1 CONTRACT DRAFTING – PRACTICAL GUIDANCE & BEST PRACTICE PRACTICE John Bennett John Bennett Eversheds www.mblseminars.co.uk 0161 793 0984
2 What you will learn (1) What you will learn (1) • Why it is important to start with an open mind not a precedent d ot a p ecede t • Some key risk areas ‐ knowledge the client relies on the lawyer for l h l f • Limiting or excluding liability ‐ impact of UCTA Limiting or excluding liability impact of UCTA 1977
3 What you will learn (2) What you will learn (2) • Some boiler plate clauses examined in detail • Some boiler ‐ plate clauses examined in detail e.g.: ‘Entire agreement’ • Words and phrases that need to be used with caution; but which may have to be used caution; but which may have to be used strategically e.g. “reasonable endeavours” • Some key lessons from the cases we have looked at looked at
4 Modern law of contract interpretation ? Modern law of contract interpretation ? • The written document remains of prime importance; but its meaning must not only be po ta ce; but ts ea g ust ot o y be clear to the clients but also to a reasonable business person business person • The background (factual matrix) is important g ( ) p • The agreement will have to make “business common sense” ”
5 Lawyers’ knowledge(1) Lawyers knowledge(1) • Statutory provisions • e g : Sale of Goods Act 1979 ‐ s12 ‐ 16 • e.g.: Sale of Goods Act 1979 ‐ s12 ‐ 16 • Controlling provisions • e.g.: Unfair Contract Terms Act 1977 • Statutory rules of interpretation S l f i i • e.g.: LPA 1925 & Interpretation Act 1978 e.g.: LPA 1925 & Interpretation Act 1978
6 UCTA 1977 UCTA 1977 • Clauses which seek to restrict or exclude business liability bus ess ab ty • Impact on statutory implied terms? – Good title s12 SGA 1979 ‐ (wholly ineffective) – s13 ‐ 15 SGA ‐ depends if B2C (“no”) or B2B p ( ) (“reasonable”)
7 Lawyers’ knowledge(2) Lawyers knowledge(2) • Common law controls – Implied terms Implied terms – Usage or custom, previous course of dealing, “gap ‐ filling” filling – Judicial precedent ‐ “time is of the essence” • Should these be excluded ‐ how?
8 Common law presumptions Common law presumptions • Contra proferentem (against one who proffers ...) ...) • Expressio unis (express mention of one ...) • Ejusdem generis (of the same type)
9 Starting drafting Starting drafting • Basic structure is of commercial contracts now established o estab s ed • Need to understand the commercial aspects of the transaction f h • Detail in Schedules Detail in Schedules • Boiler ‐ plates for legal aspects
10 Structure Key Aspects? Structure ‐ Key Aspects? • Background • Definitions/Interpretation • Definitions/Interpretation • Operative Part ‐ linked to Schedules in modern drafting Li it ti d l i • Limitations and exclusions • Standard Boilerplate clauses Standard Boilerplate clauses
11 Clients’ knowledge Clients knowledge • Start by talking to the client (not with a precedent) p ecede t) • The commercial realities ‐ who has the bargaining power • What does the client perceive as the greatest What does the client perceive as the greatest risks? – “what if ...” questions
12 Background section Background section • Also known as “recitals” or “preamble” • Can be used to influence “factual matrix” • Can be used to influence factual matrix • History of how the parties arrived here • Need to ensure it does not conflict with the operative part operative part • Is it part of the “agreement”?
13 Entire Agreement Entire Agreement • “Entire Agreement” clause ‐ 3 elements: – The only terms are those within the agreement itself ( exclude usage or course of g ( g f dealings ) – No reliance on any previous statements or No reliance on any previous statements or negotiations – Carve out from the exclusion for fraud (UCTA) C t f th l i f f d (UCTA)
14 Boiler ‐ plate clauses with hidden dangers • “Notice” provisions – Does the client realise how important this is? Does the client realise how important this is? • “Force Majeure” – Real or commercial impossibility? – Extra time, extra money or just “relief event” , y j
15 Notice clauses Notice clauses • Purpose of clause • Drafting ‐ what activities does it cover? • Drafting ‐ what activities does it cover? • Drafting ‐ how to give notice • E ‐ mails?
16 Force Majeure Force Majeure • Purpose of clause – What events does it cover? What events does it cover? – Commercial impossibility or real impossibility? – What relief does it offer? Wh li f d i ff ?
17 Reasonable endeavours Reasonable endeavours • Part of the commercial operative part, governing the obligations of the parties and go e g t e ob gat o s o t e pa t es a d seeking to quality these • Traditionally “best” endeavours is more d ll “b ” d onerous than “reasonable” endeavours • Application of general rules of construction e.g. Jet 2 (2011) J t 2 (2011)
18 Some key lessons Some key lessons • Seek to control the scope of the document to the written agreement itself t e tte ag ee e t tse • Talk to the client about what the client fears can go wrong and focus on those commercial d f h l aspects p • Seek to build in a suitable escalation procedure to avoid the risk of litigation d t id th i k f liti ti
19 Lessons? Lessons? • Key lesson is that the courts now relying more on contracts making business common sense – o co t acts a g bus ess co o se se tested objectively • If you introduce an unusual term – need to f d l d explain context and very clear wording p y g
20 Conclusion Conclusion • Try and understand as much about the deal as you can you ca • Cover the basics carefully ‐ what each party d does and what may go wrong d h • Anticipate the worst Anticipate the worst • Good drafting will not cure a bad commercial deal
21 Today s session (1) Today’s session (1) • Break clauses • Town & village greens • Property fraud P t f d • Surrender of leases – dilapidations p • Occupier’s liability – issues for landlords • Empty rates E t t • Parking spaces – are they demised to T? g p y • Service of notices – more pitfalls
22 Today s session (2) Today’s session (2) • 1954 Act – s 30(1)(g) – where are we now? ( )( ) h ? • Easements ase e ts • Landlord & tenant • Administration – liability for rent d l b l f • Land Registry: g y – Fraud update – Rectification Rectification – Powers of sale in mortgages
23 Break clauses – more pitfalls Break clauses – more pitfalls Fitzhugh v Fitzhugh [2012] EWCA Civ 694 Gemini Press Ltd v Parsons [2012] EWHC 1608 Gemini Press Ltd v Parsons [2012] EWHC 1608 (QB) PCE Investors Ltd v Cancer Research UK [2012] EWHC 884 (Ch) EWHC 884 (Ch) Canonical UK Ltd V TST Millbank LLC [2012] EWHC 3710 (Ch)
24 Town & Village Greens (TVGs) Town & Village Greens (TVGs) Barkas v North Yorkshire County Council [2012] EWCA Civ 1373 Growth and Infrastructure Bill
25 Property Fraud Property Fraud Lloyds TSB Bank plc v Markandan & Uddin [2012] l d k l k d dd [ ] EWCA Civ 65 Nationwide Building Society v Davisons [2012] EWCA Civ 1626 EWCA Civ 1626 Stevenson and another v Singh and others [2012] EWHC 2880 (QB) EWHC 2880 (QB) Greenglade Estates Ltd v Chana and another g [2012] EWHC 1913 (Ch)
26 Surrender of Leases – Dilaps – Beware! Surrender of Leases – Dilaps – Beware! Re Teathers Ltd (in liquidation); Baroque Investments Ltd v Heis and another [2012] EWHC d d h [ ] 2886 (Ch) ( )
27 Occupier’s Liability – Issues for Landlords Drysdale v Hedges [2012] PLSCS 178
28 Empty Rates – Latest Tricks Empty Rates – Latest Tricks Makro Properties Ltd and another v Nuneaton and Bedworth Borough Council [2012] PLSCS 150
29 Parking spaces – demised?? Parking spaces – demised?? Kettel and others v Bloomfold Ltd [2012] EWHC Kettel and others v Bloomfold Ltd [2012] EWHC 1422 (Ch)
30 Service of notices Service of notices Freetown v Assethold [2012] EWCA Civ 1657 Freetown v Assethold [2012] EWCA Civ 1657 Ener ‐ G Holdings PLC v Hormell [2012] EWCA Civ 1059
31 s30(1)(g) – Where are we now? s30(1)(g) – Where are we now? Frozen Value Ltd v Heron Foods Ltd [2012] EWCA Civ 473
32 Easements – Proposals for Reform Easements – Proposals for Reform • During 2013, Law Commission hopes to receive the government's response to the t e go e e t s espo se to t e Commission's recommendations to modernise and simplify the law of easements covenants and simplify the law of easements, covenants and profits à prendre • The recommendations include a draft Law of Property Bill Property Bill
33 Landlord & Tenant Landlord & Tenant Ansa Logistics Ltd v Towerbeg Ltd [2012] EWHC [ ] 3651 (Ch) ( ) E.ON UK plc v Gilesports Ltd [2012] EWHC 2172 (Ch) (Ch)
34 Administration – Liability for Rent Administration – Liability for Rent Leisure (Norwich) II Ltd v Luminar Lava Ignite Ltd ( (in administration) [2012] EWHC 951 (Ch) d ) [ ] ( h)
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