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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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ISDA documents The 1992 and 2002 ISDA Master Agreements (the Master Agreement) are standard form documents produced by the International Swaps and Derivatives Association ( ISDA). In this Practice Note, any reference to a Section of a Master Agreement or a Part of a Schedule should be read, unless stated otherwise, as a reference to the 2002 ISDA Master Agreement and its accompanying Schedule. For general background on negotiating ISDA Master Agreements, see Practice Note: Introduction to negotiating ISDA documents. What are Events of Default and Termination Events? Section 5 ( Events of Default and Termination Events) of the Master Agreement is divided into two components: Section 5(a) ( Events of Default) sets out the Events of Default; and Section 5(b) ( Termination Events) sets out the Termination Events. Events of Default are occurrences that permit one party to terminate any...
What is the Gazette? The Gazette offers an enduring, authoritative public record of significant statutory and non-statutory notices that can underpin legal and other procedures. Every notice is available via a single website, regardless of whether it first appeared in the London, Edinburgh or Belfast edition. In certain cases, insolvency law requires specific notices to be lodged at Companies House and published in the Gazette. Accordingly, it can be sensible to carry out searches at both Companies House and the Gazette. For more information on insolvency searches at Companies House, see Practice Note: What do insolvency searches at Companies House reveal? When are notices published in the Gazette? A notice in the Gazette will be placed on the Gazette website and in the particular edition (ie London, Edinburgh or Belfast) you choose......
Floating charges are typically set out within a debenture, alongside other security interests such as fixed charges, assignments, and legal mortgages. Including a floating charge can deliver significant advantages to secured lenders (see Reasons for taking a floating charge below). This Practice Note addresses the following topics: the characteristics and nature of a floating charge the rationale for, and benefits of, taking a floating charge who is able to grant a floating charge principal considerations when taking a floating charge, and issues of perfection, priority and enforcement What is a floating charge?......
This Practice Note serves as a primer on financial covenants (financial undertakings). It outlines the rationale for using financial covenants, then describes how they are established and measured. It also covers the typical financial covenants seen in commercial finance, such as: minimum net worth test gearing ratio leverage ratio (or debt to equity ratio) current ratio (or acid test ratio) cashflow ratio interest cover ratio loan to value ratio Note that this Practice Note does not delve into financial covenants for specialist transactions in detail. The final section, however, signposts additional resources on applying financial covenants across various specialist transactions. Where relevant, it draws attention to provisions in the Loan Market Association ( LMA) senior multi-currency compounded rates/term rates term and revolving facilities agreement for leveraged acquisition finance transactions (the LMA leveraged facilities agreement)...
This ‘ How to’ guide offers a primer on drafting and negotiating a facility agreement for those starting out in lending transactions. It includes a table of useful precedents, explains how a facility agreement is organised, and flags key issues to consider when drafting and negotiating, alongside links to further materials. See also Practice Note: Introductory guide to lending, which sets out the facility agreement’s role within a loan transaction. For a deeper look at negotiating a facility agreement—covering the parties’ aims, analysis of the agreement’s structure and frequently negotiated clauses, plus common pitfalls—see Practice Note: Negotiation guide—facility agreement. Finding a precedent facility agreement The lender’s lawyers will typically, though not invariably, produce the first draft of the facility agreement. What kind of precedent is required? When choosing a suitable precedent facility agreement, it is vital to understand the nature of the loan, as that will...
This Practice Note This Practice Note offers practical guidance on correctly and properly executing simple contracts and deeds for Law of Property Act receivers ( LPA receivers) or fixed charge receivers. Appointing an LPA/fixed charge receiver is a remedy available to the chargee (ie the holder of security over property) and is the remedy of a chargee. LPA/fixed charge receivership is not an insolvency process and does not necessarily, of itself, mean the chargor (ie the person who granted the security) is insolvent. An LPA/fixed charge receiver must be a natural person (ie a company cannot be a receiver) but need not be an insolvency practitioner or hold any other particular qualification. Unlike a liquidator, administrator or trustee in bankruptcy, an LPA/fixed charge receiver does not take control of the company as a whole (and, for an individual, does not control the...
This Practice Note sets out practical guidance on the correct execution of simple contracts and deeds by limited liability partnerships ( LLPs). See also Precedents: Execution clause—limited liability partnership—contract and Execution clause—limited liability partnership—deed. For commentary on establishing an LLP, see Practice Note: Forming a limited liability partnership. We have created a collection that serves as a comprehensive, interactive tool to help users pinpoint and navigate the concepts and common issues that arise when executing documents. Each stage or phase supplies practical guidance, precedent clauses and Q& As relevant to that part. For further details, see: Execution collection. The law Before 1 October 2009, the execution formalities applicable to LLPs were contained in the Companies Act 1985. From 1 October 2009, LLPs have been governed by the Companies Act 2006 ( CA 2006) by virtue of, and as modified by, the Limited Liability...
This Practice Note addresses: the purpose and consequences of events of default in facility agreements common events of default in facility agreements continuing events of default the distinctions between an event of default, a default and a potential event of default Where relevant, it signposts provisions in Precedent: Facility agreement (term loan): single company borrower—bilateral—with or without security or a guarantee and the Loan Market Association ( LMA ) investment grade multicurrency term facility agreement with/without observation shift ( the LMA facility agreement ) (available to LMA members on the LMA website). The purpose of events of default Lenders usually prefer not to depend on general contract law to secure a remedy where a borrower breaches a loan agreement. Major breaches—such as failing to honour payment obligations or breaking financial covenants—may signal financial stress and call for prompt action to protect the lender’s investment....
Most lending deals involve the use of formal legal opinions issued by counsel. Commonly, they are required as a necessary condition precedent to funding, or before the finance documents are executed and put into effect. The recipient, most often the lender, receives confirmation of specified legal issues connected with the loan transaction at hand. While widely encountered across numerous lending structures, they can be challenging in both legal and practical terms, and should therefore be negotiated and settled at the earliest possible stage of the transaction process, during initial stages of the process itself......
What are legal opinions? In debt capital markets transactions, legal opinions are formal letters of legal advice serving two principal roles: to set out a checklist of legal points that are critical to the lawfulness of offering and distributing the securities, and to the enforceability of the transaction documents and the securities; and to confirm the law firm issuing the opinion has assumed responsibility for the legal matters it states. Such opinions in debt capital markets are highly standardised, with well-established market conventions addressing: When legal opinions are given; Who provides them; What issues they cover; Who may rely on them; and The assumptions and qualifications they may contain. For broader guidance on legal opinions, see Practice Note: Legal opinions—uses, scope and structure. When are legal opinions given? Legal opinions form part of the conditions precedent delivered at closing for: standalone issues; initial issues under programmes; and syndicated issues under...
STOP PRESS: The UK's prospectus framework presently derives from the EU Prospectus Regulation, which was carried across into domestic law after Brexit as the UK Prospectus Regulation. The UK has been reassessing this regime as part of a broader programme of initiatives to modernise the UK's capital markets and strengthen the UK's attractiveness as a listing venue in the UK. Consequently, the UK Prospectus Regulation will be superseded by the Public Offers and Admission to Trading Regulations 2024 (the POATRs), with all detailed requirements relating to admission to trading to be set out in full in Financial Conduct Authority ( FCA) admission rules. The FCA issued consultation paper FCA CP24/12, outlining detailed proposals; that consultation closed in October 2024. A further consultation paper ( FCA CP25/2), released on 31 January 2025, addresses, among other matters, retail bonds; a unified disclosure framework for debt...
At the outset of a deal, the lender’s solicitors undertake due diligence on the borrower(s), any guarantors and any providers of third party security (together, the obligors). Immediately before completion (ie funding), the lender will seek assurance that nothing has altered regarding the obligors’ financial or corporate position since the initial review. On the morning of completion, the lender’s lawyers commonly run targeted searches on the obligors for this purpose. Winding up search The Central Registry of Winding-up Petitions (the Central Registry) is a computerised record of winding-up petitions and administration applications, maintained for all petitions or applications submitted to the Insolvency and Companies List (formerly the Companies Court), a Chancery District Registry or the County Court. A Central Registry search should disclose: any petition or order for the winding-up of a company made in England and Wales; and any...
Security over land Security can be taken over real property by means of a mortgage or a charge, with the form selected typically hinging on the importance of the land to the borrower’s business or its relevance to the arrangement and the circumstances of the particular transaction in question. If the land is a key asset, or the facility funds acquisition or development, funders tend to insist on a charge by way of legal mortgage. Where the property is of lesser importance, they may accept an equitable mortgage or charge. Lenders frequently take a debenture, combining fixed and floating security over all the borrower’s assets, capturing its rights, title and interest in the real property it owns. A charge by way of legal mortgage is usually included within the debenture, though it can also be set out as a standalone security document, or as a...
Within the suite of papers required to arrange funding for a development or construction scheme, the facility agreement sits as the core instrument and is regarded as the principal document. It spells out the terms and conditions on which a lender is willing to finance the scheme and participate in the project. Its provisions address every element of the funding package, and are not confined to construction-specific matters but extend across the entire arrangement. Banking and finance solicitors will prepare and negotiate the finance clauses, while construction specialists review the construction terms, acting for the lender or the borrower as required. For guidance on the overall structure and layout of a facility agreement, see Practice Note: Structure of a facility agreement for construction projects. In this Practice Note, ‘borrower’ denotes the party taking the loan, that is, the entity borrowing the money....
Netting Netting is a contract-based arrangement between two counterparties. In essence, it provides that whenever they deal with one another, they do not maintain separate cross-claims against each other. Rather, at any moment there is only a single consolidated amount outstanding, owed by the party whose notional cross-claim has a lower value than its counterparty’s claim. Accordingly, there is, at any time, just one obligation to pay between them. Netting plays a vital role in the context of derivatives. Under a swap, for instance, two parties agree to exchange streams of payments with one another in practice. Each side makes periodic transfers to the other at set intervals over time. However, the amounts each pays are determined on different bases from one another. Consider the most prevalent interest rate swap (a fixed-to-floating interest rate swap): one side pays regularly by reference to a floating...
Debt for equity swap A widely used restructuring approach is a debt for equity swap; financial creditors take shares in the reorganised corporate vehicle in return for reducing or writing off their debt claims against the company (and the remainder of the group). Many highly leveraged transactions have slender equity buffers and existing shareholders frequently end up ‘out of the money’. A debt for equity swap cuts balance sheet liabilities and lets lenders share in more of the upside after a restructuring when the business returns to profit (as equity holders, entitled to dividends once there are adequate distributable reserves) or on any subsequent sale. The valuation will indicate where the value breaks; that tranche will expect to receive the greatest equity allocation post‑restructuring (see Practice Note: Where the value breaks and negotiating strength). The corporate rescue exemption in section 322(5E) of the...
What are the methods of raising finance? When a corporate entity seeks funding, it must decide whether to borrow from creditors or issue shares on the equity markets. The choice hinges on several factors, including the preferences and requirements of prospective creditors/investors, and the characteristics of the entity raising capital. For a comparison of obtaining funds through debt versus issuing equity, see Practice Note: Debt securities and equity compared. Loans versus debt securities Loans appear in many guises. A straightforward, frequently used facility is an overdraft. In commercial finance, other common options include: Term loans Revolving credit facilities Lending can be provided by a single lender (bilateral) or a group (syndicated or club deals), and may be secured or unsecured. It can support both short-term and long-term requirements. For more detail, see: Types of...
This Practice Note offers high-level guidance on debt buy-backs within loan documentation. It first outlines what constitutes a debt buy-back, then considers the issues that may emerge, and sets out how the Loan Market Association ( LMA) addresses buy-backs in its standard form documents. For fuller analysis, including structuring points, see Article: Structuring loan buybacks—(2021) 5 JIBFL 337. Buy-backs can relate to loans or bonds; however, this Practice Note addresses loan buy-backs only. For material on bond buy-backs, see Article: and the weakening of bondholder protection (2020) 5 JIBFL 310. What is a debt buy-back? In a lending context, a debt buy-back typically means the acquisition of existing debt in the secondary market by a sponsor (or a sponsor affiliate) or by a company within the borrower group in a sponsor-controlled leveraged credit......
Practice Note This Practice Note sets out the principal drafting, negotiating and legal considerations for a typical bilateral debenture issued for a particular deal with a single security provider. It is equally applicable to syndicated and all monies debentures, and to arrangements involving several security providers. Here, the security provider is called the Chargor and the secured party the Lender. It also signposts answers to commonly asked questions. A debenture is commonly used when the lender seeks security over a company’s entire asset base. For introductory guidance on debentures—what a debenture entails and who may grant one—see Practice Note: Key features of debentures. For broader guidance on preparing and negotiating security documents, including selecting an appropriate precedent and early-stage considerations, see Practice Note: How to draft and negotiate security documents in loan transactions. Debentures vary in structure, yet they tend to share similar...
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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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