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This Practice Note outlines the law concerning criminal recklessness. The subjective test for recklessness Certain statutory and common law offences allow the prosecution to prove mens rea through ‘recklessness’. Put simply, recklessness is where the accused takes an unjustified risk that results in unlawful harm or damage. The House of Lords in R v G reaffirmed the subjective approach to recklessness. Before R v G, two distinct tests were used, depending on the offence charged: Subjective recklessness from R v Cunningham: the prosecution had to establish that the accused personally foresaw the risk. Objective recklessness from R v Caldwell: the prosecution only needed to show that the risk would have been obvious to a reasonable person, without proving the accused themselves foresaw it. In R v G, the House of Lords concluded that the objective test could operate unfairly where a defendant did not foresee the
This Practice Note examines the remedy of rescission, explaining when and in what manner a contract can be unwound (at common law, in equity and under statute) and thereby terminated and brought to an end. It covers the consequences and effects of rescission, the principal grounds for setting aside an agreement (misrepresentation, mistake, undue influence, duress, non‑disclosure, fiduciary misdealing and bribery) and the main obstacles to claiming rescission—affirmation, the intervention of third‑party rights and the impossibility of restitution. For further guidance on rescission in the context of misrepresentation, see Practice Note: Misrepresentation—rescission as a remedy. There are many ways in which a contract may reach its end; see: Terminating contracts—how and when a contract ends—overview for a brief and accessible summary, with links to the related further practical guidance, including Practice Note: Termination and expiry of contracts. For a table
What is a res judicata? A res judicata is a determination by a court or tribunal with jurisdiction over the cause of action and the parties, which finally disposes of the issues decided so they cannot be litigated again by those bound, save on appeal. Final judgments entered by default or by consent fall within this concept, whereas rulings on purely procedural points and any decision lacking finality do not. The doctrine’s aim is to bring litigation to an end and shield parties from being harassed by the same dispute twice. in personam—binds the parties and their privies in rem—binds all persons, privy or otherwise (ie a judgment binding the whole world) A party may rely on res judicata: as an estoppel to defeat an opponent’s claim or defence; and/or as the basis of their own claim or
The offence of causing grievous bodily harm with intent Wounding or causing grievous bodily harm (GBH) with intent can be tried solely in the Crown Court on indictment. Elements of the offence Under the Offences against the Person Act 1861 (OATPA 1861), the prosecution must establish that the defendant unlawfully and maliciously: wounded with the intention of causing GBH, or caused GBH with that intention, or wounded intending to resist or prevent the lawful arrest or detention of any person, or caused GBH intending to resist or prevent the lawful arrest or detention of any person ‘Unlawfully’ and ‘maliciously’ Unlawfully The wounding or causing of GBH must be unlawful. Such conduct may be lawful if used: in self-defence in defence of another in defence of property for the prevention of crime where the victim gave express or implied consent For further information on these defences, see below:
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Development documentation is a central element of any real estate finance transaction that involves the development of property. For further information, see Practice Note: Real estate development finance—introduction to the development documentation. The scope and content of the development documentation are dictated by the procurement route selected for the scheme. Here, procurement refers to purchasing services for the development works. This Practice Note sets out the key characteristics of the most common procurement approaches for developing a property: design and build procurement traditional procurement management contracting Lenders generally favour the design and build route as it provides the greatest degree of cost certainty and is the most widely adopted procurement method in the UK. By contrast, management contracting carries the highest cost exposure, is typically disliked by lenders, and is used less frequently than the other methods within the UK...
What doe this Practice Note cover? This Practice Note sets out guidance on how to use and read the opinions that evaluate the enforceability of close-out netting under the ISDA Master Agreement in multiple jurisdictions. It also explains how to assess whether a particular opinion can be relied upon for a given purpose, highlights the key legal assumptions and exclusions, and considers matters specific to individual jurisdictions, including insolvency regimes, multi-branch party elections and termination currencies. Background to ISDA The International Swaps and Derivatives Association ( ISDA) represents over 850 member institutions in 67 countries, including banks, brokers, law firms and national bodies. Established in 1985, it acts as a trade body to promote a safe and efficient over-the-counter ( OTC) derivatives market. ISDA operates in many OTC derivatives markets, including credit, equity, interest rate and energy derivatives. It has produced and maintained the ISDA Master...
Transferability and the importance of standardised terms and conditions This Practice Note outlines the provisions commonly found in offerings of debt securities by corporates, financial institutions, sovereigns and multilateral bodies within the international, investment grade, public debt capital markets. These provisions are typically expected to be included and are outlined here accordingly. A key distinction between debt securities and loans in most debt capital markets deals is that securities are freely tradable in the secondary market. While loans also have a secondary market, its liquidity is markedly lower than that for debt securities. Transferability is, nevertheless, not an issue in some forms of debt capital markets arrangements where no secondary trading is anticipated—for instance, private placements and mini-bonds. For guidance on private placements, see Practice Note: Private placements. For guidance on mini-bonds, see Practice Note: SMEs and the debt capital markets [...
Debt Capital Markets Glossary— A Accelerate Acceleration of a note means declaring it immediately due and payable before its scheduled maturity when an event of default arises, and this requires notice to be given. Agreement among managers A contract between the managers that sets out the nature and terms of their relationship, generally based on the International Capital Market Association ( ICMA) standard form. Allotment The portion of notes offered by the lead manager to the syndicate. Allotment telex Where no co-managers are invited to the syndicate, the lead manager handling documentation sends the other lead managers an allotment telex confirming the allocation of the notes, subject to completion of the issue. Debt Capital Markets Glossary— B Basis point One hundredth of a per cent (0.01%); i.e. a rate of a stated benchmark plus 75 bps equals that benchmark rate plus 0.75%. Bearer form The key characteristics of bearer securities are that: a bearer security is a...
What are interim loan agreements? Interim loan agreements are concise loan contracts put in place as a bridge until the full suite of finance documents is settled. When and why are interim loan agreements used in acquisition finance transactions? They are commonly adopted where a target group is being sold via an auction process, or where the timetable to completion is otherwise compressed. In such competitive, accelerated scenarios, the window to negotiate and execute complete finance documentation is curtailed. In addition, ‘certain funds’—while not a strict legal prerequisite in private acquisitions—is frequently expected, and interim loan agreements are regarded as a clear demonstration that funding is readily available (for further details on certain funds, refer to the introductory guide to leveraged finance facilities agreements—utilising, repaying and prepaying the facilities). Where a target sale proceeds by auction, bidders compete to show the vendor they can close...
A common way for banks and other financial institutions to earn income is by levying interest on the loans they extend. This Practice Note outlines: what is meant by a bank’s cost of lending the distinctions between fixed and floating interest rates how floating interest rates are determined, with details on SONIA and LIBOR the meaning of reference rate floors and zero floors, and what ‘default interest’ signifies and when it may amount to a penalty This Practice Note does not examine interest provisions in loan documentation in detail. For information on interest provisions in Loan Market Association ( LMA) facility documentation that is based on risk-free rates such as compounded Sterling Overnight Index Average ( SONIA), see Practice Note: Interest provisions in risk-free rate based loan agreements. For information on interest provisions in term risk-free rate...
Intercreditor arrangements—initial considerations Do I need an intercreditor arrangement? An intercreditor arrangement ought to be established whenever two or more creditors of the same person or entity want to amend or confirm the position at law concerning creditor issues. Typical matters addressed include: the sequence in which creditors are to be repaid on an insolvency the sequence for payments from the proceeds realised through enforcement of security any limits on repayments or other payments to a creditor before insolvency any limits on a creditor enforcing its security or pursuing a debt claim against the entity, and any limits on a creditor making additional debt available to that entity Where no contractual intercreditor arrangement exists, on insolvency secured creditors, subject to certain exceptions for floating charges, rank ahead of unsecured creditors, who rank pari passu (subject to priority debts). As between...
Background The intercreditor agreement is designed to manage the inevitable clashes that arise between different classes of secured lenders during a restructuring. It deals with a range of matters (see Practice Note: Intercreditor agreements for R& I lawyers). A key feature is the security trustee’s authority to grant releases, allowing assets to be sold ‘free and clear’ of junior liabilities when instructed by the requisite majority of senior lenders—typically 66⅔%—in connection with enforcement of the security. Many restructurings involve enforcing share pledge collateral, where shares in the holding company ( Holdco) are transferred either to a new company ( Newco) controlled by senior creditors who are ‘in the money’, or to a third party buyer (see Practice Notes: Where the value breaks and negotiating strength and Transfer to Newco). To achieve this, Holdco and the wider group must be released from all...
This table provides a high-level overview of typical negotiated outcomes on intercreditor matters that shape the relationship between lenders under a super senior revolving credit facility and senior secured noteholders. For deeper analysis of the topics referenced, see Practice Note: Introductory guide to Intercreditor Agreements. For a comparison of common intercreditor positions for mezzanine lenders, second lien lenders and subordinated noteholders, see Practice Note: Intercreditor rights comparison table—junior debt instruments. For definitions of frequently used acquisition finance terminology, see Practice Note: Glossary of acquisition finance terms and jargon. Structure and ranking Which entity(ies) in the transaction structure may incur the debt? Super senior revolving credit facility: typically available to the company and any target group member that meets borrower eligibility requirements and has acceded to the facility agreement as a borrower. Senior secured notes: generally issued by the company or a special purpose...
Background The purpose of an intercreditor agreement—also called a deed of priority—is to manage and resolve the conflicts that will inevitably emerge between different classes of secured lender during a restructuring. Waterfall of payments Such an agreement commonly details a distribution waterfall instructing the security trustee on how to deploy any funds it receives (including sale proceeds, litigation recoveries, or amounts originally paid in error by a debtor to a junior creditor and then transferred under turnover provisions). The waterfall may apply either: (i) universally in all situations; or (ii) by distinguishing between ordinary operations (pre-enforcement) and post-enforcement, namely via a ‘flip’ clause. Ordinarily, the waterfall requires the security trustee’s fees to be settled first, after which monies are distributed to creditors in line with their ranking (with secured lenders typically at the top of the order), and any remaining balance is ultimately returned to the...
Where a transaction features more than one category of creditor, it will ordinarily require an intercreditor agreement. The growth of differing financing structures and forms of debt, including bank/bond structures and unitranche facilities, has led to a wider range of intercreditor frameworks being used... This Practice Note provides a straightforward overview of the common creditor classes found in leveraged finance transactions describes their principal rights and controls under a typical leveraged intercreditor agreement highlights some usual structures and combinations of creditors The Loan Market Association ( LMA) intercreditor agreements are frequently adopted as the starting point when documenting intercreditor arrangements in leveraged finance transactions......
Contractual subordination This Practice Note highlights significant cases and links to pertinent resources on contractual subordination and intercreditor arrangements... Intercreditor issues Subordination Introductory guide to Intercreditor Agreements How to draft and negotiate intercreditor arrangements in loan transactions Intercreditor materials Intercreditor arrangements—overview Intercreditor issues in finance transactions—overview Intercreditor issues on debt restructurings—overview Acquisition finance: intercreditor issues—overview Related topics Rules of priority under general law: Priority between security interests Acceleration of debt and enforcement of security: Enforcing security—overview; Acceleration of debt and enforcement of security—key cases Issues relating to guarantees and set-off: Guarantees—overview; Set-off and netting in finance transactions—overview Construction and interpretation: Practice Note: Construction of finance documents—key cases; Contractual interpretation for Banking & Finance lawyers—overview Key case The Joint Administrators of Lehman Brothers Holdings PLC ( In Administration) v LB GP No1 Ltd ( In...
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Insurance Insurance is a cornerstone of trade and commodity finance. Although many embedded risks in trade funding can be reduced through careful structuring, including taking security where appropriate, insurance delivers an extra safeguard for the lender. For instance, collateral over financed goods offers no value to a financier if part of those goods are damaged or destroyed. Putting in place suitable insurance against the peril of damage or destruction of the goods preserves the financier’s position should that risk materialise. Moreover, a financial institution may procure insurance against an obligor’s default to achieve capital relief on its exposure, or to permit the financing of deals that would otherwise be barred by internal obligor or country limits. Insurance arrangements ought to be addressed from the very start of a deal, during the structuring stage. Matters to assess include: which categories of risk can, and ought to, be...
In real estate finance transactions, the borrower’s principal asset is the property, and the lender’s security package is structured around obtaining adequate security over that property. Because the property is paramount, the lender will wish to be comfortable that the insurance arranged for the property is sufficient, and will also seek security over the borrower’s entitlement to any insurance proceeds (see Practice Note: Security in real estate finance transactions). The financing documentation will set out comprehensive insurance obligations on the borrower, typically contained in the facility agreement or the security documents. The Loan Market Association ( LMA) includes provisions addressing these matters in its: single currency term facility agreement for real estate finance multi-property investment transactions ( LMA Investment REF Facility Agreement), and single currency term facility agreement for real estate finance single property development transactions ( LMA...
What is insurance law? Insurance law divides into three strands: insurance contract law, setting the rules of the bargain between policyholders and insurers the law of intermediaries, governing insurance arranged via agents (as with the majority of placements) insurance company law, addressing prudential soundness, integrity and the supervision of insurers This Practice Note focuses chiefly on insurance contract law. For wider regulatory material, see our ‘regulation of insurance’ subtopic, including Insurance & Reinsurance—regulatory framework—overview and Insurance & Reinsurance— Regulated activities—overview. Reform of the insurance sector In January 2006, the Law Commission and the Scottish Law Commission (together, the Law Commissions) began consulting on modernising insurance contract law. Their programme was then separated into three streams: consumer insurance law reform: pre-contract disclosure and misrepresentation insurance contract law reform: business disclosure, warranties, insurers’ remedies for fraudulent claims, and late payment insurance contract law...
Because many banking transactions cross borders, it is routine for the principal legal advisers to lenders/creditors and borrowers/obligors to engage local lawyers for guidance on local law. This Practice Note offers practical guidance on instructing and supervising local counsel and covers: the role of local counsel instructing local counsel as principal legal advisers for lenders/creditors or borrowers/obligors the role of the principal legal advisers in managing local counsel Role of local counsel When to appoint local counsel As a rule, local counsel should be appointed whenever: the client requires local-law advice documents must be prepared and/or executed under a law other than that of England and Wales any English law-governed document is to be entered into by a foreign company Instructing a local firm may not be needed if the principal firm has lawyers in that office who are...
Introduction to SPVs What is an SPV? ' SPV' means 'special purpose vehicle'. An SPV is a corporate entity, commonly with limited liability status, incorporated specifically to undertake a structured finance transaction in a selected legal jurisdiction and with an appropriate ownership set-up which, for tax, regulatory and/or accounting reasons, produces overall favourable treatment for the transaction it has been created to execute. SPE (special purpose entity) and SPC (special purpose company) describe essentially the very same idea. ( SPV, SPE and SPC can also denote 'single purpose vehicle', 'single purpose entity' and 'single purpose company' respectively). Under Regulation ( EU) 2017/2402 (the EU Securitisation Regulation) and UK securitisation rules, SPVs are termed securitisation special purpose entities ( SSPEs) under those regimes. SPVs are most frequently employed, in practice, as financing vehicles (typically, issuers of securities) in structured finance deals (such as...
General Set-off grants one party, Party A, who is owed money by another, Party B, the means to secure payment by setting off the sum owed through a reduction of Party A’s separate liability to Party B. Consequently, where a creditor and debtor have had mutual dealings, the creditor is entitled to set-off against the debt they are owed any amount that they owe to the debtor. The rules for administration set-off and liquidation set-off are contained in the Insolvency ( England and Wales) Rules 2016 ( IR 2016), SI 2016/1024, rr 14.24 and 14.25, respectively. The rules governing bankruptcy set-off are found in section 323 of the Insolvency Act 1986 ( IA 1986). Under insolvency set-off, an account is taken of what is due from each party to the other in respect of their mutual dealings, and the sums owed by one party to the...
This Practice Note briefly explains insolvency issues in PFI/ PF2 projects. It is designed to give restructuring and insolvency practitioners a concise, high-level overview of key contractual terms, restructuring routes, and steps that may safeguard a client’s position, presented in a practical format in routine professional practice. What are PFI/ PF2 projects? The Private Finance Initiative ( PFI) is a form of public–private partnership ( PPP) used to commission and deliver a range of public assets and services, such as schools, hospitals, prisons, rail links, roads and social housing across the public sector. PFI schemes are financed by private sector lenders, with private contractors assuming the burden and risk in relation to design, construction and/or day-to-day operations. A typical PFI arrangement is long term, enduring for around 25–30 years. Private Finance 2 ( PF2) was launched by the government in December 2012 with the intention of...
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When evaluating a general damages claim, the practitioner ought initially to refer to the Judicial College Guidelines (JCG)...
This Practice Note This Practice Note reviews mechanisms used in settling litigation. A Tomlin order consists of a consent order paired with a schedule. It operates to stay proceedings on terms that have been agreed. The provisions contained in the schedule may remain confidential. This Practice Note describes the scope of confidentiality attaching to the schedule and sets out how it differs from a standard consent order. Sample wording for a Tomlin order is included, alongside links to precedents, as well as guidance on court approval. It also addresses varying, setting aside and enforcing a Tomlin order, including the considerations the court will take into account when handling applications for each. Further guidance is provided on interpreting and applying the relevant provisions of the CPR; however, some courts and divisions impose very specific requirements for both drafting and approval, and for approaching the schedule and confidentiality issues. Accordingly, you must consider the particular rules and court guide provisions in the forum where your claim is proceeding when drawing up the Tomlin order...
Date [ date ] Parties [ name of Landlord ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Landlord) [ name of Tenant ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Tenant) [ [ name of Guarantor ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Guarantor) ] [ [ name of Mortgagee ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Mortgagee) ] Definitions Within this Deed, the terms below shall be interpreted as follows: [ Annual Rent • the annual sum reserved under the Lease; ] [ Insurance Rent • the Tenant’s share of the Landlord’s costs of insuring the Property (as set out in the Lease); ] Lease • the lease of the Property dated [ date ], entered into between (1) [ the Landlord OR [ name ...
I, [ name ], of [ address ], solemnly and sincerely state that: [ Matters to be verified, set out in numbered paragraphs ] I make this solemn statement in good conscience, believing it to be true, and pursuant to the provisions of the Statutory Declarations Act 1835. DECLARED at [ details ] this [ day ] day of [ month and year ] Before me ................................................................................ [ signature of the person before whom the declaration is made ] A [ commissioner for oaths OR [ solicitor OR [ insert other qualification ] ] authorised to administer oaths ]...
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