Archive for the ‘Commercial Litigation’ Category

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Sophistication of Consumers Stymies Claim

Wednesday, August 10th, 2011

When one business uses the trade marks of another, an action can be brought for trade mark infringement and possibly also for ‘passing off’ – the term given to the situation in which a business attempts to profit by presenting itself in such a way that the buyer may confuse it with another business.

 
The outcome in such cases depends mainly on the court’s view of what the effect of the infringement or passing off would be in the market concerned. One of the main factors will be the knowledge and sophistication of the consumer.
 
Recently, Group Lotus Plc and Lotus Cars Ltd (the manufacturers of Lotus cars) brought various claims against a number of defendants all associated with the Team Lotus Formula 1 car racing team. The claims all had at their core the use of the word ‘Louts’ in a motor-racing context.
 
The High Court was unmoved. In its view the businesses were sufficiently different and the sophistication of the consumers was such that there was no likelihood of confusion.

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Conscious Decision is Not Force Majeure

Monday, August 8th, 2011
Force majeure is the term used when something unexpected and not preventable occurs which radically changes a situation. A force majeure clause is often included in contracts to guard against the position in which a contract cannot be fulfilled because an event occurs which prevents it (wars and natural disasters are the most usual).
 
It also exists as a concept in some tax legislation and was recently argued to apply by a supplier of pick-up trucks who had earlier attempted to obtain a refund when VAT was charged at the wrong rate on its imports. It had fought the issue through the VAT Tribunal and lost. It then decided not to appeal that decision.
 
However, some years later, a ruling by the European Court of Justice confirmed that the supplier’s view regarding the appropriate rate to apply was correct. It applied for a VAT refund, but this was rejected as being out of time (there is a three-year limit on such claims).
 
The supplier argued that force majeure applied and that this had prevented it from making the application for repayment in time. This argument was rejected, however. The conscious decision of the supplier to not take a given course of action because it believed its claims would fail could not be described as force majeure.

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A Click Isn’t Enough

Friday, August 5th, 2011
An attempt by online retailer Amazon to patent its ‘one-click’ purchase system has predictably failed in the patent court.
 
The reason for the failure was that the creation of a system which is based on another, but with certain steps omitted, was ‘obvious’ and therefore not capable of being protected. The patent was sought, alleging that the use of a ‘cookie’ to look up customer details was an innovative step.
 
The claim was referred to the Technical Board of Appeal of the European Patent Office, which confirmed the 2007 decision of the European Patent Office.

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How Things Appear is Important

Monday, August 1st, 2011

An adjudicator in a construction dispute who issued a statement of  ‘preliminary view and findings of fact’ without having received the evidence of the respondent was found by the court to have offended natural justice by failing to give both sides a fair hearing. The statement was said by the adjudicator to be ‘preliminary’ and ‘not binding’. However, it read like a draft of a decision.

Property under construction
The adjudicator’s decision, issued some time later, was essentially the same as the preliminary statement.
 
On appeal, the Technology and Construction Court found that the adjudicator’s decision was unenforceable on the ground that it failed to afford natural justice.
 
The failure to wait until the respondent had presented its evidence was compounded by the statement not being made available to both sides before being formally issued, thus depriving the respondent of the chance to challenge its contents, which gave the appearance of unfairness in the decision.

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No Termination on Grounds of Own Breach

Friday, July 29th, 2011
When a party to a contract breaches the contract, the other party is normally allowed to bring the contract to an end. It is not normally possible (unless the contract allows it) for the party committing the breach to terminate the contract on the ground of its own breach.
 
In a recent case involving a motorway service area owner and a hotel group, both sides to a proposed lease agreement were entitled to terminate the contract if the necessary planning consents etc had not been obtained by a certain date. The landlord agreed to use all reasonable to obtain them.
 
When the necessary consents were not obtained, the landlord terminated the contract. The tenant argued that the landlord had not used all reasonable endeavours to obtain the consents.
 
The court was not asked to consider whether the landlord had in fact breached its obligations, but whether it had the right to terminate the contract if it had. This, the court ruled, it could not do. The intention of the parties was the building of an hotel and the granting of a lease. The purpose of the termination clause was to enable the parties to withdraw from it if the consents could not be obtained, not to allow the landlord to breach the contract and then terminate it on the basis of its own breach.

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Dodgy Insurance Claim Costs Company Dear

Friday, July 15th, 2011
Gilding the lily when making insurance claims
Fire Station sign
is a not uncommon, but dangerous, practice as a company whose premises were damaged by fire found out.
 
When making its claim to the insurer, the company produced what was said to be an invoice relating to the property. However, the invoice total was actually a valuation of the property, which had been used to support the loan under which it had been purchased. This was then pressed into ‘double service’ to substantiate the claim.
 
The insured did not disclose this to the insurer. The Court of Appeal took a very dim view of this indeed and concluded that the deceit was sufficient to absolve the insurer from any liability at all under the policy, even though a proportion of the claim was genuine.

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Own Commercial Advantage Paramount in Contract Rules Court

Friday, July 15th, 2011

Many contracts require one or both parties to use ‘all reasonable endeavours’ to fulfil the contract. When low-cost airline Jet2 and the operators of Blackpool Airport (BAL) made a contract with one another, it required both to ‘use their best endeavours to promote Jet2.com’s low-cost services…and required BAL to use ‘reasonable endeavours’ to provide a cost base that will facilitate Jet2.com’s loc cost pricing’.

plane
The two companies began a dispute when BAL wished to change the hours during which Jet2 flights would operate. The argument turned on the meaning of the expressions ‘best endeavours’ and ‘all reasonable endeavours’.
 
The court considered that in each case the meaning had to be construed form the context of the agreement. However, the expression ‘all reasonable endeavours’ could not mean the requirement to sacrifice one’s own commercial advantage.
 
 

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Similar Name Ban is Postcode-Specific

Wednesday, July 6th, 2011

‘Passing off’ is the legal term for when a business seeks to profit from the name or reputation of another business by using a similar name. When the person or business entitled to use a name in a particular market finds their trading name, or one similar enough to lead potential customers to think they are dealing with the business, being used by another business, they can bring an action in damages for the profit lost as a result and/or can apply for an injunction to prevent the other business from using the similar name.

tree
Such actions are relatively rare but recently one was heard in which a firm named Redwood Tree Services Limited, which trades in the Guildford, Slough and Kingston upon Thames areas, found that a firm called Redwood Tree Surgeons had started to operate ‘on its patch’. It sought an injunction to prevent the business using the ‘Redwood’ name in those areas.
 
The court considered that the names were sufficiently similar for confusion to arise in the minds of customers. Accordingly, the injunction was granted, but only with regard to the GU, SL and KT postcodes. The adjacent RG postcode would not be included.

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Prosecution HIghlights Need for Risk Assessment and Control

Saturday, June 18th, 2011

A plant hire company has been fined £7,000 and ordered to pay costs of £10,000 following an accident on a building site in which an excavator bucket filled with concrete fell off the arm of the machine supplied by the company and crushed the site foreman to death.

The plant hire firm and the man who was operating the excavator when the accident occurred were both convicted of breaches of health and safety legislation. The operator was fined £700 and ordered to pay costs of £1,000. The main contractor, which has now entered administration, also faces charges for having failed adequately to plan, manage and monitor the construction workand failing to take reasonably practicable steps that would have prevented the accident.
 
The accident happened because of the failure to insert a ‘safety pin’ necessary to enable the bucket to be locked to the arm of the excavator.
 
The plant hire company was convicted on the grounds that it ‘did not have a suitable regime of inspection for the plant it hired out to ensureDiggers safety conditions were maintained’ and that it had ‘also supplied the eq uipment without adequate safety warning signs, written information and instruc tions or CE marking’. The company had also neglected to ensure the attachments supplied with the excavator were maintained in an efficient state, working order and in good repair.
 
The operator had failed to take adequate care when positioning the bucket.
When an accident could easily have been avoided, as in this case, the HSE often spreads the net of blame widely. It is important for those with health and safety responsibilities to be aware of the scope of their duties. Whilst an error may appear to be mainly the fault of one person, ‘liability creep’ can easily occur unless careful risk assessment and minimisation procedures are in place.
 

 

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Claim on Wrong Basis Prevents Compensation for Loss

Friday, June 10th, 2011

When a business sues for damages because of breach of contract, the damages are based on the loss of profits for the claimant that have resulted from the breach.

However, what is the position when, instead of claiming for loss of profits, the claimant seeks damages for the loss of value to the company that resulted from the breach?
 
A recent High Court case had to consider this point specifically. It involved a franchise agreement, which was terminated by the franchisor in breach of the franchisee’s contract.
The franchisee claimed damages on the basis that the loss of the franchise had reduced the value of the company. The claim compared the hypothetical value of the company at the point immediately before the franchise was terminated with the value of the company if it ceased doing business.
 
Mr Justice Flaux was unimpressed with the claim. He pointed out that the company was continuing to trade and that the claim was based on ‘a hypothesis upon a hypothesis’.
 
Because the claim was based on a loss in valuation argument, not on the basis of the loss of profits, there was no valid claim. Had the claim been for loss of profits, once the breach of contract was proved, the argument would only have been about the quantum of the loss. Alternatively, had the breach of contract caused the failure of the business, then a claim for the loss of value of the business would have been  appropriate.
 
The case was lost simply because the wrong case was brought.

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