Key legal issues for guarantees Guarantees are contracts and must therefore satisfy the four basic requirements for a contract: • offer • acceptance • consideration, and • the intention to create legal relations The general principle is that past consideration will not usually be enough. A firm should avoid entering into a guarantee after it has agreed to provide the services to a client. The guarantee must also comply with section 4 of the Statute of Frauds (1677). It must therefore be in writing and be signed by the guarantor. The Firm will also need to bear in mind the risk of allegations of misrepresentation, duress and undue influence. It is also good practice to ensure the guarantor is given independent legal advice on the effect of entering into the guarantee. Is the guarantee a regulated credit agreement? If

Exporters who wish to take their goods or services to overseas markets will often face significant risks in their endeavours to generate new business. The likelihood of non-payment in these environments is heightened in the face of enhanced: • commercial risk (ie failure to pay by an overseas buyer, overseas buyer's insolvency, unilateral breach of contract, non-performance of the asset or non-payment by off-takers), and • political risk (ie the risk that government action or political circumstances will have an adverse effect on local business and/or international investment) For certain goods or services or in certain markets, these risks may substantially inhibit the availability of commercial financiers, meaning that in the absence of Export Credit Agency (ECA) assistance, many such projects may never get off the ground. ECAs exist to step into this gap and help mitigate the commercial and/or political risks inherent in dealing with an overseas business, providing an important source of financial support

STOP PRESS: The Loan Market Association (LMA) has published updated versions of the standard terms and conditions for Par and Distressed Trade Transactions, the full suite of Funded Participation and Risk Participation Agreements and the Secondary Debt Trading Documentation User Guide; taking effect from 17 March 2026. The amendments include the removal of LIBOR references, revisions to IBOR rate definitions and the Target2 definition and updated ERISA representations incorporating additional exemptions from the prohibited transaction rules under ERISA and the US Internal Revenue Code. The updated documentation is available to LMA members only, on the LMA’s Documentation Hub. Summary A fundamental tenet of trading under the LMA trading protocol is that a ‘Trade is a Trade’, ie a trade (which can include an oral contract made by phone) when struck is binding and any subsequent development that may be adverse to one or both parties does not allow either party to cancel or ‘break’ the trade. For example, the failure to

The answer will depend on: • the terms of the employee's contract of employment • what exactly the payment is for and how it has been calculated (and not just how the payment has been labelled) • whether the employer and employee have agreed a tax indemnity between them For further information on the tax treatment of PILONs generally, see our Practice Notes: • Termination payments taxed as earnings • Termination payments qualifying for £30,000 exemption • Taxation of payments in lieu of notice or PILONs—pre-6 April 2018 [Archived] For further information on payment in lieu of notice generally, see our Practice Note Payment in lieu of notice (PILON). Express contractual right to make a PILON—fully taxable in hands of employer Many contracts contain the right for the employer to make a payment in lieu of notice (PILON) to the employee, instead of the employee working out their notice. The PILON clause will usually set out how the payment is calculated, typically

Duties of Agent to Principal In business matters, the rights and duties of principal and agent are normally set out in a written agency agreement. Additional rights and duties may be implied by law if not contained within the agency agreement. In particular, the Commercial Agents (Council Directive) Regulations 1993, SI 1993/3053 impose specific provisions in respect of commercial agents, which in most cases cannot be excluded by contract. Where commercial agents are concerned, see, also, Practice Notes: Commercial agency and Termination of commercial agency. In relation to the duty to account and pay over, the agent must keep accurate accounts of their dealings on the principal's behalf. Books and documents relating to the agency must be produced on demand and the agent must pay over money held for the principal's use, with interest. Further, all monies received

The taxation of termination payments and benefits changed with effect from 6 April 2018 to ensure that all payments in lieu of notice (PILONs) are generally chargeable to income tax as general earnings and do not automatically benefit from the £30,000 tax-free threshold for termination payments available under section 403 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003). Prior to 6 April 2018, some PILONs were already taxable as general earnings while others were not. The legislation that took effect from 6 April 2018 treats all PILONs (whether they are contractual—and whether the PILON is an express or implied term of the contract—or not contractual at all) in broadly the same way. An express or implied contractual PILON is treated as earnings under ITEPA 2003, s 62—this was their treatment before

This Practice Note considers in detail when damages for loss of a chance (loss of an opportunity damages) may be recoverable, with reference to the test in Allied Maples v Simmons & Simmons, its further consideration in Wellesley v Withers and the Supreme Court’s clarification in Perry v Raleys. For a summary of the key points in the approach, see Q&A: How, in summary, does the loss of a chance approach work? This Practice Note should be read in conjunction with related content on recovering damages in contract and tort claims, see Practice Notes: • Contractual damages—general principles • Causation and remoteness in contractual breach claims • Damages in tort and negligence claims • Causation and remoteness in tort and negligence claims • Causation and remoteness in professional negligence claims What is the loss of a chance approach? Ordinarily, claimants must prove their case on causation on the balance of probabilities. That is so whether causation turns purely on matters of historical fact, or on

Under section 43(3) of the Landlord and Tenant Act 1954 (LTA 1954), the security of tenure provisions for commercial tenancies under LTA 1954, Pt II do not apply to short-term business tenancies of six months or less, provided certain conditions are met. There is therefore no need to ‘contract out’ such tenancies when they are granted. A short term business tenancy is specifically excluded from the security of tenure provisions under LTA 1954, Pt II without the need to go through the ‘contracting out’ process provided: • it is granted for a term certain not exceeding six months • it contains no provision for renewing the term or for extending it beyond six months from

The first instance decision in Infiniteland Limited v Artisan Contracting Limited suggested that there is no general rule that a buyer cannot make a warranty claim in respect of a matter which the buyer actually knew about when the warranty was given. The matter will be determined by the terms of the contract that the parties have made. In that case, the buyer’s claim failed because (among other factors) the agreement in question was held expressly to exclude claims of this kind. Unfortunately, the Court of Appeal was less clear on this point. Concerns over the uncertain effects of the buyer’s knowledge thus remain. In particular, the above judgment contains obiter comments speculating that prior knowledge may impact

In order to be granted a save as you earn (SAYE) option, the option holder must enter into an HMRC-certified savings arrangement. At the outset, the employee must select how much they intend to contribute from their monthly salary under the savings arrangement during the applicable savings period. Each monthly contribution cannot be more than the maximum individual limit which applies under the SAYE legislation (which is currently £500 per month) and the scheme cannot require a minimum contribution of more than £10 per month. From the 1 September 2018, the terms of the SAYE prospectus allow an employee to delay the payment of monthly contributions, by up to 12 occasions in total, without causing the savings contract to be cancelled prematurely but if the participant fails to make a contribution on the due date for a thirteenth occasion the employee is

How voting rights attach In general terms there are two ways that voting rights attach to shares, either: • by virtue of a provision in a shareholders’ agreement, or • most likely, through a company’s articles of association Amending voting rights If the current voting rights are attached to the shares by virtue of a provision in a shareholders’ agreement, it would be possible to amend the shareholders’ agreement and change the voting rights. The amendment would have to be conducted in the manner specified for variation in a shareholders’ agreement to be valid. There are no general restrictions on shareholders amending the shareholders’ agreement as the freedom of contract principle will apply, subject to the usual caveats. However, unanimous consent will be needed to alter a shareholders’ agreement. The

This Q&A considers the restrictions on ipso facto clauses under section 233B of the Insolvency Act 1986 (IA 1986) and the impact on a supplier’s contractual rights to repossession under a retention of title clause which might otherwise be triggered upon a customer insolvency event. The Corporate Insolvency and Governance Act 2020 (CIGA 2020), which received Royal Assent on 25 June 2020 and took effect on 26 June 2020, inserts a new section 233B into IA 1986 preventing suppliers from terminating contracts or supplies when a customer becomes insolvent (known as ipso factor clauses). Ipso facto clauses are common place and are routinely included in commercial contracts enabling a supplier, upon the occurrence of an insolvency-related event, to terminate a contract. These clauses are usually coupled with retention of title clauses (ROT) and together they allow a supplier’s