Punitive Provisions in Business Sale and Purchase Agreements are Unenforceable

Business buyers need to make sure that they protect themselves in sale and purchase agreements (SPA) while not making clauses so draconian they are unenforceable.

There are plenty of risks that buyers of businesses take on when they complete a sale and purchase agreement but many can be mitigated to some extent with contractual provisions such as warranties, restrictive covenants and liquidated damages clauses.

In protecting themselves, buyers need to be aware of a fundamental principle of contract law; that contractual damages seek to put the injured party in a position they would have been in if the contract was properly performed. The emphasis is on compensation not punishment.

Contractual provisions should not seek to be disproportionate or punitive for the seller or they will not be enforceable.

The Difficulties of Managing Employee Sexism

High profile news stories often do not provide the best examples of how workplace issues should be managed in the real world.

The headlines that erupted after painfully tacky emails, exchanged between Premier League chief Richard Scudamore and his lawyer, were handed to the Sunday Mirror newspaper by Scudamore’s PA provide a good example of why not.

With newspapers hard-wired to peddle heightened levels of outrage and offence it is unclear how this type of behaviour would have been managed under more normal circumstances. The media fallout rolled on for some time while the men’s employers scrambled to try and deal with the issue under the full glare of public scrutiny.

What is clear though is that sexual discrimination has no place in the workplace and businesses must have robust policies in place to deal with it.

Combating Business Threats: Fraud Prevention and Cybersecurity

Cybercrime is an increasing menace to business and SMEs are prime targets for online criminals. With fewer resources than large companies, smaller organisations are seen as easier targets for attack by hackers, online fraudsters and other cybercriminals. While online threats are an increasing problem for organisations, they should also remain vigilant to traditional threats.

Recent fraud attacks on some of the largest and best known businesses such as high street banks shows that perpetrators are becoming more audacious in their approach. Prevention is better than cure but, as well as knowing how to protect themselves in the first place, business should also know what to do in the event of a fraud attack.

How Far Can Parties Rely on Pre-contractual Statements?

Parties should always remain wary of making misrepresentations in pre-contractual statements to avoid inviting damages claims after a contract is entered into.

It is important that this is borne in mind even if the negotiating parties will not be the actual legal parties to the eventual contract. For example, where individuals or businesses negotiate a deal but set up new corporate entities or special purpose vehicles in order to go ahead with the particular project after pre-contract negotiations have taken place.

A long running legal battle that concluded in the Supreme Court at the beginning of 2014 has shed new light on the degree to which the actual contracting parties can rely on earlier misrepresentations.

The FPC Should Avoid Restricting Mortgages Further

• Lender Criteria and now the MMR already Restraining the Market
• House prices in 9 out of 12 UK Regions Still Below Previous Peaks

Ray Boulger, of leading independent mortgage adviser John Charcol, makes the case for why tomorrow’s Bank of England Financial Stability Report should refrain from further restricting mortgage availability.

“Mortgage approvals dipped in April and are now less buoyant than the Bank of England’s expectations at the beginning of the year. The Mortgage Market Review (MMR) is clearly the main factor for the April dip and at John Charcol we are finding that on average it is taking a fortnight longer to get mortgage offers today compared to pre MMR.

Will Divorce Become Even Simpler in Future?

Hot on the heels of the recent family law reforms has come speculation about additional future changes. Two areas of particular interest are the introduction of greater rights for co-habitees and the simplification of the divorce process.

April 2014 saw the introduction of a raft of reforms which have been heralded as a revolution in the way family law is conducted in England and Wales. Following this major upheaval, practitioners were perhaps hoping for the dust to settle before more changes were mooted but they appear to be out of luck.

At the end of April Sir James Mumby, President of the Family Division and Head of Family Justice, addressed legal practitioners on the reforms and raised the prospect of even further modernisation.

Employers Must be Consistent when Disciplining Employees

Employers can start formal disciplinary action against employees if they have concerns about their conduct at work. Often though, issues are raised informally with an employee before this happens.

Whether problems are raised formally according to a structured process or they are raised informally, a degree of judgement is usually required on behalf of the employer. In either circumstance this can leave room for inconsistencies to creep in which is an issue employers must remain vigilant of.

Even the most experienced and heavily scrutinised employers can get this wrong from time to time, as the BBC demonstrated with its sacking of DJ David Lowe in May 2014.

The FCA’s Market Blunder

The Financial Conduct Authority (FCA) was heralded as a watchdog with teeth when it replaced the FSA in April 2013.

Compared to its predecessor, it has certainly gained a reputation for being far more pro-active in regulating the conduct of financial firms.

Unfortunately for the FCA, it has shown that it is not immune to making blunders that shift markets when it released information about an investigation into the insurance industry in March.

The incident brought a rebuke from Government, highlighting the heightened sensitivity around financial markets in the wake of the financial crisis.

HS2 Compensation – Where is the Line Drawn?

The political momentum behind the proposed HS2 high speed railway appears to be growing despite considerable opposition and concerns about costs.

HS2 will require huge numbers of compulsory purchase orders (CPOs) if it is to go ahead. The proposed high speed line will also have far reaching effects beyond its direct pathway meaning that much wider compensation schemes are to be put in place.

Details of how HS2 will affect people differently within the same areas have already started to emerge causing concerns about the fairness of the proposed compensation schemes.

What the Silicon Valley Conspiracy Settlement Says About its Employment Market

A number of Silicon Valley’s tech giants including Apple and Google recently settled a class action case in the US relating to allegations of a conspiracy over the suppression of salaries.

The $324 million settlement came just weeks before a trial was scheduled to begin. The firms denied wrongdoing.

The recent settlement was in relation to a civil claim brought by workers and followed a U.S. Department of Justice investigation which was settled in 2010.

The case raises important issues about employment practices in highly competitive markets.

Data Analysis and Intellectual Property Law

If big data is the next big thing then organisations creating or utilising databases for analysis must understand their intellectual property rights and responsibilities.

Creating and maintaining databases in an era of big data can be time consuming and costly so organisations that do so need to protect their investment. This can be problematic where database owners wish to make their data available to the research community for further analysis.

Businesses that use databases for commercial purposes must ensure that they do not infringe intellectual property rights to avoid potential claims being made against them.

Are Tougher Strike Laws Likely After the Tube Strikes?

A series of Tube strikes in February and April 2014 brought huge disruption to Londoners going about their business in the nation’s capital. Other strikes planned in May were diverted at the last minute.

Millions of London commuters might have got used to closed Tube stations, overcrowded buses and nightmarish congestion on the roads. Politicians and businesses on the other hand have reached the limits of their patience due to the economic cost of Tube strikes.

The Mayor of London, Boris Johnson, and senior Conservative politicians proposed a variety of legislative changes to reduce the future likelihood of Tube strikes.

Supreme Court Increasingly Willing to Rectify Wills

Recent cases have shown that the English courts are now prepared to take a flexible, common sense approach to interpreting wills where errors have been made. This apparently more relaxed interpretation of ‘clerical errors’ has raised concerns that it might lead to a flood of dubious rectification claims.
While there is always a possibility that meritless claims start making their way to courts when there is a perceived change to precedent, these judicial adjustments normally occur for good reason. In the context of the cases that heralded this change, the approach of the courts should be welcomed for their desire to avoid injustice.

Google Implements Personal Data Removal Procedure

A long running legal battle came to a head recently when Google lost a major data protection case against a Spanish national in the European Court of Justice (ECJ).

Until the conclusion of the case, it was widely believed that Google would win. The result has drawn significant attention to the privacy rights of individuals, in particular the ‘right to be forgotten’.

The importance of the outcome cannot be underestimated because it now places responsibility onto search engines for personal information that is available on the internet.

In response Google has already implemented a personal data removal procedure.

Property Boom Increases Professional Negligence Risks

The latest property boom has meant that property businesses of all descriptions have been inundated with work. Although London businesses such as estate agents and conveyancers have been enjoying rising house prices since 2009, other areas of the country have only experienced an acceleration in the property market more recently.

The improvement in this sector may have economists worried about a bubble but that is unlikely to quell the enthusiasm of professionals benefiting from the transactional work they are getting. There is one thing that can put a spoke in the wheels though and that is the possibility that overstretched lawyers and others start to cut corners and damage the quality of their service.

When this happens there is a risk that clients suffer and professional negligence claims rise.

FCA Regulated Firms Must Clarify their Charges

The FCA has instructed regulated firms to make their charges clearer to retail investors following a review of 11 different firms.

The financial watchdog found that the majority of firms were presenting their charging structures in a clear and fair way but that a number were still not doing so.

It is important that FCA regulated businesses take on board this message from both a regulatory and marketing perspective. Financial firms are already under the microscope after the financial crisis and those that actively build trust with investors are also likely to keep the regulator happy.

Counting Zero Hours Contracts

The latest figures on zero hours contracts have attracted much negative press as politicians seek to score points and woo voters. But are zero hours contracts really all that bad?

As with most things that politicians like to paint in black and white, there are pros and cons and nuanced positions that get lost in the heat of political debate.

While there are clearly downsides for certain types of workers due to the insecure nature of these contracts, they also provide some with a degree of flexibility difficult to otherwise attain.

Employers can also benefit from that flexibility.

Barrister’s Downfall Proves No-one is Above the Law

The downfall of Constance Briscoe serves as a pointed reminder that even barristers and judges cannot escape the law.

Jailed for 16 months for perverting the course of justice in the police case against former Liberal Democrat, Chris Huhne; Constance Briscoe is now subject to another criminal investigation in relation to a libel case brought by her mother.

The common theme in the allegations is that she tried to dishonestly influence the outcome of court cases; in the first instance by lying to police and in the second by allegedly forging documentation.

Although the case that led to Ms Briscoes’ fall was related to criminal proceedings, the latter allegations refer to a civil claim.

Both serve to highlight the dangers for those who risk bending the truth to win in court.

Family Courts Now Dominated by Unrepresented Parties

Figures released by the Ministry of Justice have shown a marked increase in the numbers of unrepresented parties ending up in the Family Court since 2012.

Unrepresented parties brought around 25,000 cases in 2012 whereas this figure increased to nearly 35,000 in 2013. Legal Aid cuts implemented in 2013 are thought to be a significant factor in this phenomenon.

As well as the year-on-year figures for child-related cases displaying a marked increase in the numbers of unrepresented parties overall; in relative terms, they made up more than 50 per cent of the child-related cases appearing in the Family Court in the latter part of 2013.

Center Parcs Term Time Antics Earn Advertising Wrist Slap

Businesses promoting themselves through high profile advertising campaigns need to exercise caution to avoid attracting the wrong sort of publicity.

Center Parcs’ recent wrist slap from the Advertising Standards Authority (ASA), the UK’s independent advertising regulator, highlights the need for advertisers to behave responsibly and for small print to reflect the focus of adverts.

It also serves as a useful reminder to businesses that they should be particularly careful when using disclaimers in the context of advertising or contractual arrangements directed at consumers.

FCA’s Libor Penalties Continue to Roll In

The Libor scandal continues to cast a shadow over the reputations of financial institutions.

In May 2014 interdealer broker RP Martin joined a long line of prominent City names, including RBS and Barclays that have suffered fines at the hands of the FCA in relation to the rate rigging scandal.

The £1.36m ($2.3m) fine added to an already hefty tally racked up by the FCA against big name institutions since the Libor scandal broke in 2012. However, RP Martin’s fine was reduced significantly when it was revealed that the firm faced collapse if it was required to pay in full.

Effects of Tenancy Deposit Scheme on Older Tenancies

The Tenancy Deposit Scheme for residential tenancies has been compulsory since 6 April 2007 so landlords have now had plenty of time to get used to it.

Although regular landlords may be aware of the ins and outs of the scheme for assured shorthold tenancies created since that date, they may not be aware of its peculiarities for tenancies entered into before then.

If pre 6 April 2007 tenancies have continued beyond the expiry of the original term and a deposit was originally taken outside the Tenancy Deposit Scheme, landlords may have a shock in store if they try to seek possession using the normal Housing Act 1988 section 21 notice procedure.

Airbnb Agrees to Hand Over User Information to New York Prosecutors

The case being made against Airbnb by New York prosecutors took an interesting turn when the internet company agreed to hand over information about some of its users recently.

Many users might be shocked that to find they have been operating in breach of local laws or that their information is being handed over to authorities in this way. Others may of course be fully aware that they were operating illegally.

It serves as a useful reminder to individuals and small businesses using these types of internet services that they should make sure they do their homework to avoid running into legal problems.

Disgruntled Employees Must Seek Conciliation Before Court

New Employment Tribunal rules mean employees must now try conciliation services before bringing a legal claim against their employer.

The rules which came into force at the beginning of April were initially voluntary but have become compulsory from the 6 May 2014. The new rules were introduced by The Employment Tribunals (Early Conciliation: Exemptions and Rules of Procedure) Regulations 2014.

Employees are therefore under an obligation to see if their claim can be resolved by employment relations experts Acas before they are able to take their case to the Employment Tribunal.

Legal Implications of HMRC’s Data Sharing Plans

New proposals for HMRC to share taxpayers’ details with third parties including companies, research organisations and other public bodies have caused outrage. Although any legislative provisions enacted to implement the plan would provide that data is anonymised, Conservative MP David Davies captured the wider public reaction with his comments that it was “borderline insane”.

Government departments, including HMRC, have a chequered track record when it comes to data protection. The risks to the principle of taxpayer confidentiality and personal privacy are likely to fuel a heated debate if the proposals make further headway.

Property Solicitors Lose £100k Claim Over Botched Valuation

Parties to property transactions should take note of a recent case in which a botched surveyor’s valuation managed to land a conveyancing firm in hot water to the tune of £100,000.

The case of E.Surv Limited v Goldsmith Williams Solicitors [2014] emphasises the risks for the professionals involved in conveyancing. It also demonstrates that injured parties have significant scope for recourse when dealing with professionals that fail to live up to expectations.

‘Financial Needs’ to be Clarified in Divorce Cases

The Law Commission report Matrimonial Property, Needs and Agreements published on 27 February 2014 found much confusion over the interpretation of financial needs in divorce cases.

As a result of that report, the Ministry of Justice has confirmed that clear new guidelines are needed to give separating couples help in managing their expectations when property and income is distributed by the courts.

The Law Commission report also looked at how the courts should treat the various forms of matrimonial agreements including pre-nuptial, post-nuptial and settlement agreements.

Ever Evolving Family Law: Changing Trends in Living Arrangements

It is the nature of the law that it is constantly evolving to changes in the way society operates. This is most obvious perhaps in fields such as business and technology but it applies just as much to family law.

The evolution of family law has been particularly pronounced in recent decades as social changes have accelerated. By understanding the trends that have taken place and focusing on those that continue to do so, it enables us to be better prepared for the future.

Although there is no way of future proofing your family or living arrangements entirely, there are steps that can be taken to limit the fallout if circumstances change later on. The increasing popularity of nuptial agreements and their growing recognition in the courts is just one example.

Recently released ONS analysis of data in this field gives us some clues as to the groups that might need to pay particular attention.

Car Insurance Small Print to Rival Lord of the Rings?

Buyers of car insurance are ending up inundated with paperwork that is long enough to rival whole novels for word count. Although this might keep their lawyers busy and ensure that policies are as watertight as they can be, it is virtually impossible for ordinary consumers to understand the full extent of these contracts.

Sadly no one has yet taken up the challenge of turning the finer details of car insurance policies into feature films that can be watched at leisure in a digestible and entertaining format. Therefore consumers are effectively buying blind other than to the most prominent terms.

This of course begs the question whether large quantities of impenetrable legalese really sit comfortably with consumer protection legislation.