Commercial law update In house lawyers forum – March 2015

• confirmation of three recent trends

– good faith, precedence, acting

‘reasonably’

• whoops! – contractually bound by

accident

• notice – one practical thing to do pre-

signature

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• free second opinion/expert view/check

a point

• approx. 20 minutes on the telephone

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Terms and conditions apply

• (1) ‘Good faith’ - remember these…

– Compass Group v Mid Essex (2013) CA

– Yam Seng v International Trade Corp

(2013) CFI?

• and this one (from six months ago)…

– British Groundschool v IDC (2014) CFI

– ‘relational contract’

• Acer Investment Management Ltd &

Others v The Mansion Group Ltd

• (2014) CFI

• ‘relational contract’ - ‘Humbug’… (Mr

Cullen QC) on the basis that

– not exclusive

– not long term

– short notice period

– no spending reliant on continued

relationship

• for long term contracts – outsourcing,

franchising, agency, distribution –

consider arguments of ‘implied good

faith’

• use the word ‘relational’ if you really

must

But…

• for short term, non-exclusive,

terminable agreements you might find it

harder to imply ‘good faith’

• Bentley v RWE Npower (2014) –

confirmed by C of A

• precedence clause only applies in the

event of a conflict (if no conflict, read

together)

• so what?

• e.g. framework IT purchase agreement

• Porton v 3M Holdings 2011 CFI

• consent ‘not to be unreasonably

witheld’

• needn’t consider other side’s interests

• Barclays v Unicredit 2014 CofA

• discretion in a ‘commercially reasonable

manner’

• needn’t be a reasonable result

• if allowing ‘acting reasonably’ ‘not

unreasonably witheld’ or ‘in a

commercially reasonable manner’

• make sure you specify what that means

(result to be reasonable, taking into

both sides’ interests)

Glencore v Cirrus Oil Services (2014) CFI

• “good news, we will revert”

Bieber & Others v Teathers Ltd (2014) CFI

• “noted, with thanks”

So what?

• be very careful in language to other side

• use ‘subject to contract’

• Greenclose v Natwest Bank 2014 CFI

• interest rate collar - Natwest had right

to extend for two years…

• … provided it gave notice by 11.00 am

on 30th December

• “notices may be given in any of the

following ways:”

PLEASE CONFIRM THE FOLLOWING

Address [filled in]

Telephone [filled in]

Fax []

(Email – not added)

• 23rd email – we’ll send you notice

(read)

• 28th email – notice [out of office]

• 30th 9.30am – fax (failed)

• 30th 9.45am – email [out of office]

• 30th 9.48am – called – [no

answer/voicemail]

• 30th 10am called mobile & left

voicemail (accessed the next day)

• if serving notice – check the contract

and allow yourself time

• if completing the agreement – fill in the

details (remember to check for square

brackets)

• good faith – ‘relational’

• precedence – only if conflict

• not unreasonable to be selfish

• be careful how you respond to an offer

• make sure you notice ‘notice’ clauses

• if you’re looking for quick, free

response on an area of law from a firm

you can rely on….

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would like further information.

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e richard.nicholas@brownejacobson.com