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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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Shares are frequently pledged as security for a loan. In commercial finance deals, they are often taken as security: as one part of a security package covering all of a company’s assets (see Practice Note: Key features of debentures) where the borrower is a special purpose vehicle and the lender wants the option to take control of the borrower and its entire business on enforcement (see Practice Notes: Security in real estate finance transactions, Security in project finance transactions and Taking security in acquisition finance transactions—overview), or for stamp duty or other tax-driven reasons (see Practice Note: What does stamp duty apply to?) This Practice Note sets out the main issues when taking security over shares. In particular, it looks at: the categories of shares that can be secured the forms of security typically used over shares key...
Standby letters of credit Standby letters of credit (sometimes called standby credits) sit within the wider category of letters of credit. They tend to be used in much the same way as on demand guarantees and performance bonds (see Practice Note: On demand guarantees and bonds). Their role is to secure payment or other obligations if a contracting party fails to perform. A beneficiary under a standby letter of credit anticipates payment only where the counterparty is in default. For further detail on standby letters of credit, see Practice Note: Characteristics of standby letters of credit. The International Chamber of Commerce ( ICC) has produced standard rules and customary practices for letters of credit, which also cover standby credits. Adoption of those rules and practices is not compulsory. Parties are free to incorporate them into their arrangements if they choose......
This Practice Note forms part of the Share purchase transaction collection. Timing Ordinarily, due diligence is undertaken after the parties have agreed heads of terms and have put appropriate confidentiality provisions in place. From that point, the process will usually run alongside the negotiation of the principal sale documentation (the share purchase agreement together with any related ancillary documents). The bulk of the enquiries should be completed at the outset of the transaction to allow the parties to negotiate suitable warranty and/or indemnity protection within the share purchase agreement, as well as the seller’s disclosures against those warranties. A disclosure letter will be drafted and negotiated in tandem with the share purchase agreement and will be executed at the same time as the agreement itself. In most cases, the initial draft of the disclosure letter will not be prepared until due diligence is well...
Scope of this Practice Note A company may use its intellectual property to secure a loan. In commercial finance, IP is frequently taken as collateral: as one element of an all‑assets security package (see Practice Note: Key features of debentures) in financings to borrowers in sectors where IP carries particular value, for example: biotechnology, pharmaceutical, electronics and telecommunications industries (where patents are especially significant) global retail industries (where trade marks are especially important) film production and software manufacturing industries (where copyright is especially central) This Practice Note does not deal with taking security over IP in the EU or other overseas jurisdictions. Lenders should obtain appropriate local law advice when taking security over a...
Contracts for the sale of second hand aircraft are concluded between an aircraft owner (as the seller) and, in the majority of situations, an airline or an aircraft leasing company (as the buyer). The parties usually keep the terms of such agreements confidential; however, where the buyer has a lender, certain provisions will be revealed to that lender if it is providing the airline with funding in relation to an aircraft to be acquired pursuant to the purchase agreement. There is no single standard form of agreement for second hand aircraft, though some sellers maintain a preferred form of purchase agreement that they seek to use with customers. The requirements of different participants in respect of second hand aircraft sales and purchases, as well as the commercial particulars of these transactions, vary markedly, and are considered in greater detail below. Key...
Read this Practice Note alongside Practice Note: Schemes of arrangement—convening hearing and sanction hearing, bearing in mind the distinct function assumed by the court when assessing jurisdiction at each stage. Jurisdiction— England and Wales—statutory provisions The Companies List within the Business and Property Courts of England and Wales derives authority to approve a scheme of arrangement from Part 26 of the Companies Act 2006 ( CA 2006) and the Insolvency Act 1986 ( IA 1986). Under CA 2006, s 895(1), the procedure in Pt 26 applies to schemes proposed between a company and: its creditors, or any class of them; or its members, or any class of them CA 2006, s 895(2) provides that the term ‘company’ includes: a company within the meaning of CA 2006; and any company liable to be wound up under IA 1986 IA 1986, s 221 confirms that any...
This Practice Note explains the circumstances and process by which an innocent party may unwind a contract for misrepresentation, the reasons they might take that step, and the occasions when rescission is not allowed. For guidance on when a party may recover damages for a misrepresentation, or seek to limit/exclude liability for misrepresentation, see the following Practice Notes: Misrepresentation—damages as a remedy Misrepresentations—excluding and limiting liability for them The remedy of rescission in misrepresentation claims Where a misrepresentation has persuaded a party to enter a contract, that party can elect to rescind. If that decision is disputed, the party may invite the court to assist in giving effect to the rescission. The consequence of rescission, where it is available, is to restore the parties to the position they occupied before the agreement was concluded. This is often termed rescission ab initio, to set it apart from...
This Practice Note examines what a purpose clause in a facility agreement is. It also outlines what Quistclose trusts are, the circumstances in which they arise, and why they are relevant to purpose clauses in facility agreements. Where appropriate, it signposts relevant provisions in: Precedent: Facility agreement (term loan): single company borrower—bilateral—with or without security or a guarantee the Loan Market Association ( LMA) investment grade multicurrency term facility agreement with/without observation shift (the LMA investment grade facility agreement) the LMA senior multicurrency term and revolving facilities agreement for leveraged acquisition finance transactions with/without observation shift ( LMA leveraged facility agreement) The other LMA standard form facility agreements, eg the LMA Senior Single Currency Term Facility Agreement for Real Estate Finance Multiproperty Investment Transactions, also include sample purpose clauses. LMA documents are available to LMA members on the LMA...
This Practice Note reviews proprietary claims and remedies, explaining the processes of following and tracing assets at common law and in equity to reclaim property held by another—most often encountered in complex fraud matters or where the immediate defendant is insolvent. It also addresses exceptions to tracing and the potential for a right of subrogation to recover a proprietary interest, including: good faith purchaser for value chains of transactions backwards tracing Quistclose trusts What are proprietary remedies? General principles A proprietary remedy (or proprietary claim) attaches to identified property, rather than creating a personal remedy such as a claim for damages. This does not exclude money or a debt owed from being the relevant property; both can be the subject of a proprietary claim, as illustrated by the decision in Lipkin Gorman v Karpnale (see below)......
The main finance parties in a typical project finance transaction These largely mirror those found in syndicated lending, namely: the lenders hedging counterparties the arranger(s) the intercreditor agent (sometimes called the common agent) the facility agents the security trustee/security agent In project finance, further functions commonly feature within the financing structure and/or on behalf of the finance parties. These may include: the account bank(s) the role banks specialist/technical advisers to the finance parties Some of these extra responsibilities can be undertaken by one or more of the banks or financial institutions already involved in the transaction. The main project parties in a typical project finance transaction are explained in Practice Note: Project finance—key project parties......
Most projects rely on some measure of debt finance. The borrowing portion of a project’s funding is commonly known as ‘project finance’. Although no two project finance deals are identical, there are core stages that are essential to obtaining funding. This Practice Note outlines those key stages. Bid/feasibility studies The earliest steps in a project’s lifecycle vary according to whether the scheme is publicly procured (ie initiated by a government or other public body) or privately originated. In both scenarios, sponsors typically approach prospective project finance lenders only once the bidder has been shortlisted (where applicable) and after the relevant feasibility studies have been undertaken (see Practice Note: Project finance—due diligence and ‘bankability’— Technical due diligence/feasibility study in project finance transactions). Publicly procured projects In the UK, public procurement regulations require certain ‘contracting authorities’, including central government and its agencies, to run an open, formal...
The principal project participants in a standard project finance arrangement are: the sponsor(s) the project vehicle (called in this Practice Note the 'project company'), which is usually the borrower of the project loans a holding company contractors and sub-contractors suppliers off-takers the host government The principal finance parties in a typical project finance transaction are explained in Practice Note: Project finance—key finance parties. Sponsor The sponsor is the party that originates and oversees the project. It is usually a private company or a group of companies. The government of the country where the project is located (the host government) may at times be a sponsor, especially in public service schemes, eg infrastructure (roads, rail, ports etc), social facilities (schools, hospitals, prisons etc) or natural resources (oil, gas, mining etc). Even if the host government does not initiate the project, it often plays a vital part in making it viable—see Host...
What is pre-export finance ( PXF)? Pre-export finance ( PXF) is a long-standing arrangement that delivers funding to producers of goods and commodities. It is a form of structured trade finance (see Practice Note: Introductory guide to structured trade finance). These structures emerged because, historically, many producers of goods and commodities—particularly in emerging markets—were not regarded as sufficiently bankable to secure finance through orthodox channels, such as conventional corporate loans backed by the borrower’s balance sheet. In a classic PXF facility, a lender or a syndicate of lenders advances funds to producers to assist them in meeting either working capital requirements (for example, to cover the purchase of raw materials and the costs associated with processing, storage and transport) or capital investment requirements (for example, investment in plant and machinery and other elements of infrastructure). For the purposes of this Practice Note, 'lender' refers to either a...
Practical completion signals the close of a project’s construction phase, the point at which the works are sufficiently ‘finished’ for the employer to take possession and/or put them to use. It commonly triggers the commencement of the defects liability period or maintenance period. As set out below, this milestone carries weight, bringing notable commercial, contractual, financial and practical consequences for both the employer and the contractor. Determining whether a scheme has actually reached practical completion often provokes contention, becoming a regular flashpoint for disagreements and disputes across the construction industry. In some contracts, practical completion is described as ‘substantial completion’ or simply ‘completion’. What does 'practical completion' mean? Many of the difficulties that arise on construction projects in relation to practical completion stem from uncertainty over what the term really entails. The phrase is frequently included in building contracts with minimal, if any,...
This Practice Note explores portability provisions in high yield bond documentation. It explains what portability signifies before moving to the principal points in high yield documentation and how portability features in loan documentation. It proceeds on the basis that readers possess some knowledge of market terminology. For introductory material on acquisition finance, with links to more detailed resources, see Practice Note: Introductory guide to acquisition finance. For a glossary of acquisition finance terms, see: Glossary of acquisition finance terms and jargon. What is portability? High yield bond covenant packages commonly include provisions granting bondholders a put option—typically at 101% of par (plus accrued and unpaid interest)—triggered by a change of control ( Co C). This mechanism allows bondholders to reassess their investment and, in specified circumstances where the issuer’s management and ownership are likely to have altered fundamentally, to exit without suffering a loss......
Practice Note This Practice Note outlines the distinct regimes applying to overseas companies in relation to registering security at Companies House. The relevant regime depends on when the security came into being. In brief, from 1 October 2011 onwards, overseas companies have not been obliged to register security over UK assets at Companies House; however, they must keep an internal register of charges and mortgages as part of their books and records. Overseas companies are, nonetheless, required to be recorded in the Register of Overseas Entities and to supply particulars of their beneficial owners and managing officers where they acquired land in the UK on or after 1 January 1999. Acquisitions and specified dispositions, including granting security, will not be entered at the Land Registry if the Overseas entity is not listed in the Register of Overseas Entities. For further...
The terminology surrounding on demand guarantees and bonds can be confusing. On demand guarantees and on demand bonds broadly fulfil the same role and exhibit similar features. They are also known as 'first demand guarantees' or 'first demand bonds'. For simplicity, this Practice Note groups them together as 'on demand guarantees/bonds'. These instruments operate as a type of quasi-security, most commonly supporting contractual duties. In general, security (eg mortgages and charges) and quasi-security (eg guarantees) are granted in favour of a lender, usually a bank, as collateral for a loan. By contrast, an on demand guarantee or bond is issued by a bank in connection with a contract its customer has entered into with a third party, and it serves as collateral for that customer's obligations to that third party. Banks issue on demand guarantees/bonds for their clients as part of the wider suite of...
This Practice Note deals with on demand guarantees and bonds. ( It does not address conditional guarantees and bonds, which are generally issued by insurance companies and fall outside the scope of this Practice Note.) On demand guarantees and bonds are ordinarily issued by banks at their customers’ request as a form of quasi‑security for contractual obligations that the bank’s customer has undertaken with a third party. This Practice Note outlines: the purpose and common applications of on demand guarantees and bonds the distinction between: on demand guarantees and bonds, and guarantees in the traditional sense of the term the structure and parties involved in on demand guarantee and bond transactions the principal...
This Practice Note summarises notable cases and related materials concerning material adverse change clauses ( MAC) in a financing context. The cases are arranged by theme and cover: interpreting a MAC clause acceleration based on a MAC clause Interpreting a MAC clause Names of parties: BM Brazil I Fundo De Investimento EM Participacoes Multistrategia v Sibanye BM Brazil ( Pty) Limited [2024] EWHC 2566 ( Comm) Judgment date: 10 October 2024 Case summary: Following drilling that triggered a blast, a mine slope in Brazil shifted by up to two metres, with the ground moving as a single block. The central issue was whether this amounted to a ‘material adverse effect’ under the definition in the share purchase agreement for the company owning the mine, allowing the buyer to withdraw. Butcher J concluded it was not a ‘material adverse event’...
This How to guide forms part of the Banking & Finance loan transaction collection. It signposts precedents, highlights drafting and negotiating points, and serves as an introductory resource for those new to banking and finance law. What is a mandate letter? Mandate letters are used across syndicated transactions to set out the basis on which the borrower appoints banks or financial institutions to the principal roles in a syndicated facility. Mandated lead arrangers (appointed to arrange the facilities) ( MLAs) Bookrunners (appointed to organise syndication) Underwriters (appointed to underwrite the facilities—ie commit to lending the full amount even if the facilities cannot be successfully syndicated) A mandate letter will typically include provisions on the proposed financing terms, the fee structure for the arrangement, and the intended syndication strategy—ie authorises the MLAs to syndicate the loan on an exclusive basis. For more...
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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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