The coronavirus pandemic and global economic and political uncertainties mean that more businesses than ever are tied into unprofitable contracts or are required to purchase unwanted goods and services. Alternatively, they may find themselves facing refusals to perform contracts by their contractual counterparties. Absent a commercial resolution, companies may need to consider whether and how a contract can validly be terminated. Following on from our blog post on ir/remediable breaches in termination events, in this post we look at termination more generally and set out key considerations to avoid frequent pitfalls.
MUR Shipping U-Turn: non-contractual performance would have overcome a force majeure event
Earlier this year, the High Court of England and Wales held in MUR Shipping BV v RTI Ltd that an obligation to undertake ‘reasonable endeavours’ to overcome a force majeure event did not require the claimant to accept non-contractual performance. Last week, in a majority decision , the Court of Appeal allowed the defendant’s appeal, finding that the force majeure event could (and should) have been overcome by acceptance of the non-contractual performance proposed by the defendant and, accordingly, the claimant was not entitled to suspend its obligations under the terms of the force majeure clause.
Obtaining Disclosure from Third Parties Outside the Jurisdiction Now Easier
Two recent developments have made it easier for those litigating in England and Wales to obtain information and documents from third parties outside the jurisdiction: the first is a new jurisdictional gateway for applications for information from third parties outside the jurisdiction; the second is the Court of Appeal’s decision in Gorbachev v Guriev, in which a third-party disclosure order was made against parties outside the jurisdiction in respect of documents within the jurisdiction.
The ‘Rule in West Mercia’: When Do Directors Owe a Duty to Their Company’s Creditors?
Since 1988, West Mercia Safetywear v Dodd has been the leading authority for when directors of financially stressed companies are subject to the so-called ‘creditor duty’, namely the duty to consider the interests of the company’s creditors. Now, in BTI 2014 LLC v Sequana SA & Others, the Supreme Court has considered the ‘rule in West Mercia’ for the first time and clarified the existence, content, and engagement of that duty.
Irremediable Mistakes
It is common for contracts to contain termination provisions that only allow for termination for a remediable breach if notice of the breach is given and the breaching party is allowed time to remedy it. For a party considering the application of such a clause, an obvious question is: what breaches do the courts consider capable of remedy? The High Court of England and Wales recently considered this in Stobart Capital Ltd v Esken Ltd. While not making new law, the case is a good reminder that the answer is maybe more than you think.
Crypto-nite: Court of Appeal to consider whether cryptocurrency software developers owe a duty of care to currency owners
In Tulip Trading Ltd v Bitcoin Association for BSV and Others the High Court considered whether software developers of cryptocurrency networks could owe a duty of care to owners of digital assets that have been lost or stolen.
What Are You Implying?
In Yoo Design Services Ltd v Iliv Realty PTE Ltd the Court of Appeal has, once again, shown itself to be averse to exercising the ‘extraordinary power’ to intervene in a contract by implying a term in anything other than the most clear-cut cases. While it is understandable that claimants, in the absence of any helpful express terms, make claims based on the implication of terms, a party doing so must appreciate the height of the hurdle to be cleared.
Service by Blockchain Technology
In another example of the court embracing technology in the furtherance of access to justice, the High Court of England and Wales has permitted service by way of a non-fungible token.
Resolving Exclusion Confusion
In its hotly anticipated judgment in Soteria Insurance Limited (formerly CIS General Insurance Limited) v IBM United Kingdom Limited the Court of Appeal of England and Wales has reaffirmed that the courts should apply the conventional rules of contractual interpretation to exclusion clauses: if parties intend to exclude a particular type of loss, they should use clear and unambiguous language to do so.
Scope of Reasonable Endeavours Obligations in Force Majeure Clauses
In an important and timely judgment in MUR Shipping BV v RTI Ltd, the High Court of England and Wales has provided guidance as to the scope of a ‘reasonable endeavours’ obligation in the context of a force majeure clause triggered by the imposition of sanctions. In short, a party subject to such an obligation is not required to accept non-contractual performance to circumvent the effect of a force majeure event.