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Procurement and Outsourcing Journal: March/April 2014

David Sawtell considers recent case law on guarantees

Guarantees play an important role in commercial agreements, allowing parties to deal with companies or individuals safe in the knowledge that if the debtor defaults, another more financially secure party will pay up. The law of guarantees is not without its own traps, however, as a number of recent cases have shown. The Court of Appeal decision in Topland Portfolio No 1 Ltd v Smiths News Trading Ltd [2014] demonstrated how guarantors can evade liability if the primary creditor does not keep in mind the rule in Holme v Brunskill [1878].

Jack O’Farrell analyses the implications of a recent decision on penalty clauses

A three-judge UK Court of Appeal has recently unanimously held (overruling a decision of the UK High Court) in Makdessi v Cavendish Square Holdings BV [2013] that clauses in a share purchase agreement – providing, in essence, for the payment of a greatly reduced sum for shares in the company in the event of a default by the party holding those shares – were unenforceable penalty clauses, because there was a very substantial discrepancy between the level of damage stipulated in the contact and the level of damages which were likely to be suffered as a result of the default. This decision was reached despite the fact that the agreement on these issues was apparently the result of extensive commercial negotiation, in which the parties were advised by two well-known London law firms. The decision has implications for many types of commercial agreements where one party seeks, in effect, to deter another party from breaching the agreement.

Alistair Maughan reports on the overhaul of the EU public contract procurement regime

On 11 February 2014, the EU took the final step in its latest overhaul of its public procurement regime. As well as a new directive dealing for the first time with the award of concession contracts, the EU has issued new directives that consolidate and update the existing regimes dealing with the award of contracts for supplies, services or works, and the award of contracts in the so-called utilities sectors (water, energy, transport and postal services).

Morgan Lewis

Nicholas Greenwood , Kevin Robinson and Richard Ellison examine the use of deferred prosecution agreements in corporate bribery, fraud, and other economic crimes

Deferred prosecution agreements (DPAs) are the most recent tools used by the UK government to fight economic crime. Introduced by the Crime and Courts Act 2013 (CCA) and set to become available from 24 February 2014, DPAs are agreements between a prosecutor and a company that, in return for compliance with certain conditions, the prosecutor will defer and ultimately discontinue criminal prosecution. They may be used in cases that involve bribery, fraud, money laundering, or any other economic crime.

Achilles

Adrian Chamberlain warns of the risks in poor supply chain visibility

In the absence of accurate global data on suppliers, buyers are exhibiting ‘blind faith’ in lower tiers of their supply chain. Poor visibility at tiers two and three is exposing those who source globally to risk and potential brand damage that should deeply concern any board, as well as company shareholders.

Marc Fèvre reviews the recently published national infrastructure plan

The UK government published its fourth national infrastructure plan (NIP) on 4 December 2013, announcing its spending plan for the next decade and beyond in energy, transport, flood defence, waste management, water, communications and intellectual capital infrastructure.

John Houlden and Brendan Ryan discuss information sharing in government procurement exercises

The Cabinet Office has issued a procurement policy note (PPN) (3 February 2014), aimed at ensuring procurement information relating to bidders can be shared across central government bodies. Such information sharing is, according to the Cabinet Office, necessary to ensure the Crown behaves as a ‘single intelligent customer’.