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Anti-oral variation clauses are in fact worth the paper they’re written on….

In 2016 the Court of Appeal ruled that written contracts could be varied orally notwithstanding a clause that expressly prevents or restricts it (an ‘anti-oral variation clause’). However, earlier this year the issue came before the Supreme Court and the decision was overturned.

Original decision

The Court of Appeal had taken the view in MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2016] EWCA Civ 553 (“MWB”) that the principle of freedom to contract meant that parties could agree whatever, and however, they wish and therefore contractual clauses restricting this were unenforceable (see our article from July 2016 here). Whilst creating rather more flexibility for parties who wanted to vary contracts, this decision also meant a lack of legal certainty for parties entering into written contracts containing these clauses, and the scope for more disputes about whether terms had been varied. As many of us anticipated, the matter ended up before the Supreme Court.

An about-turn

The Supreme Court entirely reversed the decision on 16 May 2018, deciding that anti-oral variation clauses in contracts are in fact valid. The Supreme Court concluded, amongst other points, that contract law does not obstruct the legitimate interests of parties who wish to make their own rules restricting the variation of contracts. The full judgment is available here

In practice this means that the certainty offered by anti-oral variation clauses is back, and parties seeking to vary a contract, or who consider they have done so, should carefully consider any such clauses to ensure the variation is effective. Where a contract is varied, it is advisable to ensure that the negotiations and parties’ intentions are properly recorded in the event of any future dispute.

If you would like to discuss anything arising from this article please contact Sarah Holland on 0117 959 5438 or at sholland@loneystewartholland.co.uk.

Insolvency - Protecting Your Business

Standing in my local Wetherspoons recently, drinks distribution certainly didn’t seem to be much of a problem! However, the recent appointment of PWC as administrators of Conviviality tells a different story. Wetherspoons is one of Conviviality’s main customers.

Conviviality’s administration is being attributed to some ambitious acquisitions including wholesalers Bibendum and Matthew Clark which were quickly purchased by the company behind the Magners brand, C&C Group. A forgotten tax liability of £30 million didn’t help matters either!

Taken together with other recent high-profile insolvencies including Toys R Us and Maplin Electronics and sobering announcements from New Look, Select, Homebase, Prezzo, Byron, Jamie’s Italian, Café Rouge and Bella Italia, the retail / leisure sector seems to be continuing its significant drop in fortunes.

However, as with all things, the reasons for the poor health of companies is more complex than a general downturn in the fortune of a sector. Bad management, flawed strategies, customer confidence levels, the negative impact on discretionary spending and increased costs due to things such as the National Living / Minimum Wage and the devaluation of the pound are just a few of the factors involved in the recent insolvencies and announcements.

Of course, perfectly healthy businesses can also be impacted by the insolvency of suppliers and customers which can put an unexpected strain on cashflow and supply chains.

What can be done to safeguard your business?

The recent insolvencies and announcements are clearly a cautionary tale and should prompt business owners to give their businesses of whatever size a health check to ensure they are not the next insolvency story and/or avoid the knock-on effect from other business’ financial woes. For example:

  1. Agreements with suppliers and customers should be checked.
  2. Credit terms should be reviewed.
  3. Due diligence on new suppliers and customers should be undertaken with care.
  4. The business’ own terms and conditions should be reviewed – for example, do they contain a retention of title clause? Is the contracting process such that they are incorporated into contracts rather than those of the supplier or customer? This is important because they will usually be more favourable.
  5. Is an adequate and proactive debt recovery process in place?
  6. Can appropriate insurance protect against unexpected impacts on your business?

These are just some of the things that can be considered to ensure that your business is protected as well as possible against being affected directly or indirectly by insolvency. However, if, despite your best efforts, your business is affected by insolvency, seeking early professional advice is the key to a successful resolution. The facts and issues can be analysed properly, and a coherent strategy put in place to achieve your objectives and resolve any issues in as positive a way as possible.

We can help companies ensure their contracting process, terms and conditions and debt recovery processes are fit for purpose. We are also able to help with the vast array of issues which arise in insolvencies. If we can’t help with your query ourselves, we work closely with a number of trusted advisers and professionals who we can put you in touch with.

To discuss things in more detail or seek advice, please do contact Scott Taylor on 0117 959 5439, 07961 255 206 or staylor@loneystewartholland.co.uk.

Unhappy with your litigation solicitor? Factors to consider when choosing your new dispute resolution lawyer and transferring your case.

At Loney Stewart Holland our specialism in bringing and defending solicitor professional negligence cases has given us substantial first-hand experience of the practical issues arising from a breakdown in the solicitor client relationship. 

Do I Have to Mediate?

If you are involved in litigation, you may well have been advised to consider attempting to resolve the dispute by mediation. The Court rules require parties to consider alternative dispute resolution, such as mediation, and indeed solicitors have a duty to advise their clients about it.

Damages For Late Payment Of Insurance Claims - The Enterprise Act 2016

It has long been an oddity of English Law that an insured has no right to claim damages for late payment of sums due under an insurance contract.  This arises from a historical legal fiction whereby the claims payments themselves are considered to be damages for breach of contract by an insurer and the law does not permit the recovery of damages for losses suffered by the late payment of damages.  The only claim that an insured has is for interest on the late payment.  That was only ever at the discretion of the Court and so often irrecoverable in practice if a claim was settled prior to Court proceedings.

Misuse of Confidential Information: Actual Use of Information Crucial to a Claim for Damages

The High Court recently considered a claim by an investment management company against two former employees for copying and retaining the company’s confidential information. The Claimant sought £15m in damages, representing what it considered to be the value of the confidential information, but was awarded a mere £2, as it had not based its case on actual use of the information.

Professionals’ Duty of Care to Clients: The Importance of the Retainer

Last month the High Court in Denning v Greenhalgh Financial Services Ltd [2017] EWHC 143 (QB) considered the scope of the duty of care owed by a professional to its client. In striking out the claim against a pensions advisor the Court provided a useful reminder of the “signal importance” of the retainer and the limited circumstances in which the Court might be willing to extend a professional’s duty beyond those terms.  

Solicitors Professional Indemnity Insurance: How Many Limits of Indemnity?

AIG Europe Limited v Woodman & Others [2017] UKSC 18

The Supreme Court has today finally put to bed the long running AIG solicitors' insurance claims aggregation saga. Market wisdom has broadly prevailed on the principles and the confusing qualifications introduced by the High Court and Court of Appeal have gone. However the Court did decide that insurers will only be partially successful on the agreed facts in that separate limits of indemnity were available for each of the two developments, which demonstrates once again how fact sensitive liability cap issues are.

We have vast experience in implementing strategies for insurers and insureds facing multiple claims and are always available for an informal initial discussion.  Please contact Richard Loney if you would like to know more.

https://www.supremecourt.uk/cases/docs/uksc-2016-0100-judgment.pdf

 

Versloot & Collateral Lies: 3 months on....

In Versloot Dredging BV & anor v HDI Gerling Industrie Versicherung AG & ors [2016] UKSC 45 the Supreme Court considered whether the use of ‘fraudulent devices’ (or ‘collateral lies’ to use the Court’s preferred terminology) should operate to forfeit an otherwise perfectly legitimate claim under an insurance policy.  The Supreme Court found by majority (Lord Mance dissenting) that it should not.

Court Confirms Part 36 Offers Reject Earlier Without Prejudice Offers

In the recent case of DB UK Bank Limited (t/a DB Mortgages) -v- Jacobs Solicitors [2016] EWHC 1614 (Ch) the High Court confirmed that making an offer under Part 36 of the Civil Procedure Rules has the effect of rejecting an earlier common law offer, meaning it is no longer capable of acceptance.

Third Parties (Rights Against Insurers) Act 2010 in force – Claimants finally given powerful new rights when seeking recovery from insolvent policyholders’ liability insurers

 

The long delayed Third Parties (Rights Against Insurers) Act 2010 came into force from the beginning of August 2016 with the intention of making it quicker, easier and more certain for Claimants seeking recovery from the liability insurers of insolvent policyholders who have caused them loss.

The Enforceability of Contractual Clauses Restricting Variation

In two recent cases, the Court of Appeal has considered the law regarding the enforceability of contractual clauses that purport to restrict the way in which the contract can be varied. These types of clauses are common, and often require any variation to be made in writing. There had previously been mixed decisions from the Court on the issue and we now have a useful analysis and clarity on previously inconsistent judicial approaches.

Insurance Act 2015: Remedies for Non-Disclosure

The Insurance Act 2015 heralds the long-awaited reform of insurance contract law.  It represents a number of significant changes to the rights and remedies of insurers and policyholders and impact on the role and duties of commercial brokers.  In this article we consider changes to the remedies available to insurers in circumstances where it contends that the insured has breached its duty of fair presentation.