The Practical Lawyer


Construction – adjudication late claim

The Supreme Court has reached a highly unpopular decision on whether an adjudicator’s award (under the Construction Contract Regs 1998) can be challenged in the courts. The Supreme Court held that there is an inherent jurisdiction to do this, with a six-year limitation period applying. The problem is that this limitation period is longer than the limitation for the other party (who may therefore not be able to counter-claim).

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Relational contract – ‘honesty and integrity’

In many legal jurisdictions there is an overriding duty of good faith between contracting parties. But, the English courts have consistently refused to adopt such a vague and subjective concept. Thus, in our legal system there is no implied duty of good faith between contracting parties – our starting point is that each is free to take advantage of the other (unless, for instance, there is a fiduciary duty). 

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Holidays – Consumer Regs

The new Consumer Regs impact on the sale of holiday and package services: 

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Bankruptcy – pension draw-down

If a pension has been drawn down by a bankrupt, then that will be ‘income’ for the trustee.

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Entrepreneurs’ relief – changes

Entrepreneurs’ relief reduces the rate of capital gains tax from 28% to 10%, for the first £10m gain on the disposal of all or part of a business or trading company (held for at least one year). 

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Patent – disclose other licences?

In an ‘unprecedented’ decision, the Patents Court has ordered pre-action disclosure of all licences granted by a patent holder. This was so an alleged infringer could estimate its potential damages liability.

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Procurement – exclusion

One of the criticisms of the old procurement regime was the difficulty of excluding contractors with unsatisfactory past performance. While there were cases arguing that this could apply if there had been ‘professional misconduct’, there were no clear guidelines and most contracting authorities were worried about the potentially subjective nature of any such criteria. To an extent, those concerns have been addressed by the 2015 Regs in force since 26 February 2015.

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Final certificate – conclusive

It is important to remember that JCT building and construction contracts make the ‘final certificate’ conclusive. So, if a final certificate is issued, it is vital to take the necessary steps – within the required time period – in order to maintain a right of legal challenge.

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Indemnities – drafting

The scope of an indemnity depends on the specific contractual terms. But, what all indemnities have in common is that they avoid the usual contractual arguments about foreseeability of loss and the obligation to mitigate (unlike warranty claims, where those arguments can be raised). Needless to say, any party would much prefer to have the benefit of an indemnity in relation to a particular liability, as opposed to having to rely upon the court’s assessment of loss under a breach of contract claim.

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Liquidated damages – or penalty?

A liquidated damages clause is one way of dealing with potential breaches of contract. Thus, the parties can agree at the outset pre-determined estimates of loss for the failure to comply with certain contractual obligations – a ‘liquidated damages clause’. 

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