Monthly commercial law update: Top 5 developments in May

Farewell May!

Hello summer (well that's the theory at least).

It was clearly a busy month last month: the General Election and Queen's Speech being the two events of particular note.

So whilst the new government beds in and summer 2015 tries in desperation to get a foothold into the meteorological calendar, why not check out last month's top 5 developments:

Businesses: Queen's speech—what is relevant for commercial lawyers?

The Queen delivered the 64th speech of her reign at the State Opening of Parliament on Wednesday, 27 May.

The speech set out the government's legislative programme for the new parliamentary session.

A number of bills were announced, which are likely to be of interest to commercial lawyers:

  • the Enterprise Bill, if passed, will lead to the creation of a Small Business Conciliation Service to help settle disputes between small and large businesses, especially over late payment practices. It will also extend and simplify the concept of 'primary authority' and aim to reduce red tape
  • the EU Referendum Bill was featured in the speech as anticipated and will set the terms of a new in-out referendum to be held before the end of 2017. For details of the review of the UK/EU balance of competences held between autumn 2012 and autumn 2014 (ie the audit of what the EU does and how it affects the UK), click here, and
  • the proposed Investigatory Powers Bill: the government will look to modernise the law on communications data and 'address ongoing capability gaps that are severely degrading the ability of law enforcement and intelligence agencies to combat terrorism and other serious crime'

Other bills announced in the speech cover a proposed five-year freeze on increases in VAT, income tax and National Insurance contributions, proposals for the granting of further devolved powers to the Scottish Parliament, and the creation of a 'Northern Powerhouse' through elected metro-mayors and continued legislation for high-speed rail links.

It is notable that there was no proposed bill on the controversial abolition of the Human Rights Act 1998; the government intends to launch a consultation before taking further steps.

For more information, see our previous blog post: Queen's Speech 2015: a guide for commercial lawyers.

Advertising and marketing: CAP changes code on sales promotions

The Committee on Advertising Practice (CAP) has changed the provisions of the UK Code of Advertising, Sales Promotion and Direct Marketing that affect sales promotions (section 8).

The changes follow a consultation in 2014 and aim to ensure that the rules remain consistent with Directive 2005/29/EC, the Unfair Commercial Practices Directive (UPCD) and the Consumer Protection from Unfair Trading Regulations, which implement the UCPD in UK law.

The new rules took effect from 1 May 2015. Most of the final amendments allow greater flexibility for promoters to plan their promotions while ensuring that all the information required by consumers to make a decision on whether to participate, is clearly provided at each relevant stage.

The CAP has also issued guidance on sales promotions.

During the month, the CAP also ssued guidance for advertisers on misleading advertising and a ‘quick guide’ to comparative advertising (ie four key things to think about before running a comparative ad).

Consumer protection: when are penalties enforceable in consumer law?

How will the courts apply the rule against penalties to a consumer contract?

Peter Mellett, consultant solicitor at Cubism Law, and Rachel Ledson, in-house counsel at ParkingEye Ltd, examine the issues raised in ParkingEye v Beavis.

In their view, the case is relevant to anyone entering into a contract subject to English law, which stipulates the amount of damages payable on breach of contract. Lawyers should ensure that a court would not find the amount stipulated to be extravagant or unconscionable, or in the words of the court, 'grossly disproportionate'. The court will consider not only commercial justifications for the magnitude of the stipulation, but additionally social reasons, when deciding, if such a stipulation is an unenforceable penalty.

See also our blog post on the case.

Dispute resolution: is a click-wrap contract a valid jurisdiction agreement?

In Jaouad El Majdoub v CarsOnTheWeb, the Court of Justice of the European Union (CJEU) considered the status of 'click-wrap' agreements (namely, where terms and conditions are displayed and accepted by a customer on a website) in the context of article 23(2) of Regulation (EC) 44/2001, Brussels I.

The issue to be decided was whether a contract created by click-wrapping could result in a valid jurisdiction agreement concluded by electronic means under that article. In a decision that will provide a degree of comfort to website operators, the CJEU decided that there was a valid jurisdiction agreement because the applicant had clicked on a box to expressly accept the terms and conditions and a durable record was available to download.

It should be noted, however, that this case involved an agreement between businesses. Click-wrapping under the consumer distance selling Directive 97/7/EC does not result in a valid jurisdiction agreement, as explained by the CJEU in Content Services v Bundesarbeitskammer.

Equality: court awards compensation in cake discrimination case

The Belfast County Court has ruled that a Christian bakery business had no justification for its refusal to make a cake featuring the Sesame Street characters Bert and Ernie with the words 'Support Gay Marriage'. As such, it had unlawfully discriminated against the plaintiff on grounds of sexual orientation, religious belief and political opinion. The company was ordered to pay damages of £500.

In giving the judgment, the court decided that the decision did not give rise to any incompatibility between the rights of the bakery company under the European Convention on Human Rights and the rights of the plaintiff under the anti-discrimination laws of Northern Ireland.

The Equality Commission for Northern Ireland welcomed the decision, saying: 'In reaching her decision, the judge affirmed the position under the law—that the rights of people to hold religious beliefs is protected, as is the right to manifest them—but that they cannot do so in the commercial sphere in a way which is contrary to the rights of others.'

The bakery is looking to appeal the decision.

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