Legal Practice Notes

ARCHIVED: This Practice Note is archived and no longer maintained. For further reading on this topic, see: State aid—overview. State aid—generally European Union rules on state aid prevent member states from granting support that distorts, or may distort, competition and trade between states. Consequently, whenever a public authority or publicly funded body (such as a quango) offers financial assistance to an undertaking, they must consider carefully whether that support constitutes state aid, mindful that the European Commission is obliged to recover any unlawfully granted aid, together with applicable interest. The EU nevertheless recognises that state aid can be a legitimate element of public policy, for example to attract inward investment into underdeveloped regions (often called ‘assisted areas’) or to foster investment in high-technology industries. Article 107(1) of the Treaty on the Functioning of the European Union sets out the primary prohibition on state aid, while TFEU, art 7,...

Termination—contractual and common law rights As commercial solicitors, we are commonly engaged to advise on setting up a commercial relationship. While we, much like family practitioners preparing pre-nuptial agreements, often consider the consequences of a relationship ending, only in more recent economic conditions are we more frequently asked how to unwind the relationship in the first place. It is vital to remember that a right to terminate may arise at common law (for example, for repudiatory breach) as well as under the contract’s express terms. Where an agreement is silent on termination, the courts will, in any dispute, apply common law principles. To minimise uncertainty, parties typically include clear contractual provisions dealing with termination. As a general rule, contractual termination rights are additional to, and not a substitute for, common law rights. In the absence of wording to the contrary, the default...

Scope of the General Product Safety Regulations 2005 The General Product Safety Regulations 2005, SI 2005/1803 ( GPSR 2005), set the legal framework to ensure consumer products are safe in Great Britain. They outline the conditions and responsibilities for placing consumer goods on the GB market. states that products introduced to the market or supplied by producers and distributors must be safe clarifies the meaning of a safe product imposes duties on producers and distributors consistent with marketing safe products establishes a presumption of conformity for items that meet UK national safety standards mandates and authorises enforcement authorities to take whatever action is necessary to protect consumers from unsafe products Separate rules apply to the placing on the market of consumer products in Northern Ireland and within the EU. For details on EU consumer protection law, see:...

This Practice Note examines issues arising under the Limitation Act 1980 ( LA 1980) as they relate to tort claims. It outlines the limitation period for tort-based actions, with consideration of joint tortfeasors, overlapping contractual and tortious duties, contingent loss, continuing wrongs and latent damage. For broader guidance on limitation, see Limitation—overview and the following Practice Notes: Limitation Act 1980—general application Limitation—the principal limitation periods Initial considerations A tort is a breach of duty that gives the injured party a private law entitlement to recover compensatory damages at common law from the person responsible ( SAAMCO). Where a claim is founded in tort, the limitation period is six years from the date on which the cause of action accrues ( LA 1980, s 2). Be aware that the language of LA 1980, s 2 is broadly cast and is capable of covering newly...

This Practice Note This Practice Note clarifies the meaning of applicable law—sometimes, depending on context, called governing law, proper law or the choice of law—namely the law applied to resolve a dispute between parties. It does not encompass procedural law. It identifies which applicable law regime operates in the courts of England and Wales ( English courts). The regime engaged will differ according to whether the dispute is contractual or non-contractual and, for contractual matters, whether the parties selected the applicable law via a choice of law (governing law) clause, including any subsequent variation of that agreement. In a world where international travel, trade and communication are routine, cross-border complications arise with ease. Parties conclude contracts daily across different countries and continents. Goods and services move across frontiers, and individuals suffer accidents outside the states where they ordinarily live and work. When a claim has a...

This Practice Note outlines the purpose and functions of sea carriage documents in relation to the delivery of cargo, with particular attention to bills of lading and sea waybills. It explains that a bill of lading may be issued as a charterers’ bill or an owner’s bill, and that such documents operate both as evidence of the contract of carriage and as security for finance. Sea carriage documents A sea carriage document is produced to obtain release of goods, either at the port of discharge or at the nominated place of delivery, depending on the form issued by the carrier to the shipper. That document will be either: a bill of lading a sea waybill For more detail on bills of lading and sea waybills, see the Practice Note: Bills of lading and sea waybills. Bill of lading A bill of lading may be: bearer bill of...

This Practice Note considers good faith in commercial agreements It explores the meaning of good faith and the degree to which it features in commercial arrangements, whether as an express commitment or as a term implied by law, including in the sphere of relational contracts. It also addresses agreements to negotiate in good faith, how other jurisdictions approach a duty of good faith, the operation of Braganza-type duties within commercial contracts, and offers drafting pointers for clauses dealing with good faith provisions. The orthodox position taken by the English courts has been to refrain from implying a general duty of good faith into commercial agreements, stating that, if parties intend to create such an obligation, it must be articulated expressly ( Mid Essex Hospital Services). Nonetheless, the courts may in some situations recognise an implied duty of good faith, either by applying the...

Practice Note This Practice Note outlines the principal features of guarantees and indemnities, the situations in which they are applied, and the matters beneficiaries and lenders ought to evaluate regarding the form of any guarantee or indemnity, including where such indemnities or guarantees are provided by either individuals or corporate bodies......

This Practice Note offers practical guidance on executing simple contracts and deeds by third-party individuals or bodies corporate (chiefly companies formed under the Companies Act 2006 ( CA 2006)) acting pursuant to a power of attorney, and outlines how such parties should sign in this context. It considers the following: who can grant a power of attorney, who can act as an attorney, the formalities for executing simple contracts or deeds under a power of attorney. It does not cover: the execution of powers of attorney themselves (see Precedent: Power of attorney for commercial transactions); the execution of documents by other authorised signatories of organisations (see Practice Note: Executing documents—deeds and simple contracts). We have created a comprehensive, interactive collection to help users identify and work through the concepts and common issues when executing documents. Each section or phase contains practical guidance, precedent clauses and Q& As relevant to that section, helping users work...

General This Practice Note summarises the restraints a franchisor will usually require of a franchisee to protect the franchisor’s business, including treatment of the franchisor’s confidential information, non-compete obligations (restrictive covenants), no-poaching clauses, severability and the enforceability of restraints, together with practical guidance on drafting restrictive covenants. It does not specifically address competition law issues—see the Practice Notes mentioned below for further detail. Granting a franchise typically involves the franchisor sharing confidential material with: actual and prospective franchisees (including unit franchisees, master franchisees and developers), and employees and agents of the franchisees Such confidential information includes the methods underpinning the franchised concept and associated know-how. Misuse by any recipient—especially where it is employed in competition with the franchisor—can be highly detrimental to the franchisor’s business. The franchisor should therefore aim to prevent recipients from disclosing the information for unauthorised purposes, including using it to...

Practice Note This Practice Note sets out a summary of the aims, nature and breadth of the disclosure exercise undertaken by a seller when disposing of shares in a private limited company, or on a sale of a business together with its assets (the target). Disclosure sits at the heart of the sale process, and both sides should appreciate the significant time and effort needed to deliver it properly. With suitable professional support, the parties can reduce or manage the risks that might otherwise emerge throughout the transaction... The seller must analyse every warranty closely with its advisers and decide what matters ought to be disclosed against each one, as poor or incomplete disclosure can leave the seller open to breach of warranty claims and associated liabilities. The seller’s solicitors will co‑ordinate the disclosure workstream and, working alongside the seller and its...

It is usual for parties to a facility agreement to seek changes to its provisions, often more than once, over the term of the facilities. They might, for instance, look to push back the repayment date or raise the amounts available so the borrower can finance another scheme or acquisition. The lender may take the opportunity of an increase to the facilities to implement other amendments to the papers, such as a higher interest rate or further undertakings. These adjustments can be recorded by an amendment letter, an amendment and restatement agreement, or at times by issuing a fresh facility letter or agreement intended to supersede the earlier version. For guidance on the process of amending a facility agreement, see Practice Note: Amending a facility agreement. Where the lender is to benefit from guarantees or third party security (see Practice Note: Third party...

This Practice Note reviews the Hague Convention on Choice of Court Agreements, which governs both jurisdiction and the recognition and enforcement of judgments. It outlines the scope of the Hague Convention on Choice of Court Agreements and the need for an international case anchored by an exclusive choice of court agreement. It also examines issues lying outside the Convention’s reach, whether by specific exclusions within the text or through declarations made by contracting states. The Practice Note considers how the Hague Convention on Choice of Court Agreements applies in the UK. An explanatory report on the Hague Convention on Choice of Court Agreements by Trevor Hartley and Masato Dogauchi supplies detailed commentary on each article. When did the Convention come into force? The Hague Convention on Choice of Court Agreements was concluded on 30 June 2005 and was first ratified by Mexico, followed by the EU. In...

This Practice Note explores the deployment of consumer reviews (including fake reviews and concealed incentivised reviews) and their treatment as a banned unfair commercial practice under the Digital Markets, Competition and Consumers Act 2024 ( DMCCA 2024). It also examines obligations set by the UK Code of Non-broadcast Advertising and Direct and Promotional Marketing ( CAP Code). Introduction Consumer reviews are vitally important in guiding individuals on whether to purchase a product or obtain a service. When used appropriately and in line with the law, they deliver detailed insight into the authentic experiences of others and can be harnessed by businesses to demonstrate credibility and reliability to prospective customers alike. When misused, they may manipulate search rankings, mislead consumers about a product’s genuine efficacy, or otherwise create a deceptive overall impression that could influence a consumer’s transactional decision. Although reviews can appear both online and...

Role and remit Role and remit is an international, not‑for‑profit association headquartered in Belgium. Created in 1972 by the French Franchise Federation, the Italian Franchise Association, the Belgian Franchise Federation and the Netherlands Franchise Association, it exists to champion, safeguard and represent the franchise sector operating across Europe. The EFF is formed of single accredited national franchise associations from countries that satisfy the EFF’s Statutes, as set out in Article 7, Conditions of Admissions. Membership is restricted to one association in each country. The EFF presently counts 20 members. Its objectives are to foster the development of ethical franchising in Europe and to defend the sector by advancing an evolving European Code of Ethics ( Code) for franchising. The EFF likewise backs the principle that each European nation should have one credible, representative franchise association, which will uphold ethical franchising by requiring its members to...

This Practice Note sets out a high-level overview of the supply chain, touching on what the supply chain is, marketing and distribution routes, principal supply chain contractual considerations, key laws and regulations enacted in relation to the supply chain, and a look at some commercial tools available to address supply chain challenges. With continuing globalisation of commerce, increasing exposure to potential liabilities, and sharpening focus on environmental, social and governance ( ESG) matters, businesses must, more than ever, remain alive to a myriad of supply chain issues. What is a supply chain? The term ‘supply chain’ is a metaphor for the process or system that takes products or services from design through sale to the end-user. As with a physical chain, the supply chain consists of a sequence of links—research, design, manufacturing, transport, inventory management, warehousing and retail—each playing a critical role in moving...

This Practice Note provides a practical ‘how to’ on ending commercial, business-to-business contracts, and directs you to relevant materials. It outlines the principal methods of bringing a contract to a close, the factors to consider when deciding if termination is appropriate, the conditions for a valid termination, and other legal and practical points to bear in mind. For a high-level view of relevant legal concepts, see: Contract termination—overview and Practice Note: Termination and expiry of contracts. This Practice Note focuses on ending business-to-business commercial contracts under common law and the contract’s clauses. For detailed guidance on termination by these methods, see Practice Note: Terminating commercial contracts. For a thorough checklist to use when terminating, see: Contract termination—checklist. For an illustration of issues when choosing a termination route, see: Choosing a termination...

Setting out contractual audit rights, together with obligations to keep contract-related records in a specified way, is a vital element of any outsourcing. Strong oversight enables the customer to confirm services are being delivered as agreed and gives the supplier a forum to evidence compliance with the contract. This Practice Note explores key matters concerning record retention and audit rights in outsourcing arrangements: Initial considerations How long should records be kept? Audit rights Consistency with other terms of the contract Supplier’s perspective For sample drafting suitable for record retention or audit provisions, see clauses 22 ( Records) and 23 ( Audit) of Precedent: Outsourcing agreement—long form. Initial considerations The parties will need to address several core questions to decide what is suitable in the circumstances: What retention obligations apply to the customer and the supplier, both under law and under their...

Commercial contracts— Australia— Q& A guide This Practice Note offers a jurisdiction-specific Q& A on commercial contracts in Australia, featured in the Lexology Getting the Deal Through series by Law Business Research (published: October 2022). Authors: Baker Mc Kenzie— Adrian J. Lawrence; Caitlin Whale 1. Is there an obligation to use good faith when negotiating a contract? Australian contract law does not recognise a universal duty to act in good faith during negotiations. Courts have nevertheless found that an express agreement to negotiate a particular issue in good faith can be enforceable, provided the clause is drafted with sufficient clarity so it can be given practical effect. In limited contexts, a statutory requirement to negotiate in good faith may arise. For example, the Franchising Code of Conduct obliges the parties to a franchise agreement to act in good faith towards each other, including when...

This Practice Note directs readers to resources on the correct execution of deeds and simple contracts by partnerships, limited partnerships and limited liability partnerships, and brings together guidance, precedent clauses and Q& As. Partnerships Execution formalities and clauses For detailed guidance on executing simple contracts and deeds for partnerships, see Practice Note: Execution formalities—partnerships. For illustrations of execution clauses where a partnership is entering into: a simple contract Further materials are linked within the Practice Note to support accurate and compliant execution across these structures......