When diamonds aren’t forever… mishandling termination of contracts

Terminating a commercial contract can be fraught with pitfalls and too often a decision is taken to terminate without a full appreciation of the legal and financial consequences. The High Court underlined those risks in the recent case ofComau UK Ltd v Lotus Lightweight Structures Ltd [2014], and took the opportunity to lay down guidance on the interplay between so-called ‘termination for fault’ provisions and ‘termination for convenience’ provisions, in the context of a damages claim for repudiatory breach. 
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Current crisis in US illegal immigration

Violence in central america drives child migrants to the US border. Child migrants fleeing to the United States has led to an unprecedented humanitarian crisis. The vast majority of these migrants come from Honduras, El Salvador and Guatemala – all struggling with levels of violence tantamount to a political insurgency. Street gangs have turned Honduras into the country with the highest murder rate in the world (the murder rate is now 30% higher than in Iraq in 2007, at the height of the conflict). More than 52,000 unaccompanied children have been apprehended entering the US illegally since October 2013, creating what president Barack Obama has called an ‘urgent humanitarian situation’. Some of them 
have died on the journey.
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Carbon capture and storage: next steps for the UK

Carbon Capture and Storage (CCS) has great potential as a means of achieving dramatic reductions in the carbon dioxide (CO2) produced by combustion. The real questions about CCS remain over the technical viability of CCS and storage at scale, and the commercial and other barriers to its wider deployment.

CCS involves:

  • capturing CO2 from power plants or industrial facilities and compressing it to a liquid
  • transporting the CO2 by pipelines (or ships) to deep geological storage sites, which may be deep saline aquifers or depleted oil and gas fields
  • storing the CO2 at these sites.

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Penalty clauses: no one is immune

All too often parties amending a term of a contract will give insufficient consideration to how the amended term will interact with the remainder of the contract. Where the contract contains a liquidated damages clause, parties must be alive to the fact that the amendments may lead to a change in the value of the contract and should, therefore, trigger a review of the specified damages to ensure they have not become penal.
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Update on Scottish tax

On 1 April 2015, the first payments of Land and Buildings Transaction Tax (LBTT) and Scottish Landfill Tax (SLfT) will start to be made to Scotland’s new tax authority, Revenue Scotland.

LBTT, which replaces Stamp Duty Land Tax on transactions involving land in Scotland, is governed by the Land and Buildings Transactions (Scotland) Act 2013 which received royal assent on 31 July 2013. There are still some changes to be made – the Scottish Government is currently consulting on LBTT regulations relating to licences, multiple dwellings relief and deferred payments amongst other things, and also a proposed relief from LBTT for one of the land transactions in a ‘sub-sale’ where there is significant development or redevelopment of the land or buildings in question. 
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Disclaimer of leases: an essential guide

Even within a recovering rental 
market, the impact of insolvency can be severe. In particular, the power to disclaim a lease as onerous property can have significant implications for not only parties to the lease but also group companies (acting as guarantor), sublessees and mortgagees.

As the recent case of Schroder Exempt Property Unit Trust v Birmingham City Council [2014] demonstrates, the impact will be felt not only for contractual liabilities but also in respect of liabilities owed to third parties, such as for non-domestic rates of unoccupied premises. It is essential for all parties to be familiar with the practical realities of a leasehold disclaimer in order that the necessary steps to protect their position can be taken.
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Ruling of the Court of Appeal in MM (Lebanon) & ors v secretary of state [2014] in relation to the minimum income requirement

The Court of Appeal has delivered its verdict as to whether Blake LJ was correct in concluding that the minimum income requirement (MIR) for applicants submitting entry clearance applications was indeed unlawful. The much anticipated decision may be deemed controversial as it unanimously held that the stringent requirements were not disproportionate and did not interfere with the rights protected under Article 8 of the European Convention of Human Rights 1953 (ie the right to a family life).
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Emissions reduction and energy efficiency reporting: is it time to reconsider your compliance strategy?

EU Emissions Trading scheme (ETS) market reform is taking shape and appears to be moving ahead despite historic inertia. The Energy Savings Opportunity Scheme (ESOS), the new energy reporting regime, is now in place and enforcement of the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme for phase 2 is intensifying. These enhanced requirements are impacting businesses from a compliance and costs perspective. This article reviews some of the new requirements under these regimes, and identifies challenges and nuances businesses may want to consider when updating or developing their corporate compliance policy or sustainability programmes. 
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An exercise in discretion

Contractual terms relating to the payment of bonuses by one party to another are ripe for dispute, particularly where those terms involve the exercise of discretion by the paying party. The proceedings brought by Andrew Brogden and Robert Reid against Investec Bank (Brogden & anor v Investec Bank Plc [2014]) are a further reminder of the necessity for absolute precision in the drafting of such terms. While the claim was resoundingly dismissed, the judgment contains a number of points of interest from the perspective of contractual interpretation, particularly with respect to the ‘types’ of discretion to which limitations/obligations will be implied. 
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The Water Act 2014

The Water Act 2014 (the Act) is a major step in the government’s liberalisation of the water industry and its provisions, though still awaiting formal implementation in many cases, represent significant opportunities both for companies operating within the industry and commercial water customers. For instance, water supply licences will become more flexible and the rules on mergers within the industry are to be relaxed while, for commercial customers, there will be the potential to change water supplier in pursuit of more advantageous arrangements.

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TUPE transfers, assignment/assignation and restrictive covenants: the Scottish perspective

Lawyers have to deal with many issues when businesses are reorganising or making acquisitions but one that can be overlooked is protecting a firm’s ability to enforce restrictive covenants. This is particularly important in industries in which employees’ personal relationships carry significant value. In extreme cases it can influence the structure of a transaction but in every case it is something that the legal team should bear in mind when considering how best to approach the deal.
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