It is not necessary to actually breach a contract for your contract breach liability to arise. A clear declaration to the other party of refusal to perform an agreement (in the future) may be suffice to trigger a breach situation. Imagine the hypothetical case of a supplier of equipment (Widgets Ltd) which agrees by way of contract (dated January 2, 2014) to furnish certain machines to be used by a company (Doogle plc) in its production plant. The parties agree on a delivery date of August 10, 2014. However, the manager of Widgets informs Doogle’s CEO in May 2014 that because of in-house technical problems the delivery will be at least 6 months late and that the machine will have an output 10% less than the specfications in the contract order. What are the consequences? Must Doogle wait until 11 August, determine that the machines have not arrived and then terminate or sue for damages for late delivery (or when they finally arive, for defective performance)? Not necessarily. If a party gives clear and unequivocal notice that it will not perform an existing contract as substantially agreed the common law systems have the concept of “repudiation” (refusal to perform). That can be regarded as a (material) breach. The recent English case of Jet2.com Ltd v SC Compania Nationala de Transporturi Aeriene Romane Tarom SA at the Court of Appeal [2014] EWCA Civ 87 has reviewed the established principles of repudiatory breach. The Court confirmed that where a party which had agreed to perform services for another renounced its obligations under the contract, damages fell to be assessed on the basis that it would have performed those obligations, notwithstanding any declared intention not to do so. In other words the court said that the injured party should be put in the position it would have been in if the contract had been performed correctly by the repudiating party. Notwithstanding the general duties of mitigation of damage, this would involve the potential for claiming expectation damages for a (future) failure to perform as agreed. In practice we have to be very careful when communicating with the other contract party. Any clear statement of a refusal or unwillingnes to perform a contract in some substantial manner (e.g. “we will stop working until you pay us for the last stage of work”) could even be interpreted as a repudiation in some circumstances. Unless a contract or the law specifically allows the party in question not to perform in certain circumstances, that party should not declare its intention to take such a course of action. If there is a repudiation the other party may then elect to treat this as a (material) breach and...

“Sticks and stones may break my bones but words will never hurt me.” This a popular nineteenth century children’s rhyme that tried to downplay the effect of words. However, in law words are very powerful. This month we look at repudiatory breach, and the damage words can do to a contract relationship. In addition, just in case you are planning some outdoor fun with your family and friends (with perhaps, a barbeque), we are including a practical seasonal example of modern rule drafting. Under Miscellaneous you can look at (part of) the Texas Administrative Code which sets out the legal limits on “outdoor burning” in the land of unlimited possibilities. Happy reading (and grilling!) Stuart...

It may be too late for this year, but the following template could form a useful part of your contract drafting toolkit for future years. Instead of relying on the chance appearance of an Easter Bunny, Lawspeak… proposes the following template to ensure your Easter fun: EPC Agreement [Short Form]betweenthe Easter Rabbit (hereinafter called “the Bunny”)and[NAME XXXXXXX] (hereinafter called “the Customer”) relating to the Easter Procurement and Concealment of specified oval objects as described in Schedule 1 hereto (”Eggs”) within a geograhical area as agreed by the Parties elsewhere herein and set out in Schedule 2 hereto (“Territory”) on Easter Sunday, the exact date and time of which is specified in Schedule 3 hereto (“Delivery Date”).WHEREAS the Bunny is said to have had many years of expertise and experience in the field of the procurement and concealment of diverse objects and is now willing to procure Eggs for, and provide specific services to the Customer in consideration for quantities of fresh carrots as set forth elsewhere herein and, WHEREAS the Customer wishes that such Eggs and related concealment services be provided in order to allow for Easter to be duly celebrated and,WHEREAS the Bunny acknowledges that the Eggs must conform to the specifications set forth elsewhere herein and must be concealed during the hours of darkness so as to preserve an element of surprise and achieve the purposes of this EPC Agreement and,WHEREAS the Bunny acknowledges and declares that to the best of its knowledge no third party has any title or claim to any intellectual property* or other rights which may conflict with the due performance of this EPC Agreement as set forth herein,   IT IS HEREBY AGREED AS FOLLOWS: [Detailed contractual rights and obligations etc.]*in the light of recent cases, it is recommended that a specific disclaimer be introduced in the definition section so that the term “Eggs” specifically excludes any object similar to or in any way comparable to a golden bear and that any liability for any coincidental similarity to a golden bear, whether caused by melting or normal wear and tear or otherwise, is...

Guarantees, Bonds and Bunnies A third party guarantee, whether given by banks or parent companies, is a very common legal instrument in supply agreements and project and construction work. But many people fail to understand the importance of the terminology used and how different types of “guarantee” arrangements can result in varying levels of liability. The main note this month deals with this point. And, I am afraid an Easter Bunny EPC agreement is waiting for you on page 2 under “Miscellaneous.” Good luck. Happy reading Stuart...

The main tool of lawyers, especially in examining witnesses in court hearings, is supposed to be language. However, sometimes the related logic is forgotten. In the following anecdotal examples, the questions and/or answers prove the difficulties that may arise when the lawyer forgets common sense: Q: Now doctor, isn’t it true that when a person dies in his sleep, he doesn’t know about it until the next morning? Q. Is it possible that the patient was alive when you began the autopsy? A: No. Q: How can you be so sure, doctor? A: Because his brain was sitting on my desk in a jar. Q: Was it you or your younger brother who was killed in the war? Q: You were there until the time you left, is that true? Q: How many times have you committed suicide? Q: Can you describe the individual? A: He was about medium height and had a beard. Q: Was this a male or a female? Q: Doctor, how many autopsies have you performed on dead people? A: All my autopsies are performed on dead...

On Sunday 26th August 1928 May Donoghue sat in a café with a friend. The friend ordered and paid for some ginger beer, which came in a bottle made from dark opaque glass. Donoghue drank some of the contents then her friend proceeded to pour the remainder of the contents of the bottle into the tumbler when a snail, which was beginning to rot, floated out of the bottle. As a result of the sickening sight of the snail and the impurities in the ginger beer, Donoghue suffered from shock and severe gastro-enteritis. She argued that the ginger beer was manufactured by the defendant (Stevenson) to be sold as a drink to the public; that it was bottled with a label bearing his name; and that the bottles were then sealed with a metal cap by the defendant. Donoghue’s lawyer, Walter Leechman, claimed that it was the duty of the defendant to provide a system of working his business which would not allow snails to get into ginger beer bottles, and that it was also his duty to provide a system of inspection of the bottles before the ginger beer was filled into them, and that he had failed in both these duties and had so caused the accident. The case went all the way to the House of Lords where the Law Lords ruled for Donoghue. It was the speech of Lord Atkins that was most influential. He said: “You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law is my neighbour? The answer seems to be – persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question.” This ‘neighbour principle’ was, and to a certain extent still is, the foundation of the modern law of negligence. The above report is taken from http://www.brightknowledge.org/knowledge-bank/law-and-politics/features-and-resources/famous-cases-donoghue-v-stevenson Donoghue v. Stevenson shows us that negligence establishes liability regardless of whether a contract exists or not. The impact of this case is still felt today in areas such as product liability, consumer protection laws and in negligent misrepresentation. Certainly, in contract and contract negotiation situations most people tend to link liability with the issue of the contract, whether it exists, and the exact nature of the agreement. The idea that most business people have seems to be that all liability starts and ends with a contract. It is often forgotten that legal responsibility or liability may exist totally independently from the law of contract. So our modern...