Commercial News Vlog - September 2021

Commercial News Vlog - September 2021



Corporate & Commercial

Supreme Court provides clarity on liquidated damages clauses

Business contracts often obligate the service provider to pay a certain amount if it is late delivering the services (usually referred to as liquidated damages), but will liquidated damages be payable if the contract is terminated and the services (or goods) are never delivered?  The Supreme Court has now ruled on this point (overturning an earlier Court of Appeal decision1): unless the contract expressly states otherwise, liquidated damages will be payable until the date the contract is terminated.  A party to the contract may have additional claims for other losses but these will be separate to the liquidated damages claim.

See: The drafting and operation of liquidated damages clauses, and liability caps (Triple Point v PTT [2021])

See Practice Notes: Exclusion and limitation of liability, Wilful misconduct and deliberate default in commercial contracts, Contract disputes—key and illustrative decisions and Contract interpretation—distinguishing between liquidated damages and penalty clauses)

Is your limitation of liability clause in the right place?

A recent Court decision2 has ruled that the Defendant company could not rely on an exclusion of liability clause.  Whilst the words of the clause clearly excluded the relevant losses, it was under a section that referred to risk allocation in specific circumstances. It was also noted that if the clause was intended to exclude all losses, it conflicted with other terms.

See News Analysis: Construing exclusion clauses in context (Acerus v Recipharm)

See Practice Notes: Exclusion and limitation of liability, Contract interpretation—the guiding principles and Contract interpretation—rules of contract interpretation  

See Checklist: data-sf-ec-immutable="" Drafting and negotiating a liquidated damages clause—checklist

Can you threaten a business partner?

If a business party threatens an unlawful act (for instance threatening to breach a contract) to bully the other party – then the agreement reached through such bullying is likely to be void, but what if the bullying is a threat to do a lawful act (for instance one business partner refusing to supply another business party that is dependent on it)?  This issue was recently considered by the Supreme Court3 in the Pakistan International Airline v Times Travel case. The Court ruled that the Pakistan Airline behaviour in this case (making ticket allocation dependent on Times Travel dropping its commission claims) had not ‘crossed the line’. The majority of the Supreme Court felt that the behaviour would need to be ‘morally reprehensible’ before it could lead to the deal being void.

See News Analysis: Supreme Court dismisses Times Travel (UK) Ltd’s lawful act economic duress appeal (Pakistan International Airline Corporation v Times Travel (UK) Ltd)

See Practice Notes:  Economic duress-undue influence—tort of intimidation, Void contracts and Recission of a contract

Directors’ duties after termination

A recent case4 has provided helpful commentary on when and to what extent the duty to avoid a conflict of interest continues after a person has resigned as a director. A director will not automatically be regarded as having acted in breach of their duties if they take advantage of an opportunity following their retirement, however should a director elect to resign in order to be able to exploit an opportunity for personal gain that the company would have otherwise had the opportunity to pursue there would be a strong presumption of breach.

See Practice Notes: Claims against directors—key considerations for dispute resolution practitioners and Directors' duties—directors' interests: CA 2006, ss 175–177


 

Data security

New standard contract clauses (SCCs) for transferring UK personal data.

We reported last month on the EU SCCs (‘2021 EU SCCs’).  The UK Information Commissioner (‘ICO’) is now consulting on its draft version of UK SCCs that will allow personal data subject to the UK GDPR to be transferred to countries that have not been approved by the UK as having adequate data protection laws.

For organisations that are subject to both the UK and EU regimes the ICO has published a draft Addendum to the 2021 EU SCCs.

Some concerns with the draft UK SCCs are:

  • they require more information about the data transfers than the current SCCs;
  • there is an obligation to review annually; and
  • an obligation on the data importer to comply with reasonable requests made by the ICO.

The consultation is open until the 7th October.

See News: The draft UK SCCs for international transfers

See Practice Notes: UK GDPR and EU GDPR—transfers of personal data internationally and to international organisations  and UK GDPR—transfers of personal data internationally and to international organisations

Liability for cyber-attacks

Between 2017 and 2018 DSG Retail (which operates Currys PC World and Dixon Travel) suffered cyber-attacks where the personal data of around 14 million customers was stolen.

DSG Retail was subsequently fined £500,000 was by the ICO for its failure to implement appropriate security measures.

One customer issued a claim against DSG Retail5 for: breach of confidence; misuse of private information; and breach of the Data Protection Act 1998 (DPA 1998). 

The High Court has struck out the first two claims – DSG Retail had not breached confidence, nor misused private information – these were acts done by the cyber-attacker, not DSG Retail.

The court also rejected the claims in negligence since statutory duties operated (ie the DPA 1998)   and because the distress and anxiety claimed was insufficient for recovery in negligence.

The Customer’s claim for breach of the DPA 1998 is on hold until DSG Retail’s appeal of the ICO decision has been completed.

See News Analysis: High Court narrows the scope of data breach claims—welcome news for corporates (Warren v DSG Retail Ltd)

See Practice Notes: Misuse of private information and related claims and Privacy law—misuse of private information, Starting a UK GDPR compensation claim—a practical guide 

First UK GDPR certification schemes

Businesses can demonstrate their compliance with the UK GDPR by adhering to approved data protection certification schemes. The ICO has approved three UK GDPR certification schemes relating to disposing of IT assets, verifying a person’s age and age appropriate design of information society services.

See News: ICO approves three UK GDPR certification scheme criteria

See Practice Note: The UK General Data Protection Regulation (UK GDPR) and Children and data protection law—the age appropriate design code (children’s code)


 

Employment

Right to Work Checks - End Date Extended

The temporary measures that allowed for the remote checking of work status was due to end on 31 August 2021, but has now been extended to 5 April 2022.

See News: Home Office extends coronavirus (COVID-19) right to work checks concession

See Practice Note: Right to work checks: how to conduct the check

Breach of NMW legislation

In August, the Government published a list of 191 employers that underpaid their staff and breached national minimum wage (NMW) legislation. The list included well-known companies. The companies have been collectively fined £3.2 million.

See News: BEIS publicly names 191 employers for minimum wage breaches

See Practice Note: National minimum wage

Discrimination claim for trying to reduce gender pay gap

When marketing agency, Wunderman Thompson, identified it had a high gender pay gap it decided to make some changes and issued internal presentations stating it wanted to ‘obliterate its reputation for being full of British straight men’

Shortly after two straight British men were selected for redundancy and they brought claims to the tribunal6.  The tribunal agreed that the reason for the claimants' dismissals was their sex and upheld their claims of unfair dismissal, sex discrimination and victimisation.

See: Unfair dismissal—overview

See Practice Notes: Sex discrimination, Victimisation

Government to introduce a new duty on employers to prevent sexual harassment

The government has published its response to the consultation on sexual harassment in the workplace and confirmed that intends to introduce a new duty on employers to proactively take steps to prevent harassment. Last year the Equality and Human Rights Commission (‘EHRC’) published employer guidance on duties to prevent sexual harassment.

See News: Government releases outcome of consultation on sexual harassment at work

See Practice Note: Harassment


 

Consumer

Competition & Markets Authority loses consumer redress test case

Consumer law requires businesses to ensure their practices are fair and not misleading.  Regulators have tended to assume that charges that are not clear at the outset are unfair and misleading.

A recent Court of Appeal decision (in the care home sector) has provided some helpful guidance on whether a fee is likely to amount to an unfair commercial practice. 

  1. The practice must be a misleading action, a misleading omission, or an aggressive commercial practice.  In this case the fee was not unfair as the care home had provided material and distinct pre-admission services.
  2. A subsequent decision taken by a consumer who has been exposed to the practice must be a “transactional decision”.   In this case the care home provided evidence that the full information about the administration fee would be provided before the consumer made a purchasing decision.
  3. The practice must have caused or be likely to cause the “transactional decision” to be taken (and that decision must be different to a decision that the average consumer would otherwise have taken).  In this case the administration fee was a small cost relative to the overall charges so unlikely to change the consumer’s decision.

The narrower approach adopted by the Court of Appeal is likely to mean that the regulators will need to re-think their view of what’s misleading.

See: Competition & Markets Authority loses consumer redress test case and CMA publishes update on care homes consumer protection case

New consumer laws planned

On the 20th July the Government released a new consultation on Reforming competition and consumer policy and has stated that it has an ‘arsenal of planned reforms to boost competition and shield the public from rip-offs’.  There is a particular focus on online shopping and subscription contracts with proposed hefty fines of 10% of annual turn-over for the most serious breaches. The consultation closes on 1st October.   

See: BEIS launches consultation on reforming competition and consumer law policy




Competition

UK certifies an opt-out competition class action for the first time

The Competition Appeal Tribunal (CAT) has permitted the first-ever collective proceedings order in Mastercard damages action7.  As the name suggests, this means that everyone that has been subject to the alleged wrong (overcharging for Mastercard fees in this instance) is in the claim, unless they have opted out.  The proposed class is vast, comprising an estimated 46.2 million people and it is believed the value of the claim is £14 billion.

See: Mastercard v Merricks—an important year for collective proceedings and representative actions

See Practice Notes: Walter Hugh Merrick CBE v Mastercard Incorporated and Others (remittal) (application CPO application) [Archived] Collective proceedings in the Competition Appeal Tribunal, UK private competition actions and CAT procedure for competition claims

Cases, laws, decisions referred to in this Bulletin

  1. Triple Point Technology, Inc v PTT Public Company Ltd [2021] UKSC 29 
  2. Acerus Pharmaceuticals Corporation V Recipharm Limited [2021] EWHC 1878 (Comm)
  3. Pakistan International Airline Corporation (Respondent) v Times Travel (UK) Ltd (Appellant) [2021] UKSC 40
  4. Alan Burnell v. Trans-Tag Limited, Robert Aird [2021] EWHC 1457 (Ch)
  5. Darren Lee Warren v DSG Retail Limited [2021] EWHC 2168 (QB)
  6. Mr C Bayfield and Mr C Jenner v Wunderman Thompson (UK) Ltd and Others: 2200540/2019 and 2200546/2019
  7. Mastercard Incorporated and others v Walter Hugh Merricks CBE [2020] UKSC 51


 

Disclaimer

Nothing in this Bulletin, or on the associated website, is legal advice. We have taken all reasonable care in the preparation of this Bulletin, but neither we nor the individual authors accept liability for any loss or damage (other than for liability that cannot be excluded at law).

 

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About the author:
Iain founded Radius Law in September 2013 which has been designed to meet the exacting standards that Iain had of his law firms during his time as an in-house counsel.

 

Iain’s in-house career spans 14 years with the 7 years from 2006 to 2013 being the General Counsel and Chief Compliance officer for the Mercedes-Benz UK Group. In this role he led a team of 18 staff.
Iain has previously been recognised in the Financial Times Innovative Lawyers report as a thought leader in legal management. He has spoken regularly and had published articles particularly on how to measure legal value.

Aside from legal management, Iain has significant expertise in regulatory work, particularly competition law and anti-bribery. Iain has led the implementation of large scale compliance programmes and also managed regulatory investigations.

Outside of the day job Iain has a passion for community projects and has been a non-executive director of a housing association and also established a debt advice centre. This social conscious approach continues in Radius Law with a bold commitment to pay 10% of profits to charity.