Statement Of Employment Particulars EM Law London

Statement of Employment Particulars: New Requirements for Employers

A statement of employment particulars is a written form that an employer must give an employee when the employee first starts working for the employer. It sets out the bare bones of the employment contract (more on this below).

From 6 April 2020 the statement of employment particulars is changing – more detail will need to be included.

This has come about as a result of recent legislation:

  • The Employment Rights (Miscellaneous Amendments) Regulations 2019 and;
  • The Employment Rights (Employment Particulars and Paid Annual Leave) (Amendment) Regulations 2018.

Requirements prior to 6 April 2020

In order to understand the changes made it is useful to have a firm grasp on what is required prior to 6 April 2020.

Section 1 Employment Rights Act 1996 (ERA) details that employees who are to work for more than a month must be provided with a statement of employment particulars. This is sometimes referred to as a ‘section 1 statement’ and it must be produced within two months of the start of employment. It must include:

  • Names of employer and employee
  • Date employment commences
  • Date of any period of continuous employment
  • Hours
  • Pay and interval of payment
  • Holiday entitlement and holiday pay

The ERA does not require information regarding disciplinary procedure to be included within the same statement but it must also be made available to employees within two months of employment commencing.

Requirements post 6 April 2020

  • The right to a statement of employment particulars will start from day one of employment and those working for less than a month are no longer an exception.
  • The definition of those affected has changed from ‘employee’ to ‘worker’ which means those with looser service contracts (worker contracts) will, in some cases, still have a right to a section 1 statement.
  • There is more information required in a section 1 statement and this must be contained within a single document. Particulars to be added are:
    • Days of the week a worker is required to work.
    • Whether working hours or days may be variable.
    • Maternity leave and paternity leave entitlement.
    • Remuneration or benefits provided by employer.
    • Probationary period, including any conditions and its duration.
    • Any training provided by the employer which the worker is required to complete and any other required training in respect of which the employer will not bear the cost.
  • There are other particulars which are now required in the same principal statement and not a supplementary one:
  • The notice periods for termination by either side.
  • Terms relating to absence due to incapacity and sick pay.
  • Terms as to length of temporary or fixed-term work.
  • Terms related to work outside the UK for a period of more than one month.
  • The determination of an average week’s pay must be based on data from 52 weeks rather than 12 weeks or the number of complete weeks for which the worker has been employed.

Worker/Employee distinction

A section 1 notice, under the new requirements, is now available to both employees and workers.

This places the onus on the employer to determine whether their contract is with an ‘employee’ or ‘worker’ and tailor the information to suit either definition. A worker being loosely defined as someone obliged to provide work personally, but not carrying on business where the employer is the customer. Someone who is genuinely self-employed will obviously fall outside of this definition.

Disciplinary and grievance procedures as well as probationary periods would not normally apply to ‘workers’ and therefore specifying these in a worker’s statement could imply that they are an employee. It is important that employers do not sanction unwanted or potentially harmful rights to those normally defined as workers.

Existing Employees

As of 6 April 2020 an existing employee can request additional information now required in a section 1 notice at any time up to three months after the end of employment. An employee has no longer than one month to give such additional information.

It is also important to be aware that if new provisions are introduced and they fall within the remit of the new section 1 notice then existing employees should be notified of these changes. This is the case even when the existing employee has not, up until that point, requested a new section 1 notice.

Action to be taken by employers

Given that employers will be required to produce statements for employees on day one it will mean that full details of job offers will need to established from the outset.

Existing contracts will need to be reviewed. New contracts will need to be updated. The worker/employee distinction will need to be considered.

We are currently helping clients with the new rules – it’s quick and straightforward work. If you are an employer and would like our help please contact Imogen Finnegan, Helen Monson or Rhodri Thomas or call us on 0203 637 6374.


avocats anglais

Faire du Business au Royaume-Uni - Petit guide pratique

 Classé au 5ème rang mondial des économies, le Royaume-Uni facilite les affaires et offre un emplacement attrayant avec un accès facile aux clients, aux innovateurs en matière de produits, aux fournisseurs et aux partenaires. Ce blog fournit un guide sur les questions juridiques et commerciales à prendre en compte par les entreprises françaises avant de créer une entreprise au Royaume-Uni. Si vous souhaitez plus d'informations ou des conseils sur la création d'une entreprise au Royaume-Uni, veuillez contacter Neil Williamson ou Anca Toma-Thomson.

Considérez la structure juridique de votre entreprise

Avant de créer une entreprise au Royaume-Uni, vous devez choisir une structure juridique pour votre entreprise. Il existe un grand nombre de structures différentes au Royaume-Uni, et celle que vous choisirez dépendra des objectifs et des ambitions de votre entreprise. Les deux structures juridiques les plus courantes pour les sociétés étrangères implantées au Royaume-Uni sont une filiale et un établissement stable telle qu'une succursale.

  • Filiale- une filiale à l’étranger établie au Royaume-Uni est une société anonyme britannique dont les actions sont détenues à 100% par une société mère étrangère. La filiale britannique sera une entité juridique distincte, régie par le droit britannique et totalement distincte du propriétaire de sa société mère.
  • Etablissement / succursale au Royaume-Uni- en revanche, l’enregistrement d’une succursale au Royaume-Uni n’est pas une entité juridique distincte. Un établissement stable tel qu'une succursale sera régi par les lois et règlements de la société mère où son siège social est établi. Une succursale sera enregistrée à Companies House en tant qu’entité étrangère.

L’autre option, moins courante, consiste à définir votre entreprise comme un partenariat à responsabilité limitée. Une société à responsabilité limitée, comme une société anonyme à responsabilité limitée, a une identité juridique distincte et la responsabilité de chaque associé est, en général, limitée à la contribution convenue à la société. Créer une société de partenariat au Royaume-Uni est un bon choix si vous souhaitez « tester le marché » en faisant appel à un représentant localisé au Royaume-Uni. La structure juridique que vous choisissez pour votre entreprise dépendra de ce que vous souhaitez atteindre et doit être analysée avec soin.

Enregistrez votre entreprise

Une fois que vous avez décidé de la structure juridique de votre entreprise, vous devrez peut-être l'enregistrer à Companies House. Cependant, le fait qu'une société étrangère exerce ses activités au Royaume-Uni ne signifie pas automatiquement qu'elle doit s'inscrire auprès de Companies House. L’enregistrement d’une société étrangère n’est requis que lorsque celle-ci a une certaine présence physique au Royaume-Uni, tels qu’un bureau ou une usine. L'enregistrement, par exemple, ne serait pas requis pour les agents indépendants, les distributeurs ou les employés en visite de temps en temps.

Si votre entreprise envisage d'avoir une présence physique au Royaume-Uni, vous devrez envoyer un formulaire OS IN01 à Companies House ainsi que des frais d'inscription de 20 £. Si votre entreprise enregistre son premier établissement au Royaume-Uni, vous devrez également envoyer une copie certifiée conforme de ses documents constitutionnels ainsi qu'une copie de son dernier jeu de comptes à Companies House. Vous pouvez enregistrer une entreprise à l'étranger au Royaume-Uni sous sa dénomination française ou un nom alternatif sous lequel elle propose d'exercer ses activités au Royaume-Uni.

Une fois enregistrée, une filiale devra déposer des comptes annuels conformément à la Loi de 2006 sur les sociétés. Un état de confirmation doit également être soumis au Registrar of Companies avec une taxe de dépôt de 30 £. Une succursale du Royaume-Uni devra également déposer des comptes annuels auprès de Companies House et devra en outre divulguer les comptes de la société mère à l'étranger. Si les comptes de la société mère sont en langue étrangère, ils doivent être traduits. Contrairement à la France, il n’est pas nécessaire de publier des avis juridiques dans la presse lors de la création d’une entreprise au Royaume-Uni.

Considérez votre situation fiscale

  • Impôt sur les sociétés

Une fois que vous avez terminé les étapes ci-dessus, vous devez enregistrer votre entreprise britannique pour l’impôt sur les sociétés. Que vous créiez une filiale ou un établissement stable tel qu'une succursale, votre présence au Royaume-Uni sera soumise à l'impôt britannique sur les sociétés à un taux de 19%. Du point de vue de l’impôt sur les sociétés, il existe une différence majeure entre la création d’une filiale et la création d’une succursale au Royaume-Uni. Étant donné qu’une succursale n’est pas une entité juridique distincte, elle sera régie par les lois et règlements de la société mère située à l’étranger. La succursale du Royaume-Uni ne sera soumise à l'impôt sur les sociétés que sur les bénéfices de la société mère qui sont imputables à cette succursale du Royaume-Uni. Toute perte de démarrage de la succursale du Royaume-Uni peut également être utilisée par la société mère à l'étranger pour compenser les bénéfices du pays d’origine ; accordant une réparation plus rapide que pour une filiale britannique.

 En revanche, une filiale du Royaume-Uni sera soumise à l'impôt britannique sur les sociétés pour ses bénéfices mondiaux. En effet, une filiale britannique est une entité juridique distincte de la société mère. Toutes les pertes commerciales de démarrage constatées ici ne peuvent être reportées que sur les bénéfices futurs des activités commerciales au Royaume-Uni, plutôt que sur les bénéfices des sociétés mères de cette année.

  • TVA

La TVA est une taxe de vente à la charge de toutes les livraisons de biens et services effectuées au Royaume-Uni par une soumission dans le cadre de ses activités. Une succursale ou une filiale d’une entreprise étrangère ayant une présence physique au Royaume-Uni doit s’inscrire au Royaume-Uni auprès de HMRC aux fins de la TVA, sauf si son chiffre d’affaires est inférieur au minimum prescrit (85 000 £ actuellement). L’entreprise devra alors généralement appliquer la TVA aux clients, bien que les livraisons à des clients situés hors du Royaume-Uni puissent ne pas être soumises à la TVA. Il existe trois taux de TVA au Royaume-Uni: le taux standard (qui s'applique à la plupart des biens et services - actuellement de 20%); le taux réduit (qui s'applique à certains biens et services tels que l’énergie domestique et les sièges de voiture pour enfants - actuellement de 5%); et le taux zéro (qui s'applique à la plupart des aliments et des vêtements pour enfants). Une entreprise britannique enregistrée à la TVA doit soumettre des déclarations de TVA à HMRC de manière périodique, généralement tous les trimestres.

Soyez conscient du droit du travail britannique

Contrairement au droit du travail français, le droit du travail britannique découle de la common law, de la législation nationale et du droit européen. En outre, il existe un nombre considérable de textes de droit dérivé sous la forme de réglementations contenant des dispositions supplémentaires affectant la relation de travail. Si vous envisagez de recruter du personnel au Royaume-Uni, vous devez être au courant de certaines règles et usages.

  • Contrat de travail- Bien qu'il ne soit pas obligatoire de conclure un contrat de travail écrit, les employeurs sont tenus de fournir aux employés qui ont été employés pendant un mois ou plus des détails écrits sur les termes et conditions de leur emploi. Ces informations contiendront des termes explicites et implicites et, entre autres choses, devront indiquer combien et combien de fois l'employé sera payé, les heures de travail et les congés payés.
  • Droits pendant l’emploi- en droit commun, les parties à un contrat de travail sont en droit de convenir des conditions qu’elles souhaitent. Cependant, diverses lois exigent que les employeurs observent certaines exigences minimales en ce qui concerne les conditions de travail de leurs employés. Par exemple, la loi de 1998 sur le temps de travail prévoit que les employeurs doivent prendre toutes les mesures raisonnables pour que les travailleurs ne travaillent pas plus de 48 heures en moyenne par semaine. Ce règlement contient des dispositions supplémentaires relatives au travail de nuit, aux vacances et aux périodes de repos. En vertu de la loi de 1998 sur le salaire minimum national, la plupart des travailleurs ont également droit à un salaire horaire brut minimum et doivent recevoir un décompte détaillé de leur salaire.
  • Cotisations fiscales et de sécurité sociale- En vertu du système de répartition, les employeurs sont tenus de déduire l’impôt sur le revenu directement du salaire de leurs employés et de le payer mensuellement à HMRC. En outre, les employeurs et les employés doivent verser des cotisations d’assurance nationale («NIC») sur la rémunération en espèces versée aux employés. En vertu de la loi de 2008 sur les pensions, les employeurs doivent également inscrire automatiquement les employés dans un régime de pension et verser des cotisations à leurs pensions s'ils sont éligibles pour une inscription automatique.
  • Cessation d'emploi- le licenciement d'un employé peut donner lieu à un certain nombre de demandes différentes en vertu du droit britannique. Les principales réclamations pouvant résulter de la cessation de l'emploi sont les suivantes : (i) licenciement injustifié ; ii) licenciement abusif; (iii) une demande d'indemnité de licenciement; (iv) une réclamation résultant de l'absence de motivation écrite du licenciement; et v) une demande de discrimination fondée sur le sexe, la race, un handicap, l'orientation sexuelle, la religion ou les convictions.

Droit des contrats et réglementation

Une fois que vous avez créé une entreprise au Royaume-Uni, il est très probable que vous deviez passer des contrats avec des fournisseurs, des clients et d’autres tiers. Si tel est le cas, vous devriez considérer les points suivants.

  • Clauses contractuelles abusives- en vertu de la législation britannique, toutes les clauses contractuelles doivent être claires, équitables et non trompeuses. Une clause d'un contrat de consommation est injuste au Royaume-Uni si, contrairement à l'exigence de bonne foi, elle crée un « déséquilibre significatif » dans les droits et obligations du contrat des parties au détriment du consommateur. Si une clause est considérée comme injuste, elle ne liera pas le consommateur. Il est également interdit d'exclure ou de limiter la responsabilité en cas de décès ou de blessures résultant d'une négligence. Toute clause qui semble limiter la responsabilité de quelque soit la nature doit être raisonnable pour pouvoir être exécutée.
  • Responsabilité du fait des produits- La responsabilité du fait des produits est une considération essentielle si votre entreprise britannique fournit des produits aux consommateurs. Les producteurs, les fabricants et les importateurs ont tous l'obligation légale, en vertu de la loi britannique, de garantir la sécurité des produits vendus aux consommateurs. Comme le non-respect de cette obligation peut avoir de graves conséquences, toute entreprise installée au Royaume-Uni doit surveiller la sécurité de leurs produits, informer les consommateurs des risques potentiels et prendre des mesures immédiates si un problème de sécurité est découvert. Si votre entreprise est centrée sur la fourniture de produits aux consommateurs, il pourrait également être intéressant de rechercher une assurance responsabilité.
  • Lois d’anti-corruption et corruption- la législation britannique en matière de lutte contre la corruption est sans doute la plus complète au monde, couvrant à la fois les actes de corruption nationaux et étrangers. La corruption est définie comme « une offre, une promesse ou le cadeau d'un avantage financier ou autre, ou la demande, l'acceptation de recevoir, ou la réception de celle-ci, dans le but d'induire ou de récompenser la « réalisation indue » d’une fonction publique ou privée.» Loi sur la corruption 2010 définit les infractions de corruption de tiers et de corruption, ainsi que de nouvelles infractions de corruption d'agents publics étrangers et d'organisations commerciales qui n'empêchent pas la corruption. L'infraction de corruption peut être commise au Royaume-Uni ou à l'étranger et constitue une infraction de responsabilité stricte, ce qui signifie qu'il n'y a aucune obligation de démontrer la faute de la part de l'organisation commerciale.

Droits de propriété intellectuelle

À la suite du vote du Royaume-Uni en faveur de la sortie de l’UE, des incertitudes subsistent quant aux effets de la protection de la propriété intellectuelle. Cependant, jusqu'à ce que le Brexit se produise, les titulaires de droits de propriété intellectuelle britanniques peuvent continuer à protéger efficacement leurs intérêts aux niveaux européen et britannique.

  • Brevets - Les brevets s’appliquent aux procédés industriels et aux inventions et protègent contre la mise en œuvre non autorisée de l’invention. Pour être brevetable, une invention doit être nouvelle, impliquer une activité inventive, permettre une application industrielle et ne pas être expressément exclue par la loi. Les brevets prennent généralement 4 à 5 ans pour être accordés. Si vous déposez une demande de protection par brevet au Royaume-Uni par l’intermédiaire de l’Office de la propriété intellectuelle, vous devez suivre huit étapes.
  • Marques- une marque peut être un nom, un mot, un slogan, un dessin, un symbole ou un autre périphérique unique identifiant un produit ou une organisation. Il existe deux types de marques pertinentes au Royaume-Uni; Marques déposées au Royaume-Uni et marques déposées dans l'UE. Pour être enregistrée en tant que marque, une marque doit généralement: i) être capable de représentation graphique; et ii) être capable de distinguer les produits ou les services d'une entreprise d'une autre. En outre, il existe diverses exceptions où les demandes de marque ne seront pas approuvées. 
  • Droit d'auteur - le droit d'auteur s'applique aux œuvres enregistrées, telles que les œuvres littéraires, artistiques, musicales et dramatiques. Les règles relatives au droit d'auteur au Royaume-Uni sont énoncées dans la loi de 1988 sur le droit d'auteur, les dessins et modèles et les brevets. Il existe certaines exceptions à la protection, mais la protection subsistera automatiquement lors de la création de l'œuvre.

Derniers conseils…

Malgré les événements de ces dernières années, le Royaume-Uni reste un lieu attractif pour les affaires françaises. Ce guide devrait constituer un bon point de départ pour quiconque souhaitant s'installer au Royaume-Uni, mais il est primordial d'obtenir des conseils juridiques appropriés. Si vous avez des questions sur les affaires au Royaume-Uni ou souhaitez obtenir des conseils plus détaillés, veuillez contacter Neil Williamson ou Anca Toma-Thomson.


EM Law Unsigned Contract Lawyers London

Unsigned Contract? - it may be binding anyway

Surely the lack of a signature would suggest that the parties had not yet reached the point where they wished to be bound? However, where evidence exists to the contrary, for example where the parties have acted in accordance with the contract, this is not always the case. While every case will depend upon the individual facts, it is important to be aware that a written contract does not always need to be signed by both parties to be legally binding. This blog takes a look at the rules around unsigned contracts and examines the Court of Appeal case of Reveille Independent LLC v Anotech International Limited to see where the law stands today.

An unsigned contract - the starting point

A contract is a legally binding promise by one party to fulfil an obligation to another party in return for “consideration” i.e. something of value. A basic binding contract, whether written or oral, must comprise four key elements. These key elements are offer, acceptance, consideration and intention to create legal relations. Acceptance is a final and unqualified assent to an offer. It is made in response to an offer and must correspond exactly with the terms of the offer to be enforceable. Usually, a lack of signature on a contract would suggest that a party did not wish to be bound and had therefore not accepted the offer. However, whether a contract is signed is only one factor for the courts to consider when deciding whether or not the parties to a contract intended to be bound. The courts will look at all the evidence relating to the intention of the parties, including their conduct.

Acceptance by conduct may make an unsigned contract binding

Although it is generally considered that acceptance must be communicated to the offeror to be effective, conduct may sometimes be considered as acceptance. For example, where a supplier does not communicate acceptance of an order, but it delivers the goods ordered and requests payment anyway, this will generally be deemed as acceptance.  Conduct will only amount to acceptance of an offer if it is clear that the party did the act in question with the intention of accepting the offer; they must implicitly accept the terms. In the case of Brogden v Metropolitan Railway, for example, the House of Lords concluded that, in a situation where the parties had acted in accordance with a draft unsigned contract for the delivery of consignments of coal, there was a contract on the basis of that draft. As stated by Steyn LJ in G Percy Trentham Ltd v Archital Luxfer, “the fact that a transaction was performed on both sides will often make it unrealistic to argue that there was no intention to enter into legal relations.” It should be noted, however, that there are some situations where a contract does have to be in writing to be legally enforceable. Common examples of this include a contract for the sale of land, a transfer of shares, or an assignment of intellectual property rights.

Reveille Independent LLC v Anotech International (UK) Limited (2016)

The case of Reveille Independent LLC v Anotech International (UK) Limited (2016) concerned a dispute over whether there was a binding contract in place between Anotech, a UK manufacturer of cookware, and Reveille, a U.S television production company. In the contract, Reveille agreed to permit the integration and promotion of Anotech’s cookware products into three episodes of its television series as well as grant a license to Anotech for certain US intellectual property rights. The parties began negotiations in January 2011 and on 16 February 2011 Reveille sent a “deal memo” to Anotech’s managing and sole director setting out the relevant terms. This deal memo stated that “it would not be binding on Reveille until executed by both Licensee and Reveille”.

Following further negotiations, on 28 February 2011 Anotech returned a signed version of the deal memo to Reveille, with handwritten amendments and additions. It was intended that this deal memo would be replaced by detailed, long form agreements however negotiations broke down and in July 2013 Reveille wrote to Anotech treating the contract as repudiated.

The judge at first instance concluded that by March 2012 Reveille was performing its obligations under the deal memo and Anotech knew this. He concluded that Anotech’s amended and signed offer, as set out in the deal memo, was accepted by conduct by Reveille thus a binding contract was in place. In May 2016, Anotech appealed this decision. The Court of Appeal stated that the High Court judge was right to focus on whether there were clear and unequivocal acts on Reveille’s part to constitute acceptance by conduct of Anotech’s counter-offer. The judge did not identify a date when the contract came into effect, but stated that the various acts on Reveille’s part, of which Anotech was well aware, led to a binding contract on the terms of the deal memo. Anotech’s conduct itself, for example its acknowledgement in emails that it had to pay Reveille, was also consistent with the existence of a binding contract. Reveille waived the provision that there would be no binding contract in the absence of its signature on the deal memo, and there was no prejudice to Anotech. Accordingly, the case was dismissed.

Case analysis

The case of Reveille Independent LLC v Anotech International (UK) Limited serves as an important reminder that an unsigned contract may still be legally binding. It also demonstrates the fact that a prescribed mode of contract acceptance can be waived by conduct. Therefore, the signature of both parties to a written contract will not always be a precondition to the existence of contractual relations, even where the contract explicitly states that it is. When deciding whether or not a contract has come into existence between commercial parties in negotiation, the court will be keen to preserve certainty and give due attention to what it considers to be the reasonable expectations of honest, sensible business people.

Final words

As you can see from the above, an unsigned contract is not as harmless as it may first seem. The Court of Appeal decision in Reveille Independent LLC v Anotech International (UK) Limited should be a timely reminder to parties who are negotiating a written contract not to assume that it is only binding when the document has been signed by both parties. If you have any questions about an unsigned contract or about contract law more generally please contact Neil Williamson.


Restraint of Trade EM Law

Restraint of Trade in Commercial Contracts

Individuals should be able to use their skills without undue restriction and businesses should be free to compete with other businesses. However, restraint of trade clauses are not uncommon within commercial contracts. This blog considers the general principles of restraint of trade and examines the different types of restraint of trade clauses that you may come across in your commercial dealings. 

What is a restraint of trade clause?

A restraint of trade clause is a contractual restriction imposed upon a business or an individual for a finite period of time. The purpose of a restraint of trade clause is to protect a business interest. In the employment context, restraint of trade clauses are usually used to prevent employees or directors leaving and immediately joining a direct competitor. However, in the commercial context, restraint of trade clauses can be much wider reaching. A restraint of trade clause in a Share Purchase Agreement may, for example, limit the activities of the seller to act in competition with the business sold after completion. Due to the general principle that individuals and organisations should be free to carry on their business however they see fit, restraint of trade clauses are generally unenforceable at common law. However, a court may decide to enforce a restraint of trade clause if it:

  • is designed to protect a legitimate business interest;
  • is no wider than is reasonably necessaryto protect that interest; and
  • is not contrary to the public interest. 

If these criteria are not met, the restraint of trade clause will be void and unenforceable. If these criteria are met, the clause will usually stand up in court. But what exactly do each of these criteria mean?

What are legitimate business interests?

The first task when drafting a restraint of trade clause is to make sure that you understand the nature and extent of the interest requiring protection. Although the categories of legitimate business interests are not closed, the most common legitimate business interests include:

  • Business relationships with clients
  • Goodwill of a company
  • Trade connections
  • Trade secrets and other confidential information

Is the restraint reasonable to protect that interest?

Once a legitimate interest has been identified, the restraint of trade must go no further than is necessary to protect that legitimate interest. The restraint must be reasonable as to the term of the restriction, the geographical area, and the scope of the activities covered. The term “reasonable” is generally taken to mean providing no more protection than is relevant and necessary to safeguard the relevant legitimate interest. With geographical area, for example, a restriction on a seller who operated solely in the UK from operating a similar business anywhere in the world would probably be unreasonable (although would depend on the type of business). With the term of the restriction, it is much harder to lay down a general rule. However, the courts do acknowledge that the longer the term of the restraint, the greater the chances are that it will be found unreasonable. Having said that, it is not unheard of for restraint of trade clauses in commercial contexts to last for 2, 4 or even 5 years. 

In Esso Petroleum Co Ltd v Harper’s Garage, Lord Hodson stated that in the case of agreements between commercial parties, the parties are usually taken to be the best judge of what is reasonable between themselves, meaning that the courts will be slow to interfere and find a restraint unreasonable. This also means that what might be reasonable in one context might be unreasonable in another. The burden of proof will be on the person enforcing the clause to show that the restraint goes no further than is necessary to protect the legitimate business interest.

Is it contrary to the public interest?

In the majority of cases, if a restraint of trade is reasonable between the parties, the courts will try to uphold it. However, on occasion, the courts will consider a restraint of trade from the perspective of “public interest” rather than that of the parties. Although it may crop up in the employment context, public interest is far less likely to be relevant in contracts between commercial parties. More relevant in the commercial context nowadays may be the interest of customers that under UK and EU competition law, competition is not unduly restricted. 

Different types of restraint of trade clauses

It is important to note that there are many different types of restraint of trade clauses. The type of clause you choose will depend upon the type of agreement you’re drafting. A sale and purchase agreement, for example, would typically contain restrictions on the sellers from soliciting existing customers or suppliers, soliciting existing employees, or competing with the business for a specified amount of time. A typical franchise agreement would contain restrictions on the franchisee applicable during the lifetime of the agreement and usually for a limited period thereafter. Typically, these would be not to solicit customers or employees, not to compete with the franchise business and not to represent themselves in any way connected with the franchisor. Non-solicitation and non-compete clauses are the most common types of restraint of trade. 

What happens if the restraint of trade is found to be unreasonable?

Where a restraint of trade clause is found to be unreasonable, it will be void and unenforceable. A court is unlikely to enforce a restraint of trade clause if the restrictions are inappropriate for the role, excessively long or entirely ambiguous. Where a restraint of trade clause is found to be unreasonable, the doctrine of severance may provide assistance. The doctrine of severance allows an unenforceable clause to be severed from the remainder of the agreement, with the remainder of the agreement remaining in force. Commercial parties will often include a severance provision in their contracts however this is not strictly necessary. The courts can apply the doctrine of severance without express authorisation in the contract. Nevertheless, it would be wise to include a severance provision in the contract to be safe.  

Final words

Businesses do not have complete freedom when drafting and inserting restraint of trade clauses into their commercial agreements. If you are considering a restraint of trade clause in one of your commercial contracts, you should make sure that it complies with the above requirements. If you have any questions about restraint of trade, or about any other commercial or contract law issue, contact Neil Williamson


EM Law Representations and Warranties

Representations and Warranties What's the Difference?

This blog takes a look at the difference between representations and warranties and offers some top tips on how to prevent confusion in your contracts.

What is a warranty?

A warranty is a promise that a particular statement made is true at the date of the contract. A breach of warranty gives rise to a claim for breach of contract - the main remedy being an award of damages. To give an example, in a contract for the sale of goods, a warranty may be given about the condition, age or history of the goods being sold. In a software supply agreement, a warranty is usually given that the software will be free from material defects at the time it is delivered.

What is a representation?

A representation, like a warranty, is a statement of fact but is one which is made during contractual negotiations in order to induce another party to enter into a contract. While representations are usually made prior to the contract they are often repeated and therefore form the basis of a contract.

So, what is the difference between representations and warranties?

The key difference between a representation and a warranty is the remedy available to the innocent party when there is a breach. If a warranty is found to be untrue, the innocent party will be entitled to damages. A breach of warranty does not allow the innocent party to rescind the contract, which would effectively set it aside and put the parties back in the position they were in before the contract was made. As a warranty is a term of the contract, normal breach of contract considerations apply. A breach of warranty will therefore only give rise to damages if the innocent party can prove that the breach resulted in a loss and that the loss was not too remote i.e. the loss was in the reasonable contemplation of the parties at the time the relevant contract was entered into. If damages are available, they will be assessed to put the innocent party back in the position they would have been in had the breach of warranty never occurred.

In contrast, if a representation is found to be untrue the innocent party will be entitled to bring a claim for misrepresentation, which if successful would allow the innocent party to rescind the contract. The right to rescind may be lost, though, if the innocent party affirms the contract, if a significant amount of time has passed, or if third-party rights would be infringed.

A breach of representation may also entitle the innocent party to damages, which in principle are wider in scope than the damages available under a breach of warranty. With a breach of representation, the innocent party will not have to prove that their losses were in the reasonable contemplation of the parties at the time the relevant contract was entered into. Instead, the losses must be “reasonably foreseeable”, which has been held by the courts to be a less onerous test than the test associated with a breach of warranty claim. The manner in which damages are calculated also differs for a breach of representation claim versus a claim for breach of warranty. Under a claim for breach of warranty, damages are usually assessed at the time of the breach. Under a claim for breach of representation, damages are assessed from the date the misrepresentation was made. This is usually an earlier date and so may give rise to a higher level of damages.

Given the potential to rescind the contract and the wider scope for damages, it is generally more advantageous for a party to be given representations rather than warranties. However, whether or not a party can insist on this will depend on the bargaining strength of both parties and the type of contract on the table.

Can warranties also be representations?

If you are familiar with contracts, you may have seen wording such as “the seller represents and warrants…”. Where the wording is clear cut, it is likely that the court will view the statement as both a representation and a warranty. However, where the wording does not expressly provide that a warranty is to take effect as a representation, an innocent party will struggle to argue that the warranty is also actionable in misrepresentation. Take the case of Sycamore Bidco Ltd v Breslin in 2012 as an example. In this case, the court held that various warranties in the share purchase agreement, which were not expressed to be representations, could not be representations.

The case of Idemitsu Kosan Co Ltd v Sumitomo Co Corp in 2016 further reiterated this point. Here, the court concluded that it was not enough that the subject matter of the warranty was capable of being a representation; there was no representation because there was no express provision to that effect. The fact that the agreement contained an entire agreement clause also made it clear that any pre-contractual understandings, communications or representations had not been relied upon or had been withdrawn before completion.

Representations and Warranties - final thoughts

Representations and warranties may appear similar on the surface but the remedies available can be completely different. The question of whether a statement is a warranty, a representation, or both will depend upon the wording used and the context of the contract in question. Careful drafting of representations and warranties, as well as any exclusion clauses, is therefore key!

If you have any questions about representations and warranties, or about any other contract law issue, please contact Neil Williamson.


EM Law Liquidated Damages

Liquidated damages – are they payable even when the contractor does not complete the works?

For this reason, the parties to these contracts often pre-determine the level of damages to which a party is entitled in the event of certain specified breaches occurring. These pre-determined damages are known as liquidated damages and are often triggered when there is a failure to complete works within a specified time. In this blog we take a look at the recent case of Triple Point Technology Inc v PTT Public Company Ltd and consider whether a liquidated damages clause can survive the termination of a contractor’s engagement.

Liquidated damages - current position 

The question of whether or not a liquidated damages clause will trigger a payment obligation when a contractor does not complete works has been disputed by the courts on numerous occasions over the past few years. The conventional position, derived from earlier case law, is that an employer will be entitled to claim liquidated damages for delay up to the point of termination but must bring a general damages claim for any delays which accrue after that date. The logic is that, after termination, the contractor loses control of the time for completion, especially if another contractor is employed to complete those works. However, the cases of Halland another v Van Der Heidenand GPP Big Field v Solar EPC Solutionsmuddied the waters by concluding that an employer could claim liquidated damages for the period after termination. So where do we stand now? The recent Court of Appeal case of Triple Point Technology Inc v PTT Public Company Ltd has offered some much needed clarity on this issue.  

Triple Point Technology background 

In 2012 Triple Point Technology entered into a contract with PTT Public Company Ltd for the supply of a software system. Under the contract, Triple Point were to provide the new software system in two phases, with each phase having multiple stages of work. In the first phase, the new CTRM System would replace PTT’s existing system, and in the second phase the new CTRM System would be developed to accommodate new types of trade. The contract also contained a liquidated damages clause, referred to as Article 5(3), which stated:

“if contractor fails to deliver work within the time specified and the delay has not been introduced by PTT, the contractor shall be liable to pay the penalty at the rate of 0.1% of undelivered work per day of delay from the due date for delivery up to the date PTT accepts such work…” 

In February 2013 Triple Point Technology began working on the project however the first two stages of phase 1 were completed 149 days late. Nevertheless, Triple Point submitted an invoice in respect of this work, which was duly paid by PTT. Triple Point then submitted further invoices in respect of work which had not yet been completed, on the basis that the payment dates for such work had passed. However, PTT refused to make such payments and in May 2014 Triple Point Technology suspended work. By February 2015 PTT had terminated the CTRM contract and Triple Point technology had commenced proceedings in the High Court. 

High Court decision

Following termination of the contract, Triple Point Technology commenced High Court proceedings against PTT for the sums it said they were due. PTT counterclaimed for damages for delay and damages upon termination. In the High Court, Mrs Justice Jefford dismissed the claim and awarded PTT just under $4.5 million of which just under $3.5 million represented liquidated damages for delay pursuant to Article 5(3) of the contract. As the further milestones had not been reached, Triple Point Technology were not entitled to further payments. Triple Point were therefore not entitled to suspend work in May 2014 and were accordingly in repudiatory breach of contract. 

The appeal decision 

Triple Point Technology appealed Mrs Justice Jefford’s decision. Among other grounds of appeal, Triple Point Technology argued that Article 5(3) should not be engaged because it should only apply when work was delayed, but nonetheless completed and then accepted by the employer. In this case, the work was delayed and the contract was subsequently terminated. 

The Court of Appeal held that there were three different approaches towards clauses providing liquidated damages for delay, namely: 

  • The liquidated damages clause would not apply at all (as in the case of British Glanzstoff manufacturing Co Ltd v General Accident, Fire and Life Assurance Co Ltd);
  • The liquidated damages clause would only apply until the point of termination (as in the case of Greenore Port v Technical & General); or
  • The liquidated damages clause would continue until the second contractor achieved completion (as in the case of Hall and another v Van Der Heiden).

In the court’s view, the question of whether the liquidated damages clause ceased or continued to apply up until termination, or even beyond that date, depended on the wording of the clause itself and there was no blanket rule that applied by default. Relying heavily on the reasoning in British Glanzstoff manufacturing, Sir Rupert Jackson stated that there was “no invariable rule that liquidated damages must be used as a formula for compensating the employer for part of its loss.”

Sir Rupert Jackson also held that Article 5(3), which focused specifically on delay between the contractual completion date and actual completion, had no application in a situation where a contractor never completes the work. It followed that PTT was entitled to recover liquidated damages of $154,662 in respect of Triple Point Technology’s 149 day delay and would have to bring a claim for general damages in respect of any other delays. Although Sir Rupert Jackson emphasised that every case would turn upon the wording of the clause in question, he did cast doubt on the previous decisions in Halland GPP

Liquidated damages - concluding thoughts

The case of Triple Point Technology v PTT Public Co illustrates how the law in relation to liquidated damages is far from settled. Parties to construction or software contracts should think carefully about when they want their liquidated damages provisions to apply. Clear and effective drafting is therefore key to ensure that you do not encounter any surprises when bringing a claim for breach of contract. If you have any questions about liquidated damages clauses in construction contracts or software agreements please contact Neil Williamson.


EM Law Breach of Contract Claim

Breach Of Contract What Are We Entitled To?

Signing and dealing with contracts is an integral part of running a business. But have you ever considered what would happen if one of these contracts didn’t go to plan? Breach of contract disputes are one of the most common claims brought in courts today so knowing your rights when things go wrong can put you one step ahead of the game. This blog takes a look at breach of contract claims and considers what you can do if you ever find yourself in such a situation. 

What is a breach of contract?

A contract is a legally binding agreement between two or more parties. A breach of contract occurs where one party fails to perform an obligation imposed by another party under that contract. Typical examples of breaches of contract include:

  • Failing to perform obligations in whole or in part
  • Failing to pay for what has been provided
  • Failing to provide obligations on time
  • Providing defective goods or services 

Remoteness of damage

As in the law of tort, the law of contract accepts that not all losses flowing from a breach of contract are necessarily recoverable. If the court decides that a loss is too “remote” you will not be able to recover for that breach of contract. The traditional principles of remoteness are set out in the case of Hadley v Baxendale. The main question to ask here is whether the loss was the type of loss within the reasonable contemplation of the parties at the time the contract was made. If not, it is likely to be too remote and as a result not recoverable. So, for example, if I agreed to sell you 500 widgets for £50 and, unbeknown to me you had agreed to sell those widgets to someone else for £500, if I failed to sell those widgets to you, you would not be able to sue me for your loss of £450 because this loss would not have been in the reasonable contemplation of the parties at the time the contract was made (assuming 500 widgets generally sell for around £50!)  

Contributory negligence 

A defendant to a breach of contract claim may seek to argue that the loss suffered by the innocent party is partly down to them. If successful, a claim for damages here would be reduced to such an extent as the court thinks just and equitable having regard to the innocent party’s share in responsibility for the damage. 

Exceptions to the general rule

In a limited number of cases the court may also award damages which go beyond a strict measure of compensation. Examples of non-compensatory damages include nominal damages, aggravated damages, restitutionary damages and account of profits. Restitutionary damages may be awarded where there is a gain by the defendant but no measurable loss by the innocent party. Nominal damages are small, token sums which may be awarded where the innocent party has suffered no recoverable loss. 

Other possible remedies for breach of contract

In addition to claiming damages for breach of contract, the court has discretion to award a non-financial, equitable remedy. Equitable remedies are awarded at the court’s discretion and will only be granted if damages would not be adequate. These non-financial equitable remedies may include an order for specific performance or an injunction. An order for specific performance compels a party to perform its contractual obligation and an injunction compels a party to refrain from doing something that would be a breach of contract. 

Be careful not to waive the breach

Before pursuing a breach of contract claim, you need to make sure that you have not unintentionally waived the breach. Waiving a breach essentially means giving up your right to claim any sort of remedy and can be demonstrated by something as simple as your behaviour. Unfounded delay or waiting to bring the claim at a convenient time may be enough to constitute a waiver. 

Final thoughts

If you are thinking “there’s been a breach of contract what are we entitled to?” the first thing you should do is take legal advice. It’s important that you do not take steps that could jeopardise your claim or which could even put your own business in breach of contract. If you have any questions on breach of contract claims or dispute resolution more generally please contact Joanna McKenzie

Mitigation

The rule of mitigation requires a party who has suffered loss to take reasonable steps to minimise the amount of loss suffered. The question of what steps are ‘reasonable’ is generally fact-sensitive, but an innocent party cannot generally recover for any loss that could have been easily avoided. For example, where a seller fails to deliver goods for which a market substitute is available, the innocent party should attempt to purchase a replacement rather than sit back and attempt to claim for all losses. 

Remoteness of damage

What can I do?

Suing someone for breach of contract is not always an easy process. In order to make a claim you must first overcome a series of legal hurdles. After proving the existence of a contract and that the contract was breached, you must then prove that you have sustained a loss and that loss was a direct consequence of the breach of contract. This is often referred to as the ‘but for’ test, requiring the innocent party to prove that the loss would not have occurred but for the breach.   

What am I entitled to?

Once the above has been established, you can go on to consider what you might be entitled to. The basic remedy in English law for a breach of contract is an award of damages. An award of damages is essentially an award of money which aims to put the innocent party in the same position they would have been in had the contract been properly performed. Although there are no rigid rules for the quantification of damages in a breach of contract claim, the assessment of damages is essentially a question of fact. You should consider any revenue or profits you would have earned, any costs that would have been avoided and any non-financial benefit that would have been received, provided it was a major object of the contract. 

However, you should also be aware that not all losses flowing from a breach of contract are recoverable. The rules on mitigation, remoteness and contributory negligence may restrict, and in some cases entirely prevent, an award of damages.

Mitigation

The rule of mitigation requires a party who has suffered loss to take reasonable steps to minimise the amount of loss suffered. The question of what steps are ‘reasonable’ is generally fact-sensitive, but an innocent party cannot generally recover for any loss that could have been easily avoided. For example, where a seller fails to deliver goods for which a market substitute is available, the innocent party should attempt to purchase a replacement rather than sit back and attempt to claim for all losses. 

Remoteness of damage

As in the law of tort, the law of contract accepts that not all losses flowing from a breach of contract are necessarily recoverable. If the court decides that a loss is too “remote” you will not be able to recover for that breach of contract. The traditional principles of remoteness are set out in the case of Hadley v Baxendale. The main question to ask here is whether the loss was the type of loss within the reasonable contemplation of the parties at the time the contract was made. If not, it is likely to be too remote and as a result not recoverable. So, for example, if I agreed to sell you 500 widgets for £50 and, unbeknown to me you had agreed to sell those widgets to someone else for £500, if I failed to sell those widgets to you, you would not be able to sue me for your loss of £450 because this loss would not have been in the reasonable contemplation of the parties at the time the contract was made (assuming 500 widgets generally sell for around £50!)  

Contributory negligence 

A defendant to a breach of contract claim may seek to argue that the loss suffered by the innocent party is partly down to them. If successful, a claim for damages here would be reduced to such an extent as the court thinks just and equitable having regard to the innocent party’s share in responsibility for the damage. 

Exceptions to the general rule

In a limited number of cases the court may also award damages which go beyond a strict measure of compensation. Examples of non-compensatory damages include nominal damages, aggravated damages, restitutionary damages and account of profits. Restitutionary damages may be awarded where there is a gain by the defendant but no measurable loss by the innocent party. Nominal damages are small, token sums which may be awarded where the innocent party has suffered no recoverable loss. 

Other possible remedies for breach of contract

In addition to claiming damages for breach of contract, the court has discretion to award a non-financial, equitable remedy. Equitable remedies are awarded at the court’s discretion and will only be granted if damages would not be adequate. These non-financial equitable remedies may include an order for specific performance or an injunction. An order for specific performance compels a party to perform its contractual obligation and an injunction compels a party to refrain from doing something that would be a breach of contract. 

Be careful not to waive the breach

Before pursuing a breach of contract claim, you need to make sure that you have not unintentionally waived the breach. Waiving a breach essentially means giving up your right to claim any sort of remedy and can be demonstrated by something as simple as your behaviour. Unfounded delay or waiting to bring the claim at a convenient time may be enough to constitute a waiver. 

Final thoughts

If you are thinking “there’s been a breach of contract what are we entitled to?” the first thing you should do is take legal advice. It’s important that you do not take steps that could jeopardise your claim or which could even put your own business in breach of contract. If you have any questions on breach of contract claims or dispute resolution more generally please contact Joanna McKenzie


Mitigation

The rule of mitigation requires a party who has suffered loss to take reasonable steps to minimise the amount of loss suffered. The question of what steps are ‘reasonable’ is generally fact-sensitive, but an innocent party cannot generally recover for any loss that could have been easily avoided. For example, where a seller fails to deliver goods for which a market substitute is available, the innocent party should attempt to purchase a replacement rather than sit back and attempt to claim for all losses. 

Remoteness of damage


EM Law Commercial Lease Lawyers London

Commercial Lease - A Quick Guide For Tenants

However, before signing on the dotted line, it is very important to understand exactly what you are getting into. To avoid potential pitfalls, here are some issues that tenants should consider when taking on a commercial lease for the first time.

Identify the parties and the premises

Care must be taken to correctly identify the parties to a commercial lease as well as the premises in question. The lease should be taken in the name of the business rather than in the name of a person as leases usually contain onerous obligations and can expose the lessor to significant liability. You should also check that the precise square footage of the premises is clearly defined in the lease and matches the premises that you were expecting.

Think about the length of your lease

Commercial leases are generally for a fixed term, typically three, five, ten or 15 years depending on the business sector. Although it may sound obvious, it is essential that the length of your lease fits in with your commercial objectives. Committing to a long lease when you have a long-term plan to relocate may not be in your best interests. Ideally, as a tenant, you also want to be protected by the Landlord and Tenant Act (1954). The Landlord and Tenant Act (1954) allows commercial tenants to remain in occupation of the premises even when the contractual term has come to an end, and to apply to the court for the grant of a new lease.

Ask for a break clause

If your business starts to struggle and you need to end your lease early, you won’t be able to do so unless your commercial lease includes a break clause. A break clause essentially enables you (and possibly the landlord) to end the lease early. The right to break may arise on one or more specified dates or be exercisable any time during the term on a rolling basis. Before signing your lease, you should check the conditions of any break clause. It is important that both parties are aware of the other’s right to break the lease and the required notice that may need to be served.

Be aware of hidden costs

When it comes to commercial property, there are certain costs that are unavoidable. Having said that, there are also hidden costs that you should be aware of. A repairing obligation can, for example, prove a real burden. To avoid this burden, you should ensure that the definition of ‘Premises’ does not include areas that you have not anticipated you need to keep in repair. You don’t want to find yourself responsible for major works or repairs to your premises that are disproportionate to the length of your commercial lease.

You should also be wary of any additional service charges. Additional service charges often apply to premises where there are multiple occupants and the landlord provides a range of services for those occupants, such as cleaning, heating and general maintenance. Before signing a commercial lease, you should ask your landlord to provide an exact breakdown of costs so that you can make an informed decision about whether or not the lease is financially viable for your business.

Don’t forget about assignment and subletting

If it's not easy to terminate your commercial lease, being able to assign or sublet it may be a huge help to you. Assignment involves transferring the remainder of your lease to another party whereas subletting creates a new lease where you become landlord to a sub-tenant. However, whether you can assign or sublet your commercial premises will depend on the terms of your lease. If you want to keep your options open, you should try and get your landlord to agree appropriate assignment and subletting terms before you sign the lease.

Commercial lease terms can be difficult to understand, and once signed can be very tricky to get out of. Before signing a commercial lease you should seek advice from one of our commercial lease lawyers. If you have any questions regarding commercial leases please contact Razina Akhtar.


Death Of Contra Proferentem Contract Lawyers London

Not The Death Of Contra Proferentem

However, following the recent case of Persimmon Homes v Ove Arup (Persimmon Homes), many have questioned whether the rule still exists. This blog takes a look at the contra proferentem rule and explains why we have not seen the last of it.

What is the contra proferentem rule?

“Contra proferentem” (literal translation from Latin is “against the offeror”), also known as “interpretation against the draftsman”, is a doctrine of contractual interpretation that provides: where a contract is ambiguous, the words will be construed against the party who put them forward. The logic behind this rule is that a party who imposes terms on another should make those terms clear and should be the one to suffer the consequences if they do not. Originating from the case of Canada Steamship Lines Ltd v The King in 1952, the relevance of the contra proferentem rule has been extensively debated over the past few years.

Initial debate

It was the comments of Lord Neuberger in K/S Victoria Street v House of Fraser in 2011 which sparked the initial debate on the relevance of contra proferentem. Although the case focused mainly on the effect of the Landlord and Tenant (Covenants) Act 1995, the Court of Appeal also commented on the usefulness of the contractual interpretation rules. Referring to contra proferentem, Lord Neuberger said “such rules are rarely of assistance when it comes to interpreting commercial contracts.” Instead, “the words used, commercial sense, and the documentary and factual contexts are and should be enough to determine the meaning of a contractual provision.” A similar stance was taken in Transocean Drilling UK Ltd v Providence Resources in 2016. In this case, the Court of Appeal reversed the initial judgement of the High Court, stating that the rule of contra proferentem had “no part to play when the meaning of the words is clear.” However, it was the case of Persimmon Homes in 2017 which caused the most stir.

Persimmon Homes

The comments of Jackson LJ in the case of Persimmon Homes cast the most doubt on the contra proferentem rule. In Persimmon Homes, a consortium of property developers brought a damages claim against project consultant, Arup, for failing to identify large quantities of asbestos on a development site that they had purchased. The developers and the project consultant had entered into two agreements, under which the consultant agreed to take out professional indemnity insurance and to limit their overall liability. The agreements also contained an exemption clause which stated “liability for any claim in relation to asbestos is excluded”. Relying on the contra proferentem rule, the claimants alleged that this did not exclude liability for negligence in failing to identify asbestos. However, the court did not bite. Instead, the Court of Appeal ruled that all liability relating to asbestos, including liability arising from negligence, was excluded. The court relied on the clarity of the language and concluded that the contra proferentem rule had a very limited role in relation to commercial contracts negotiated between parties of equal bargaining power.

Not the end

Despite numerous commentators citing the “death of contra proferentem” following Persimmon Homes we do not believe that this is the case. Firstly, in Persimmon Homes, Jackson LJ drew a distinction between indemnity clauses and exclusion clauses observing that where an indemnity clause is involved, the contra proferentem rule and the Canada steamship guidelines will continue to be of assistance.

Secondly, although the courts seem much less willing to listen to a contra proferentem argument when it is possible to interpret a clause’s meaning by, dare we say it, adopting a “common sense” approach or interpreting the clause in the way that the average businessperson would, there will still be times when the courts simply cannot work out what a clause is saying because it is truly ambiguous or it conflicts squarely with another cause elsewhere in the contract. It is in these cases that the contra proferentem rule will remain.

Finally, the case of Persimmon Homes involved two sophisticated commercial parties, who were capable of allocating risks as they saw fit. In cases where parties do not have equal bargaining power, the courts may be more willing to find that the contra proferentem rule applies. Where the courts cannot achieve protection for a weaker party through statutory provisions, the courts could use interpretive principles to avoid contractual oppression by the stronger party. This may be relevant in cases of consumer contracts, residential leases and insurance contracts.

Conclusions

So, despite what you may read, the contractual interpretation rule of contra proferentem is still relevant today and should not be forgotten. As a business, the main thing to take away from this is: make sure your contracts are clear and free of ambiguities! If you have any questions about contra proferentem, or contract law more generally, please contact Neil Williamson.