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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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Residual value agreements are a practical mechanism for apportioning an aircraft’s residual value risk. The main purposes for deploying residual value agreements are: to deliver added protection for financing parties within a specific aviation finance transaction in operating leases, to minimise a lessor’s exposure to residual value risk to give an airline reassurance about the worth of its investment in a fleet of aircraft There are multiple forms of residual value agreement. Each allocates risk in different ways and to different parties within the transaction. Such arrangements appear in several variants, each designed to apportion residual value risk differently between stakeholders. What is a residual value agreement? Within aviation finance transactions, residual value agreements distribute the residual value risk in an aircraft among various parties, or transfer that risk to a third party, such as an insurer......
Key elements of confidentiality agreements—restructuring & insolvency This Practice Note outlines what a standard confidentiality agreement in a restructuring covers, and the reasons those provisions appear. It should be read together with Precedent: Confidentiality agreement—restructuring & insolvency. Why are confidentiality agreements required? Sound information is the foundation of any effective restructuring. Directors, creditors, investors and other stakeholders require insight into the debtor company and its affairs to decide if a restructuring is feasible, how it should be structured, and which participants hold an economic interest in the result. The right balance is critical—creditors must have adequate access to data to assess the company properly, understand the drivers of its difficulties and the depth of its financial distress, and thereby be positioned to maintain support throughout the process. That visibility enables them to evaluate the company, grasp the causes of the issues and the...
Background to the Dodd- Frank Act After the 2008 turmoil in US capital markets, the Dodd- Frank Wall Street Reform and Consumer Protection Act of 2010 was adopted to strengthen regulation of the US financial system. In relation to financial derivatives, Dodd- Frank: requires the registration and supervision of ‘swap dealers’ and ‘major swap participants’ (both terms are discussed below) imposes clearing and trade execution obligations on standardised derivative contracts mandates record-keeping and data reporting for swaps, including real-time public disclosure expands federal agencies’ oversight of the swaps sector Under Dodd- Frank, the US Commodity Futures Trading Commission ( CFTC), which supervises the futures and options markets, and the US Securities and Exchange Commission ( SEC) jointly oversee derivatives. The CFTC regulates ‘swaps’ under the Commodity Exchange Act ( CEA), while the SEC regulates...
What does this Practice Note cover? This Practice Note explains the documentation needed to set up and run a derivatives clearing arrangement operating under the principal model (see: ‘ Two main models of clearing’ below), as typically and widely applied in the EU and UK. It sets out the legal and operational architecture for recording both the Client Transaction (defined below) and the linked CCP Transaction (defined below), covering the deployment of standard industry templates, collateral mechanisms, and various account segregation approaches. How is clearing achieved? Clearing is the mechanism by which a central counterparty ( CCP) serves as an intermediary for financial market trades, seeking to assure and reduce the risk on the transaction between ‘buyer’ and ‘seller’. In practice, clearing occurs via a structured workflow encompassing trade submission, validation, and novation by a CCP. After execution, a trade is routed to the CCP through a...
All documentary conditions precedent ( CPs) to funding must be fulfilled (or expressly waived) before any drawdown can occur. For more information on the purpose and types of conditions precedent, see Practice Note: Conditions precedent Conditions precedent to lending—overview Who signs off on the documentary CPs? Once every documentary CP has been met (or waived), the lender (or, in syndicated transactions, the facility agent) is typically required under the facility agreement to confirm this to the borrower in writing. Whether the documentary CPs are satisfied will have been assessed by reference to a range of legal, commercial and factual matters, considered jointly by the lender(s) and the lawyers acting for the lender(s). Accordingly, sign-off on the documentary CPs involves both the lender(s) and their lawyers. It should be noted, however, that the ultimate commercial decision to lend rests with the lender(s), not their...
A distributed ledger is a database that securely logs financial, physical or digital assets and shares them across a network via fully transparent updates of information. Its earliest form appeared in 2008 as ‘blockchain’. Best known for underpinning Bitcoin and other cryptocurrencies and crypto tokens such as Etherium, blockchain is hailed by supporters as a technology with the potential to revolutionise financial services. At its simplest, it stores records of transactions or other data; at the same time, it can power a broad array of applications that may fundamentally reshape how financial services are delivered. Definition of distributed ledger technology There is no single, universally accepted way to define distributed ledger technology ( DLT). In essence, it denotes a suite of technological solutions that enable cryptographically secured ledgers of electronic transactions to be maintained by a shared, or...
This Practice Note examines the difference between statements that are representations and those that are contractual terms, and identifies when a representation can carry legal consequences, whether as a collateral contract, promissory estoppel or a waiver, even where it is not incorporated into the written contract. For further guidance on the admissibility of pre-contract statements and representations when construing a contract’s meaning, see Practice Note: Contract interpretation—admissibility of pre-contractual negotiations and statements and related content. What are contractual terms? The terms of a contract set the existence and limits of the parties’ respective rights and duties to each other. A contractual term is a statement that constitutes a promise or undertaking and is incorporated as part of the contract. If a term is broken, the innocent party may bring a claim against the defaulting party for damages for breach of contract and, in some cases,...
Declaration of a director's interests Any director who, whether directly or indirectly, has an interest in either of the following must, subject to limited exceptions, disclose to the other directors the nature and extent of that interest in line with the Companies Act 2006 ( CA 2006): a proposed transaction or arrangement with the company of which they are a director; or a transaction or arrangement already entered into by the company of which they are a director. For more detail, refer to the comprehensive Practice Note: Declaration of a director's interests—the statutory provisions. For practical help in determining precisely when an interest requires disclosure, see Flowcharts: Declaration of a director's interests—proposed transaction or arrangement and Declaration of a director's interests—existing transaction or arrangement. Some or all of the statutory rules on declaring a director's interests could also potentially extend to other companies and entities of various types;...
General duties of directors The Companies Act 2006 ( CA 2006) sets out many, though not every, obligations placed upon directors under case law and principles of equity......
This Practice Note sets out a clear overview of how UK and EU legal frameworks are developing to accommodate digital bonds. It explains key terminology and the digital bond transaction lifecycle, covering the principal documents needed for issuance, with emphasis on smart contracts. It also signposts what practitioners should consider when engaging in digital bond transactions. Summary Digital bonds are now legally recognised in the UK and EU, provided the issuance structure complies with the relevant securities regime, the Prospectus Regulation and/or Regulation ( EU) 2023/1114 on markets in crypto-assets ( Mi CA), and the underpinning distributed ledger technology ( DLT) infrastructure falls within the scope of the competent regulator or sandbox. Practitioners should determine early whether an instrument is a native digital bond or a tokenised form of a traditional bond, as that choice shapes property law status, custody and settlement exposure, and...
Where does the value break? Early in restructuring talks, the parties commission valuations of the business to identify where the value breaks (see Practice Note: Types of valuation for R& I lawyers). That valuation shows: which tranche(s) of debt is impaired which creditors are plainly out of the money and therefore have no place at the restructuring table which creditors sit close to the break and may contest the valuation the probable division between equity and debt instruments in the company after the restructuring who will be asked to inject further funds in return for a post-restructuring stake which creditors may wish to buy out the senior creditors to avoid enforcement and the resulting impairment of their debt Creditors in the tranche at the value break will generally expect a larger slice of equity in the restructured entity, compensating their impairment and encouraging them to back a...
The route a project sponsor selects to procure a construction scheme is pivotal to cost efficiency, quality, overall delivery success and the sponsor’s satisfaction with the final outcome. That decision is shaped by several factors, including: Time permitted for tendering and completing the works The chosen method of finance The construction contractor’s expertise What is a design and build contract? A sponsor may opt for a design and build approach to lessen the risks it carries. Design and build ( D& B) procurement is a widely used route for sponsors undertaking construction projects. For the sponsor, procuring via D& B provides a more unified delivery model than traditional procurement, which keeps design and construction separate (see Practice Note: Traditional procurement of construction contracts). Under D& B, the sponsor appoints a single main contractor under a D& B contract, and that...
What does this Practice Note cover? Derivatives are a staple of structured finance, appearing in many guises (eg swaps, options and forwards). They are commonly deployed to reshape the cash flows an issuer receives from the underlying asset pool into the revenue profile required to meet payment obligations on the securities issued to finance that asset. In practice, these arrangements align asset cash flows with liability profiles. This Practice Note sets out the main categories and purposes of derivatives in structured finance transactions. It also describes their uses within structured finance transactions, including: interest rate swaps currency rate swaps credit default swaps credit linked notes total return swaps A variety of institutions, such as banks and insurance companies, may serve as the swap counterparty in a structured finance transaction......
When is collateral needed in financial derivative transactions? Engaging in financial derivative arrangements carries a range of risks. Foremost is 'credit risk', meaning the chance that a counterparty will fail to pay what it owes on the specified date, or otherwise fail to perform its financial obligations. In the most extreme case, non-performance may result from insolvency. As many derivative contracts stipulate recurring payments on predetermined dates across the life of the deal, credit exposure exists in the periods between those dates on amounts that have accrued but are not yet due for payment. Take an interest rate swap as an illustration: one party may commit to pay the other a fixed sum every quarter, while the other side pays a variable amount at the same time. The floating interest element is determined by prevailing levels of interest rates in the market. Between interest payment dates, the sum...
ARCHIVED: This Practice Note has been archived and is no longer being maintained. Through the transition period, core EU rules effectively continued to apply for derivatives practitioners (see Practice Note: Brexit—impact on finance transactions [ Archived]); from IP completion day, however, the landscape alters markedly. This note offers a high-level overview of IP completion day’s practical implications for derivatives lawyers and signposts fuller guidance. MARKET ACCESS FOR SWAP COUNTERPARTIES Key EU and UK legislation and Brexit SIs Directive 2014/65/ EU ( EU Mi FID II) and Retained Directive 2014/65/ EU ( UK Mi FID II) Regulation ( EU) No 600/2014 ( EU Mi FIR) and Retained Regulation ( EU) No 600/2014 ( UK Mi FIR) Directive 2013/36/ EU ( EU CRD IV) and Retained Directive 2013/36/ EU ( UK CRD IV) The EEA Passport Rights ( Amendment, etc., and...
Loan market and developments A concise outline of the current Danish loan market and notable recent developments follows. Most corporate lending still comes via bank facilities—both committed and uncommitted—and is frequently secured. Security packages commonly comprise: shares; real property; bank accounts; and a floating charge spanning all moveable property, receivables and intellectual property of the borrower. Financing for both private and commercial real property is most often arranged through mortgage credit loans provided by mortgage credit institutions, with the relevant property given as security. The Danish Capital Markets Act introduced SME Growth Markets in Denmark for small and medium-sized companies ( SMEs). In the preparatory remarks to the Act, it is noted that SMEs have experienced difficulties obtaining finance since the financial crisis. By establishing SME Growth Markets in Denmark, the aim is to grant SMEs easier access to the capital...
Debt instruments—including bonds, medium-term notes and commercial paper—are financial products that evidence indebtedness; see Practice Notes: Key features of the debt capital markets and Types of debt securities. This Practice Note reviews the various forms such securities may adopt and clarifies the meaning and distinctions between: a bearer security versus a registered security, and a security issued in definitive form versus a security issued in global form Its primary emphasis is on the attributes of definitive debt securities. It should be considered alongside Practice Note: Form of debt securities—global securities, which sets out: the features of global debt securities the differences between a temporary global security versus a permanent global security, and the differences between a standard global note structure versus a new global note structure and new safekeeping structure Taken together, these Practice Notes should be consulted for context, comparison and terminology across the structures and forms...
Defaulting lender provisions Borrowers aren’t the only parties that may encounter financial strain. If a lender fails to honour its funding obligations under a loan, the borrower might be unable to meet its own liabilities, with knock-on consequences for other lenders if the borrower’s repayment capacity is affected. The Loan Market Association’s ( LMA) recommended senior multicurrency term and revolving facilities agreement (compounded rate/term rate) for leveraged acquisition finance (the LMA leveraged facilities agreement), together with the other LMA leveraged finance forms, includes measures to address potential issues on syndicated facilities where a finance party risks non-performance. Although the LMA’s investment grade documentation does not feature these provisions, parties may choose to include them in other syndicated facility agreements. The LMA’s standard form documents are available to members via the LMA website. As only a small share of facility agreements contain defaulting lender...
The nature of an issuer's payment obligations—principal and interest Debt securities (other than ‘zero coupon’ or ‘perpetual’ instruments) typically contain undertakings by the issuer to service interest on the outstanding principal and to return that principal amount. In this sense, a debt security resembles a loan: the issuer stands in the position of a borrower and the investor stands in the position of a lender. Nevertheless, there are variations in how interest and principal are delivered under debt securities. The promise to pay interest and to repay principal is legally binding, and a failure to meet either obligation will usually constitute an event of default that makes all amounts outstanding then payable to investors. Payment terms feature several elements, including the method for calculating interest or principal due. Interest may be set at a fixed rate or a floating rate; and principal may be...
This Practice Note sets out what constitutes events of default and explains their use and purpose within debt capital markets transactions in practice. It also outlines some of the typical events of default commonly found in the documentation for an issue of bonds or other debt securities. Events of default Events of default are included in documentation for many forms of term finance—if a specified event of default occurs, the creditor or creditors may require immediate repayment of the debt (acceleration)......
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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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