Legal Practice Notes

Signing Signing marks a key stage in a finance transaction. It is the point at which the parties sign the agreed forms of the documents and the deal becomes binding (although, in some cases, this is subject to conditions precedent—see Practice Note: Conditions precedent). It usually happens before, or at the same time as, completion (often called ‘closing’), which is when funds are transferred between the parties and the transaction is ‘completed’. In a straightforward corporate facility, this means money moving from the lender to the borrower. In other financing arrangements, such as acquisition or asset finance, funds will typically pass from the lender(s) to the borrower and then from the borrower (as purchaser) to the seller of the business or asset. For more on signing and completion in loan transactions, and the tasks lawyers commonly undertake during this phase, see Practice Note: Signing and...

Ground of opposition (c) A landlord may resist the grant of a renewed lease under section 30(1) of the Landlord and Tenant Act 1954 ( LTA 1954) by invoking ground of opposition (c): ‘ That the tenant ought not to be granted a new tenancy in view of other substantial breaches by him of his obligations under the current tenancy, or for any other reason connected with the tenant’s use or management of the holding.’ This ground comprises two limbs: substantial breaches of the tenant’s obligations, and other reasons tied to the use or management of the holding. It is not a prerequisite to show a breach under the first limb in order to rely on the second. As to the first limb, whether a cited breach is substantial is a matter of fact. Any breach may relate to any part of the premises demised by the...

ARCHIVED: This archived Market Standards Trend Report reviewed current market practices and nascent, evolving trends regarding directors’ remuneration disclosure and the overarching shareholder voting regime, that ultimately came......

This Practice Note examines in considerable detail when damages for loss of a chance (often called loss of an opportunity damages) may be recoverable, with reference to the test in Allied Maples v Simmons & Simmons, its subsequent consideration in Wellesley v Withers, together with the Supreme Court’s clarification in Perry v Raleys. For a summary of the key headline points in the approach, see Q& A: How, in summary, does the loss of a chance approach work? This Practice Note should be read in conjunction with related content on recovering damages in contract and tort claims, see Practice Notes as follows: Contractual damages—general principles Causation and remoteness in contractual breach claims Damages in tort and negligence claims Causation and remoteness in tort and negligence claims Causation and remoteness in professional negligence claims What is the loss of a chance...

THIS PRACTICE NOTE APPLIES ONLY TO OCCUPATIONAL PENSION SCHEMES Notifying the Pensions Regulator of the winding-up As part of their ongoing duty to provide and maintain registrable information on the Pensions Regulator ( TPR)’s scheme register, trustees must tell TPR, as soon as reasonably practicable, about: the date that any winding-up starts, and the completion of any winding-up Reports must be submitted through Exchange ( TPR’s online information service). A failure to notify or update TPR may result in financial penalties on the trustees. For further details, see Practice Note: Pension scheme reporting requirements— The duty to provide and maintain registrable information on the Pensions Regulator’s scheme register. Disclosure requirements applicable to a winding-up scheme When winding-up commences, trustees of an occupational pension scheme will usually draft a winding-up procedure and disclose it to TPR and others. For further information, see Disclosure of...

Negotiation Guide This guide forms part of the Practical lease negotiation collection. See also Practice Note: New starter guide—entering into new commercial leases. The purpose of a rent review is to reset the rent during the term so it reflects prevailing market conditions. In MFI Properties v BICC Group Pension Trust, Hoffmann J observed that a rent review clause addresses a clear commercial tension: the tenant’s desire for long-term security of tenure against the landlord’s wish, during inflation or a swiftly shifting property market, to avoid being fixed to the same rent throughout the term. There are several ways to approach this, yet every rent review clause sets out a mechanism or formula to determine the rent at a specified time (the review date). This Negotiation Guide looks at the principal features of an upwards only open market rent review clause that can be included in a...

This Practice Note explains when the VAT option to tax is disapplied under anti-avoidance provisions (see Practice Note: The option to tax land and buildings). Why does this matter? Where the conditions set out in this Practice Note are satisfied, the option to tax is switched off automatically. The parties have no discretion, and no tax avoidance purpose is required. As a result, the option can be turned off in routine commercial deals, so significant caution is often necessary. The rules operate to override an option to tax and render a sale or letting exempt, preventing the vendor or landlord from reclaiming VAT attributable to the property. The consequences can be especially severe for property developers. The regime is also pertinent to transfers of a going concern ( TOGC) (see Practice Note: VAT—transfers of a going concern involving land and buildings), and it is...

Acting as a company’s agents, directors oversee its everyday operations and bear a number of obligations owed to it. Many of these obligations have been crafted by the courts over hundreds of years, developing from broader common law rules and principles of equity......

This Practice Note sets out the ‘two-stage tendering’ method widely adopted to procure building schemes. Many clients opt for two-stage tendering to bring a contractor on board sooner. It allows the client and the chosen contractor to collaborate in the second phase, with the contractor contributing to design, buildability and value engineering, while firming up the final price for the works. Two-stage tendering is most often applied when letting lump sum contracts, in both traditional and design and build procurement. How does it differ from traditional single stage tendering? Two-stage tendering is increasingly favoured as an alternative to the classic single stage route. Under single stage tendering, contractors submit a bid for the scheme on the basis of a design illustrated by drawings and a specification or, for design and build, the employer’s requirements and an agreed programme. After reviewing the returns, the employer selects the...

Putting robust security in place is the initial move to strengthen a creditor’s standing. After that, it is essential to confirm the security ranks ahead of rival security interests over the same asset. The framework on how security interests take priority is covered in Practice Note: Priority between security interests. Further, if a secured creditor plans to provide further advances (that is, extra loans) under a facility, it must note extra priority pitfalls. In practice, further advances frequently arise with term loan facilities allowing multiple drawdowns and with revolving credit lines (see Practice Note: Overdrafts, term loans and revolving credit facilities). These issues are especially relevant where facilities contemplate later drawdowns and ongoing utilisation by the borrower. The Note explores them in depth to aid secured creditors considering additional lending under existing arrangements. This Practice Note explains the concept of ‘tacking’, then examines the...

When an employee is let go due to redundancy, the Employment Rights Act 1996 ( ERA 1996) sets out a mechanism enabling the employer to propose, and the worker to accept, fresh or renewed employment in place of a redundancy payment. In certain circumstances, if this occurs and the worker is taken back within four weeks, the initial dismissal is treated as a legal fiction; the individual is regarded as not dismissed in law and, for these purposes, is not entitled to a statutory redundancy payment. In all cases, unless the substitute terms and conditions are identical to the earlier ones, both the worker and the employer are allowed a statutory trial period of at least four weeks to assess the new arrangement. Depending on the changed terms and conditions, and the employee’s reasons for rejecting them, or for declining to continue after the trial...

Financial covenants For lenders in project finance, closely gauging a project's financial robustness is essential. In a standard project finance deal, the project typically provides the borrower’s sole revenue stream to service the debt (see Practice Note: Introduction to project finance— Concept of project finance). Undertakings (often called 'covenants') are commitments the borrower—sometimes together with members of its group—gives to the lender about doing, or refraining from, specified actions and behaviours. For further information on undertakings in general, see Practice Note: Undertakings (covenants). Financial covenants represent a distinct subset within those undertakings. They also require the borrower to meet, or comply with, specific financial thresholds. These financial covenants appear across a wide range of commercial finance arrangements (for broader guidance on financial covenants, including details of relevant provisions in Loan Market Association documentation and on accounting principles, including International Financial Reporting Standards ( IFRS), see...

What is permission in principle ( Pi P)? The Housing and Planning Act 2016 ( HPA 2016) created permission in principle ( Pi P), an England-only alternative consent route for housing-led proposals that separates high-level acceptance from detailed technical matters. When Pi P is followed by a grant of technical details consent, the combination amounts to full planning permission. Section 58A of the Town and Country Planning Act 1990 ( TCPA 1990) permits Pi P to be conferred for housing-led development of land in England. Under TCPA 1990, s 58A(2), development involving the winning and working of minerals is expressly excluded from eligibility for Pi P at all. According to the explanatory notes to HPA 2016 and the Planning Practice Guidance ( PPG), the government intends that the elements capable of being agreed through Pi P are confined to the site’s location, the uses (which must be...

Option X12 This Practice Note examines Option X12 of the NEC3 and NEC4 contracts, titled ‘ Multiparty Collaboration’ in NEC4 and ‘ Partnering’ in NEC3. It is one of the secondary Options in NEC, selectable by the Client (the ‘ Employer’ in NEC3) to tailor the contract to its needs or the project’s needs (see Practice Note: NEC contracts—introduction). Unless the context indicates otherwise, references to the Client include the Employer where NEC3 is used. Option X12 was developed from the Construction Industry Council’s ‘ Guide to Project Team Partnering’. It was first published in June 2001 as a secondary Option ( Option X12) for incorporation into the NEC2 Engineering and Construction Contract ( ECC). As with the other secondary Options, Option X12 operates alongside and supplements the Core Clauses together with the selected main Option. In the case of Option X12, its...

The Environment Agency ( EA), Natural Resources Wales ( NRW), the Health and Safety Executive ( HSE) and Natural England possess extensive, though not limitless, statutory powers to enter premises lawfully. Environment Agency powers Rights of entry and investigation under section 108 of the Environment Act 1995 ( EA 1995) may lawfully be exercised without a warrant in appropriate circumstances, although a warrant might be necessary where permission to enter has been, or is expected to be, refused. However, access must strictly comply with the express terms of written authorisation and be solely for the specified purpose of: ascertaining whether pollution control or flood risk activity law is being, or has been, complied with carrying out one of the authority’s relevant pollution control or flood risk activity functions deciding whether, and if so how, such a function should be...

This Practice Note This Practice Note summarises the employment tribunal’s authority, under Rule 33 of the Employment Tribunal Procedure Rules 2024 ( ET Rules 2024), SI 2024/1155, to compel disclosure of documents and information. It explains the relationship with the Civil Procedure Rules ( CPR) and explores what disclosure and inspection mean and cover, the applicable test for disclosure, the overriding objective and proportionality. It also addresses both standard and specific disclosure, confidentiality, public interest immunity, oppressive disclosure, medical reports, and legal professional privilege (including legal advice privilege, litigation privilege, the iniquity exception and waiver). The Note further reviews procedural requirements such as disclosure statements, pre-action disclosure, and disclosure by non-parties, together with restrictions on the use of disclosed material. It concludes by considering the role of artificial intelligence ( AI) in the disclosure process. In many employment tribunal cases, documents of...

A company is UK tax resident if it is: incorporated in the UK (subject to exceptions), or centrally managed and controlled in the UK, provided it is not considered resident outside the UK under a double tax treaty (ie not treaty non-resident). The central management and control assessment is commonly known as the CMC test. For guidance on treaty non-residence, see Practice Note: Tie breakers—when tax treaties impact on the UK tax residence of companies. For details on moving a UK tax resident company from the UK, and the tax effects of doing so, see Practice Notes: Company migration or corporate inversion—how to change tax residence in practice and Consequences of company migration— UK exit charges and post-migration UK tax considerations and Corporate migration by shifting tax...

This Practice Note covers: debt rescheduling—lengthening the amortisation/repayment timetable so the company can weather short-term financial strain. The purpose of rescheduling is to set a more achievable debt burden or a period within which repayment is feasible. A firm without cash to meet wages or supplier invoices will struggle to survive. Adjusting the schedule may allow the business to stabilise and frequently boosts the lenders’ overall recovery on their investment, as businesses are usually more valuable when trading successfully than when dismantled or broken up. In many cases, enabling continued trade by rescheduling supports recovery and preserves value for lenders debt waivers—the lender consents to discharge the borrower from having to repay part or all of sums owed. This typically happens where the lender accepts there is minimal or no realistic chance of full repayment to it at all in such...

This Practice Note examines the appointment and dismissal of alternate directors, together with their standing, authorities, responsibilities, liabilities and the capacity to bind the company. The Companies Act 2006 ( CA 2006) states that a director includes ‘any person occupying the position of director, by whatever name called’. As a consequence, the definition of ‘director’ in CA 2006 is sufficiently broad to encompass an alternate director. Therefore, the statutory provisions that govern directors extend to alternate directors in the same way as they apply equally to other directors, whether de jure or de facto. Power to appoint an alternate CA 2006 gives no authority for a director to name an alternate, though this right is often set out in a company’s articles of association. Where the articles confer this power, they will also prescribe the process for appointing an alternate director. Typically, the articles require the...

Challenging or disputing the court’s jurisdiction This Practice Note sets out the key considerations when contesting the court’s jurisdiction. A challenge may proceed on the footing that the court lacks territorial jurisdiction or, if jurisdiction exists, that the court ought, in its discretion, to refuse to accept the case, for example on forum non conveniens grounds. It surveys the available bases for disputing jurisdiction and addresses whether a stay must, or may, be sought in favour of proceedings begun in a country outside the UK. The Note indicates how and when to bring a challenge, whether before issue or after proceedings have started, and clarifies what ‘jurisdiction’ signifies for the purposes of CPR 11. It also deals with jurisdictional contests within the UK and the interaction between CPR 11 and the Defamation Act 2013 ( DA 2013). For detailed guidance on matters arising when...