The Practical Lawyer


Insolvency – commercial test

Section 123 Insolvency Act 1986 includes both a cash-flow test and a balance sheet test of insolvency. However, in Eurosail [2013] it was made clear that these two tests should not be separated and isolated from each other, and nor should they be applied mechanically.
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Warranties – also representations?

Warranties were given in a sales agreement. Could they also be sued on as misrepresentations (under Misrepresentation Act 1967)?
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Wrongful trading – costs?

The High Court has recently held that liquidators and administrators are not able to recover their own costs and expenses for investigating a wrongful trading claim from the directors of a company (even if there has been a finding of wrongful trading under s214 IA 1986).
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Design fees – delay?

The design fees for UK registered designs are due to be dramatically lowered(!) on 1 October 2016 (eg an application for up to 20 designs has been reduced by c90%). Clients thinking of filing design applications may want to consider whether it is worth postponing.


Insurers – late payment

Section 13A Insurance Act 2015 will make it an implied term of every insurance policy that the insurer will pay out within a ‘reasonable’ period of time (which will include a ‘reasonable time’ for the insurer to investigate and assess the claim).

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Airline delay – ‘extraordinary circumstance’

The EU rules on airline compensation for delay have, to all extents and purposes, become strict liability. The lead case is [2014] which involved two faulty engine parts in a KLM plane that was due to leave for Quito. The parts failed unexpectedly – but within their normal lifespans – meaning that KLM had to fly in replacement parts causing a 24-hour delay. KLM argued that, for all practical purposes, it was impossible to avoid the technical failure and thus it was outside their ‘actual control’ and ‘an extraordinary circumstance’. But, it was held that while this was an ‘unexpected flight safety shortcoming’ it was not ‘extraordinary’ because it is ‘normal’ for there to be unexpected mechanical failures – and KLM had a duty to maintain the aircraft so it was in ‘actual control’ (even though there was no way it could have foreseen the failures).

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Contract – ‘good faith’

English courts have shied away from implying a general duty of ‘good faith’ into contracts. The court approach is that parties should be free to negotiate their own contractual terms, and that having an implied term of ‘good faith’ might impact on contractual clarity. This is, of course, very much ‘swimming against the tide’ of international judicial opinion (the civil jurisdictions of Holland, Germany, France and Italy will imply ‘good faith’ provisions, as will the common law jurisdictions of Scotland, New York, Canada, Australia and New Zealand).
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Contract or tort – pros and cons

There are different measures for calculating damages, depending on whether the claim is contractual or tortious. Moreover, if a claimant has a claim in both contract and tort, then they can choose whichever produces the better outcome.
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Exclusion clause – ambiguous

The CA recently dealt with an ambiguous exclusion clause. It took the view that the correct approach is to interpret it in the narrowest way, if a linguistic, contextual and purposive analysis does not resolve the issue.
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Hashtag – registrable?

There is a growing trend for businesses to try and register their most popular hashtags as trade marks.
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