UK Disputes Round Up - May 2022 from Bird & Bird's UK Dispute Resolution Team
Written By
This newsletter contains updates and developments in case law and legislation that will be of interest to in-house counsel. In this edition we are pleased to include the following updates:
- Why unduly onerous obligations within STC’s should be fairly and reasonably drawn to your counterparty’s attention,
- HMRC's revised UK VAT treatment of payments made to terminate a contract,
- Force Majeure clauses and sanctions, and
- The On-Line Safety Bill - what your business needs to know
You will find a find full index of all the topics covered below.
Please get in touch if you have any questions or would like further information on these topics.
In this newsletter:
Contracts
English Commercial Court judgment is a reminder not to bury onerous terms within standard Terms & Conditions even in B2B contracts
By Victoria Hobbs and Louise Lanzkron
Many businesses contract using standard Terms & Conditions (STC’s) because it is simple and minimises risk. However, the case of Blu-Sky Solutions Limited v Be Caring Limited [2021] EWHC 2619 (Comm) is an important reminder that businesses should revisit their contractual processes to ensure that any unduly onerous obligations within their STC’s are fairly and reasonably drawn to their counterparty’s attention at the time the contract is signed. The judgment also considered whether the onerous term in question in the STC was incorporated into the contract, and if so, was the term void because in effect it was a penalty rather than a charge to cover administrative expenses.
Revised HMRC policy on VAT treatment of early termination fees and compensation payments
By Victoria Hobbs and Caroline Browne
HMRC has at last published its revised policy on the UK VAT treatment of payments made to terminate a contract. The long-awaited new policy should result in fewer payments being subject to VAT than under HMRC’s previous policy, although may result in more uncertainty for borderline cases that will be determined by reference to their specific facts.
Reasonable Endeavours in a force majeure clause did not require a party to accept non-contractual performance
By Jonathan Speed, Louise Lanzkron and Dragana Vukadin
Force Majeure clauses are again in the spotlight as sanctions are made against businesses with Russian ties resulting in non-performance of commercial contracts. In a timely judgment, relating to sanctions imposed on Russia in 2018, the Commercial Court, in MUR Shipping BV v RTI Ltd [2022] EWHC 467 (Comm), has recently confirmed that the requirement to use reasonable endeavours to overcome the effects of a force majeure event did not extend to requiring a party to a contract to accept non-contractual performance in order to be able to
rely on the force majeure clause.
Smart Contracts – Recognising and Addressing the Risks
By Jeremy Sharman and Prashant Kukadia
Smart contracts, where some or all of the contractual obligations are defined in and/or performed automatically by a computer program, are expected to have a significant impact on the way business is done. Whilst already being deployed for relatively straightforward transactions, such as facilitating transfers on cryptocurrency exchanges, with the technology underpinning smart contracts becoming more sophisticated, they are increasingly being considered as an alternative way to do business when compared to the traditional paper contract.
Digital Rights & Assets
Bird & Bird successfully advises on Tulip Trading Ltd v Bitcoin Association for BSV and others judgment
Bird & Bird has successfully advised on today’s Tulip Trading Ltd v Bitcoin Association for Bitcoin SV (BSV) and others judgment.
The judgment in Tulip Trading Ltd v Bitcoin Association for BSV and others is of significant importance for the cryptocurrency and blockchain space. The result of the judgment is fundamental to how the underlying technology works within the law. The Bird & Bird team led by partner Sophie Eyre and supported by associate Priyan Meewella, acted for 12 of the successful defendants. James Ramsden QC was counsel.
Smart Contracts – Recognising and Addressing the Risks
By Jeremy Sharman and Prashant Kukadia
Smart contracts, where some or all of the contractual obligations are defined in and/or performed automatically by a computer program, are expected to have a significant impact on the way business is done. Whilst already being deployed for relatively straightforward transactions, such as facilitating transfers on cryptocurrency exchanges, with the technology underpinning smart contracts becoming more sophisticated, they are increasingly being considered as an alternative way to do business…
