercial agreements?

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Consumers – doorstep selling

New doorstep selling Regs came into force on 1 October. The earlier, 1987, Regs provided a consumer of goods bought as a result of an unsolicited visit to the home or place of work, with a seven-day cooling off period in which to cancel (by giving written notice to the seller).

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Auctions – liability

Any description of a lot (eg in the catalogue or in an oral description during the auction) will be governed by the Sale of Goods Act 1979, which implies a term that goods will correspond with that description. If the goods are not as described, then the buyer may be entitled to reject the goods or claim back the purchase price (or claim damages for the difference in value).

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Directors – indemnity

Given the number of companies that are getting into difficulties, it is an appropriate time to consider whether client companies have taken advantage of the changes introduced by CA 2006 to increase the scope of director indemnities:

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Late payment – interest

A reminder of the Late Payment of Commercial Debts (Interest) Act 1998.

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Procurement – criteria

The procedures for the award of public service contracts are governed by an EU Directive that sets out the criteria on which a contracting authority may base its award of a contract:

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Warranty – directors

Share purchase agreements often contain exclusion clauses in which the seller will agree that if it is sued under the warranties, it will then not seek a contribution from either the target company or any directors/employees of the target who may have been involved with the seller in agreeing to and making disclosures under the warranties.

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Minimum purchase – penalty?

Contracts often state that a fixed, or easily calculated, sum has to be paid if one party is in breach.

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Unfair Contracts – ‘read and understood’

Under the Unfair Terms in Consumer Contracts Regs 1999 a contractual clause can be rendered void, through being ‘unfair’ if, ‘contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract to the detriment of the consumer’.

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Contracts – Rome II

Rome II introduces important changes on the ‘applicable law’ rules when dealing with foreign claims. Note that Rome II only applies to non-contractualclaims (eg torts) but it has implications for commercial contracts.

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