Contract Law Highlights of 2014

Lunch & Learn 2 nd Monday of each month 45 minutes via webinar Unaccredited CPD points Rolling 3 month schedule Monday, 12 January 2015 Recent Challenges (and Opportunities) for Technology Companies in China Speakers: Paul McKenzie & Gordon Milner Monday, 9 February 2015 Anti-corruption Compliance: Minimizing the Supply Chain Risk Speakers: Chris Coulter & Kevin Roberts 2

Today Questions at the end. Or e-mail us afterwards Phones are muted to reduce background noise We ll unmute at the end

Today s Agenda Old Chestnuts Liquidated Damages Commercially Reasonable Good Faith Contract Breach Repudiatory Breach Pre-contract Misrepresentations Dispute Resolution IPR Developments on UsedSoft New Media Web linking and browsing Information as Property ISP Liability 4

Old Chestnuts Liquidated Damages Unaoil v Leighton Offshore [2014] EWHC 2965 Builds on Cavendish Square Holdings v El Makdessi [2012 1st instance; 2013 Court of Appeal] penalty is unenforceable tests: genuine pre-estimate of loss or commercial justification Court considers interpretation at time contract entered into Court denied subcontractor, Leighton s, LDs claim initially consider facts at contract date but take account of later date where contract amended in relevant respects What is a relevant amendment that shifts the date for determining penal nature of LDs? 5

Old Chestnuts Good Faith Bristol Groundschool Ltd v Intelligent Data Capture Ltd and others [2014] EWHC 2145 (Ch) Builds on Yam Seng Pte Ltd v International Trade Corp [2013] EWHC 111 (QB) nothing novel or foreign to English law in recognising an implied duty of good faith in the performance of contracts more likely to be implied into so-called relational contracts, e.g. joint venture agreements, franchise agreements, long term distributorship agreements Held: the agreement was a relational contract good faith extends beyond, but at the very least includes, the requirement of honesty would the conduct in question be regarded as commercially unacceptable by reasonable and honest people in the particular context involved? 6

Old Chestnuts Commercially Reasonable Barclays v Unicredit [2014] EWCA Civ 302 Was Bank commercially reasonable when withholding consent to early termination of guarantees? Held: Way decision is made must be commercially reasonable and not outcome Party making decision is entitled to take account of own interests in preference to the other party Party making demand in excess of what could reasonably have anticipated won t be acting in commercially reasonable manner Entire agreement designed to exclude additional terms. Not intended to exclude evidence or argument about the way party exercised rights Fact specific - difficult to formulate test 7

Contract Breach Pre-contract Misrepresentation Cramaso LLP v Ogilvie-Grant [2014] 2 All ER Established principles: Smith v Kay (1859) 7 HL & Brownlie v Miller (1880) 7 R (HL) a representation made during pre-contractual discussions may continue to operate until the time that the contract is concluded the representor has a continuing responsibility for the accuracy of the representation Question Could Party A owe a duty of care to Party C who relies on a misrepresentation originally made by Party A to Party B? Builds on Briess v Woolley [1954] 1 All ER 909 no reason why a representation could not continue in circumstances where the original representee was not the contracting party 8

Contract Breach Dispute Resolution Emirates Trading Agency LLC v Prime Mineral Exports Private Limited [2014] EWHC 2104 If any dispute arises out of this Agreement, the Parties shall first seek to resolve it by friendly discussion and, if no solution can be reached for a continuous period of 4 weeks, the non-defaulting party can refer the dispute to arbitration. Previously: Key issues on agreements to negotiate = certainty and unenforceability Walford v Miles [1992]; Sulamerica v Enesa [2012] But now: Walford v Miles distinguished Agreement to undertake negotiations in good faith to settle a dispute under a contract could be enforceable 9

Contract Breach Repudiatory Breach Repudiatory Breach = breach of contract that gives aggrieved party right to choose either to end the contract or to affirm it, and in each case claim damages. Breach of condition is normally repudiatory, as is breach of an innominate term that deprives the other party of substantially the whole benefit of the contract Valilas v Januzaj [2014] EWCA Civ 436 Does late payment go to the root of the contract? Vivergo Fuels v Redhall Engineering Solutions [2013] EWHC 4030 Underlines risks of terminating for alleged repudiatory breach Provides useful guidance on: Where a breach is sufficiently material to justify termination Termination notice requirements 10

Intellectual Property Rights Developments on UsedSoft and the right of re-sale of digital media UsedSoft v Oracle [2012] CJEU decision software owner couldn t prevent licensee of software downloaded from the internet from selling unwanted licenses software originally downloaded on terms specifying that right to use is nontransferable under the EU Software Directive, first sale in the EU of a copy of a computer program exhausts the right of distribution E-books: Tom Kabinet [2014] - Dutch court e-book licenses: re-sale allowed Computer games keys [2014] - Berlin court re-sale of keys for computer games not allowed Does exhaustion of rights apply to EU Copyright Directive as well as EU Software Directive? 11

New Media Web Linking/Browsing Svensson v Retriever Case C-466/12 CJEU decision on referral from Swedish court Clarification that providing clickable links to freely available works is not copyright infringement Linking not authorised if communicated to a new public Meltwater (PRCA v NLA) Case C-360/13 CJEU decision on referral from UK Supreme Court Browsing freely accessible copyrighted material is not copyright infringement Copies did not unreasonably prejudice the legitimate interests of the rights holder and constituted normal exploitation of the work 12

New Media Information as Property Your Response Ltd v Datateam Business Media Ltd [2014] EWCA Civ 281 Reluctance to treat information as property Distinction between the information, the medium on which it is recorded, and the rights to which the information gives rise. Question Is it possible to exercise a lien over information? Held Databases are not tangible property of a kind capable of forming the subject matter of the torts concerned with an interference with possession. An extension of the right the scope of the law on liens to databases would be a significant departure from the existing law. 13

New Media ISP Liability UPC Telekabel Wien, Case C-314/12 CJEU decision on referral from Austrian court Can a copyright owner require an ISP to block an ISP hosting a website streaming infringing materials? Cartier International and others v British Sky Broadcasting and others [2014] EWHC 3354 No trade mark equivalent to s.97a CDPA 1988 Cartier & Montblanc attempted to block access to sites selling counterfeit products Court agreed to grant injunctions but: ISP subscribers may apply to overturn Page display must identify who obtained blocking order Sunset clause 14

Lunch & Learn Alistair Maughan Partner, European Technology Practice T: (+44) 20 7920 4066 E: amaughan@mofo.com @ictoutsourcelaw Sue McLean Of Counsel, European Technology Practice T: (+44) 20 7920 4045 E: smclean@mofo.com @sumolaw Amy Collins Associate, European Technology Practice T: (+44) 20 7920 4180 E: acollins@mofo.com Monday, 12 January 2015 Recent Challenges (and Opportunities) for Technology Companies in China Speakers: Paul McKenzie & Gordon Milner Monday, 9 February 2015 Anti-corruption Compliance: Minimizing the Supply Chain Risk Speakers: Chris Coulter & Kevin Roberts 15