Monthly commercial law update: Top 5 developments in March

Why are paper cuts so painful?

The question that overworked printers in The Stationary Office will no doubt be asking themselves this week.

All business in the House of Commons has now come to an end and there are no longer any Members of Parliament. However, just before their (temporary) extinction, MPs pushed through a large amount of new laws. On 27 March, 21 Acts of Parliament were published, with the Small Business, Enterprise and Employment Act 2015 alone coming at a whopping 287 pages.

That's a lot of printing, a lot of paper cuts (potentially), and—most importantly to commercial lawyers—a lot of new laws to digest and understand.

Of particular interest to commercial lawyers are these new Acts:

https://twitter.com/LexisUK_Comml/status/581156565652209664

As always, we'll be providing practical commentary on these new laws as their provisions come into force.

In the meantime, here's the top five developments that the Comet team thought were of particular interest this month:

Advertising and marketing: ASA rules that 'world class' must mean just that

The ASA has upheld a complaint against a school which suggested that it was 'world class' on its website.

A complainant challenged whether the term 'world class' was misleading and could be substantiated. The school said that 'world class' was not a status awarded by Ofsted. They supplied details of the gradings that were awarded by Ofsted for overall effectiveness and the quality of education provided in the school. They said 'world class' was a term used in a variety of ways by many organisations to demonstrate that they had high aspirations, without there necessarily being an award or designation of 'world class'. They also supplied examples of organisations that used the term.

The ASA considered 'world class', used alongside references to high academic qualifications and a teaching team with a proven record in high performance in the context of an advertisement for a school, suggested an objective rating rather than an aspirational term, particularly when presented with capital letters and in speech marks or inverted commas.

As a result, the ASA considered that the advertisement was likely to mislead. As a consequence, the advertisement breached rules 3.1 (Misleading advertising) and 3.7 (Substantiation) of the UK Code of Non-broadcast Advertising, Sales Promotions and Direct Marketing.

The adjudication is an illustration of the perils of using terms in everyday use without being able to objectively substantiate them, and is particularly relevant as many organisations aspire to world-class customer service, for example.

Confidential information: High Court orders disclosure of confidential information

The High Court has ordered the Royal Bank of Scotland (RBS) in Property Alliance Group v The Royal Bank of Scotland [2015] EWHC 321 (Ch), [2015] All ER (D) 228 (Feb), to produce a document for inspection that was ordered to be kept under seal by a US judge as part of a Deferred Prosecution Agreement, entered into between the RBS and the US Department of Justice relating to London Interbank Offered Rates (LIBOR) manipulation. The document was confidential (but not privileged) and the risk of being in contempt was low, if any.

This judgment provides a useful summary of the legal position when a party is seeking to prevent inspection of documents which are not privileged but are confidential to proceedings outside the jurisdiction.

Confidentiality is not a reason in itself to prevent disclosure and/or inspection of documents, but may justify the court making case management orders to deal with the status of the document in the proceedings. The fact that compliance with an order for disclosure or inspection may put a party at risk of prosecution under a foreign law is not a defence to the making of such an order, but the English court is entitled to take into account the risk of prosecution.

Consumer protection: Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015 published

The Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015, SI 2015/542, have been published, which implement the majority of the provisions in Directive 2013/11/EU on alternative dispute resolution (ADR) for consumer disputes.

The competent authorities responsible for monitoring ADR entities will be designated by 7 April 2015. These ADR entities will have been approved by a competent authority and can deal with disputes concerning contractual obligations regarding the sale of goods or provision of services.

The regulations also make provision for traders to notify customers about what options for ADR are available if they cannot resolve a dispute themselves. This notification requirement is intended to increase uptake of ADR among traders. Measures concerning the duties of traders will have effect from 9 July 2015.

Consumer protection: CAA takes action against three airlines

Enforcement action has been launched against major airlines Aer Lingus, Jet2 and Wizz Air by the UK Civil Aviation Authority (CAA) for breaches of consumer law.

The CAA's decision to take legal action follows a six-month review of airline policies in relation to supporting passengers during disruption, including their approaches to compensation for flight delay and the availability of information about passenger rights. A number of airlines have changed their policies as a result of the CAA's review.

However, some airlines are yet to make the required changes despite court rulings having been made requiring them to do so. The specific issues the CCA uncovered included:

  • both Jet2 and Wizz Air have failed to satisfy the regulator that they are consistently paying compensation caused by technical faults;
  • both JET2 and Wizz Air are imposing two-year time limits for passengers to take compensation claims to court; and
  • Jet2 and Aer Lingus have failed to provide sufficient evidence they proactively provide passengers with information about their rights during disruption.

All three airlines must make the changes required by the CAA or face the prospect of a court order. The CAA is carrying out this process under the Enterprise Act 2002. The CAA has issued two reports on airlines' compliance with passenger rights regulations

Contracts: High Court rules on good faith and 'relational' contracts

The claimant in D&G Cars v Essex Police Authority [2015] EWHC 226 (QB), [2015] All ER (D) 85 (Mar), had a contract with the defendant police force to dispose of vehicles for the defendant. The defendant terminated the contract and excluded the claimant from the tendering process. The claimant alleged bad faith on the part of the defendant.

The High Court dismissed the claim on the basis that there was evidence to show that a reasonable person in the defendant's position, and in possession of the facts which the defendant had, would have done precisely what the defendant had done and would have treated that which had been discovered (dealing with a vehicle without the defendant's consent) as a repudiatory breach and also grave misconduct so as to lead to the termination of the contract and the removal of the claimant from the tender process.

Alexandra Whiston-Dew, solicitor at Mishcon de Reya says that for transactional lawyers, there are two immediate issues. First, clients negotiating what might be termed 'relational contracts' should be advised of the risk that they may be found subject to implied duties of good faith/integrity, and the consequences that would flow from such a finding. Second, advisers and clients may want to expressly provide for the scope of such duties in the terms of the contract. For lawyers involved in resolving disputes that arise in relation to potentially 'relational' contracts, the growing number of cases implying terms of good faith or integrity provide additional opportunities for parties to allege breaches of implied terms.

 

Finally, don't forget that a new Parliament will meet on Monday 18 May 2015, when the business will be the election of the Commons Speaker and the swearing-in of members.

The State Opening of Parliament will take place on Wednesday 27 May 2015.

If you like the more formal way of announcing this fact, here's the announcement in the Gazette:

BY THE QUEEN A PROCLAMATION FOR DECLARING THE CALLING OF A NEW PARLIAMENT ELIZABETH R.

Whereas We, by and with the advice of Our Privy Council, being desirous and resolved, as soon as may be, to meet Our People, and to have their Advice in Parliament, do publish this, Our Royal Proclamation, and do hereby make known to all Our loving Subjects Our Royal Will and Pleasure to call a new Parliament to be holden at Westminster on Monday the eighteenth day of May next: And We do hereby also, by this Our Royal Proclamation under Our Great Seal of Our Realm, require Writs to be issued by Our Chancellor of Great Britain for causing the Lords Spiritual and Temporal who are to serve in the said Parliament to give their Attendance in Our said Parliament on the said date.

Given at Our Court at Buckingham Palace, this thirtieth day of March in the Year of our Lord two thousand and fifteen and in the sixty-fourth year of Our Reign.

GOD SAVE THE QUEEN

https://twitter.com/churchstate/status/581144476632129536

So that’s it for another month. In readiness for next month, why not enter your name and email address in the box on the right hand side of this page? If you do so, you will receive our larger monthly round-up PDF for free along with other exclusive content courtesy of our new Comet newsletter.

If you have any thoughts in the meantime on the above developments, let us know below.

Area of Interest