Cavendish Square Holdings BV v El Makdessi [2012] EWHC 3582 (Comm); [2015] UKSC 67 – Law Journals

Restrictive Covenants: Spot the difference – restrictions in sale and shareholder agreements

The courts take a markedly different approach to enforcing covenants in sale-and-purchase and investor agreements compared to those in employment contracts, reports Sam Whitaker ‘Generally, the courts treat restrictive covenants in sale-and-purchase agreements (SPAs) more favourably than those in employment contracts. This is because they assume the parties have equal bargaining power.’ Restrictive covenants in …

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Drafting: The letter of the law

Brioney Thomas and Grace Dawson Stephens weigh up a recent decision on penalties ‘The case is authority that a price reduction, recorded separately but contemporaneously with a main agreement, should be considered a primary obligation of the overall deal.’ Practitioners should take note of the recent application of the law on penalties in Vivienne Westwood …

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Leases: When the side becomes the main

Anna Ralston takes a closer look at termination traps in rent concession letters ‘Parties to side letters need to consider carefully the content of any potential termination mechanisms.’ Finding a concession letter nestled in the deeds packet is very common. Commercial landlords and tenants often document the ‘main deal’ in the lease and then agree …

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Contracting: Limiting the damage

Clare Auty and Doris Woo examine the application of penalty clauses in procurement contracts ‘Although the penalty rule still stands, it is clear… that establishing a valid legitimate interest is effectively a trump card for allowing a broad spectrum of financial remedies in properly negotiated contracts.’The use of liquidated damages clauses and service credits, such …

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Penalty Clauses: A high threshold

The Supreme Court has issued a landmark judgment on penalty clauses. Paul Joukador, Nathan Searle, Jane Dockeray and Ingrid Stables discuss the implications ‘It remains to be seen how the courts will determine what is and is not extravagant, exorbitant or unconscionable, particularly where the contracting parties are not on a level playing field.’In its …

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Update: A litigation overview – 2015

Anna Pertoldi and Maura McIntosh look back at some of the key developments of 2015 from the perspective of the commercial litigator in England and Wales ‘2015 offered a welcome respite from the previous flood of case law considering applications for relief from sanctions for breaches of court rules and orders.’ As we move into …

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Construction Trends: Keeping an eye on the ball

Riaz Hussain examines legal and litigation trends for construction in the year ahead ‘Although in most respects the Supreme Court is not saying anything new [in Arnold v Britton], the emphasis of the majority’s view claws back from some of the more purposive approaches taken in recent cases. The impact of this decision on construction …

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Damages: Avoiding a penalty

Noel McMichael and Clare Arthurs analyse the impact of Makdessi ‘The Supreme Court looked at two main questions: when is the penalty rule engaged, and what makes a contractual provision penal?’ The Supreme Court has re-examined the rule against penalties in contracts. Its judgment in the joined cases of Cavendish Square Holding BV v El …

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Contract: Something for everyone

Mark Lawrence and Jonathan Pratt investigate recent Supreme Court guidance on break rights and implied terms ‘All five members of the Supreme Court were clear that… a term can only be implied into a contract where it is necessary to make that contract work. This should, therefore, be the starting point for anyone involved in …

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Damages: Offside – a new test for penalty clauses

Paul Joukador and Nathan Searle report on a landmark Supreme Court judgment ‘Provided that the relevant contractual provision: (i) serves a legitimate business interest(s); and (ii) is not extravagant, exorbitant or unconscionable, it will not be a penalty and therefore will be enforceable.’ It is common practice to include a clause in a contract which …

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