Monthly commercial law update: Top 5 developments in November

As we hurtle towards 2016 at an alarming rate, the Commercial PSL Team are here to provide you with a whistle-stop tour of the key commercial developments from November:

Contracts: Supreme Court rules on penalties in Parking Eye and Cavendish v Talal El Makdessi cases

At the beginning of the month, the Supreme Court handed down its joint judgment in ParkingEye Limited v Beavis, and Cavendish Square Holding BV v Talal El Makdessi [2015] UKSC 67, two associated cases on penalty clauses.

In one of the most hotly anticipated commercial decisions of the year, the court reviewed the development of the law of penalties and clarified the test for assessing whether a clause is an unenforceable penalty.

The issues in ParkingEye were whether an £85 overstay charge in a private car park was an unenforceable penalty and whether it was unfair under the Unfair Terms in Consumer Contracts Regulations 1999, SI 1999/2083 (now replaced by the Consumer Rights Act 2015 (CRA 2015)). In El Makdessi, the court considered whether the penalty rule should apply at all to sophisticated commercial parties and, if it should, whether certain clauses in a share purchase agreement were unenforceable penalties.

The court declined to abolish or extend the penalty rule but has clarified the test. The ParkingEye appeal was dismissed but the El Makdessi appeal was allowed; however in both cases the terms concerned were ruled not to be unenforceable penalties. Read our blog for further information.

Advertising and marketing: ASA to start using new Prioritisation Principles from 23 November 2015

The Advertising Standards Authority (ASA) has announced that it will use its new prioritisation principles from 23 November 2015. The principles will assist the ASA in deciding how to respond to complaints about advertising.

The ASA says that it will place a greater focus on those issues that have the biggest impact, specifically where there is the greatest potential for detriment or harm, so that consumers, society and responsible advertisers benefit. It also means that the ASA will not be spending as much time on cases where it is less likely that an advertisement has had a significant impact on consumers.

Data protection: European Commission publishes guidance following Schrems

Following the decision of the Court of Justice of the European Justice (CJEU) in Schrems v Data Protection Commissioner [2015] All ER (D) 34 (Oct), in which it held that the Safe Harbor framework (Commission Decision 2000/520/EC) was invalid, the European Commission has published guidance on what companies can do to make lawful transfers of personal data to the United States.

The guidance stresses that the Safe Harbor arrangement can no longer serve as a legal basis for transfers of personal data to the US. Further, the European Commission will continue to finalise negotiations for a renewed and sound framework for the transfer of personal data, which must meet the requirements identified in the CJEU's ruling and other adequacy decisions will need to be amended to ensure that data protection authorities, such as the Information Commissioner's Office, remain free to investigate complaints by individuals.

Partnerships: government proposes less burdensome regulatory regime for LLPs

The government is consulting on proposals to introduce changes to the Limited Liability Partnerships' (LLPs) regulatory framework, including creating a new micro-entity regime for LLPs. This aims to allow LLPs to benefit from a less burdensome regulatory regime and to ensure their legislative requirements remain aligned with those for limited companies.

Earlier in 2015, the Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 SI 2015/980, aimed to reduce the administrative burdens for preparing and publishing statutory accounts for limited companies. The new proposals are designed to build on these legislative changes.

Subject to the agreement of Parliament, the government intends the new requirements for LLPs and Qualifying Partnerships to apply to financial years starting on or after 1 January 2016. The consultation ends on 21 December 2015.

Supply of goods and services: guidance published on Modern Slavery Act 2015

Section 54 of the Modern Slavery Act 2015 requires certain organisations to develop a slavery and human trafficking statement each year. The slavery and human trafficking statement should set out what steps organisations have taken to ensure modern slavery is not taking place in their business or supply chains. The government has now published guidance on who is required to publish a statement; how to write a slavery and human trafficking statement and how to approve and publish the statement.

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