China is an important growth market for the UK, with its worldwide food and drink imports having continued in a positive trend in July to just under £5bn, up from £4.4bn in June. With 2010 figures for UK food and drink exports to China up 28.5% on 2009 figures, manufacturers are increasingly looking at opportunities in this market.

In a joint initiative with the Food & Drink Exporters Association (FDEA) and UK Trade & Investment (UKTI), FDF’s support will ensure companies benefit from an enhanced and strongly branded UK presence at the show; a specially organised trade development visit for non-exhibiting companies to give them a taste of the market; and a meet the buyer initiative enabling companies to meet key customers from the retail and food service sectors.

Charlotte Lawson, Director of Member Services at FDF, said, “The UK manufactures many of the world’s best loved food and drink brands, and demand for our products abroad continues to grow. China, with its growing middle class, has turned from an export country to an import destination. As a growth market for the UK, China cannot be ignored.

“Working with FDEA and UKTI, FDF wants to help UK food and drink manufacturers take the Chinese market by storm by significantly enhancing the UK presence at the FHC exhibition in Shanghai. We aim to support Britain in her endeavour to double trade with China by 2015 to some 62 billion pounds, by supporting business building initiatives which enable UK food and drink manufacturers to gain access to this market.”

So, the message from the FDF seems clear – the Eastern markets are full of promise – maybe we have heard that said somewhere before? Let’s hope UK businesses can achieve something great in these troubled times.

This trial, which is expected to begin on 12 June 2012, is only the second corporate manslaughter case to be brought under the Corporate Manslaughter and Corporate Homicide Act 2007 since the Act came into force on 6 April 2008. The previous conviction under the Act was in February 2011 (click here and here for further details). Under the Act, convicted companies face unlimited fines, remedial orders and publicity orders; the common law offence of gross negligence manslaughter carries a maximum sentence of life imprisonment. The directors will return to court on 8 December 2011 to enter their pleas.

The case is of particular importance, as it is also the first case to be brought against a medium-sized company, with over 100 employees. Cotswold Geotechnical Holdings, the first company to be convicted, had less than five employees and was ultimately fined £385,000. If convicted, Lion Steel Equipment can probably expect a much larger fine.

Corporate manslaughter has been a criminal offence under the Corporate Manslaughter and Corporate Homicide Act 2007 since the Act came into force on 6 April 2008.

As in the Cotswold Geotechnical case, Lion Steel Ltd has been charged with corporate manslaughter under the Corporate Manslaughter and Corporate Homicide Act 2007. Three of the company’s directors have also been charged with gross negligence manslaughter and charged under the Health and Safety at Work Act 1974 for failing to ensure the safety at work of their employees. In this particular case, an employee of the firm died after he fell through a factory roof.

The hearing will take place at Tameside Magistrates’ Court on the 2 August 2011.

The bringing of a second prosecution further demonstrates how important it is for businesses to ensure that they regularly review their health and safety and risk management systems/policies.

In 2009, the High Court ruled in Internet Broadcasting Corporation (t/a NetTV) v Mar LLC (t/a MARHedge) that there is a rebuttable presumption that an exclusion clause should not apply to a deliberate personal repudiatory breach of a contract. In that case, the High Court ruled that extremely clear drafting would be needed for a court to rule that the parties intended an exclusion clause to cover a deliberate personal repudiatory breach. The Court had said that there was a presumption that a party would not intend to limit their liability for really serious deliberate breaches (such as deliberately walking away from a binding contract).

What happened in this case?

In this case, AstraZeneca (AZ) and Albemarle International (AI) entered into an agreement for AI to supply a product called DIP to AZ that AZ then distilled to produce propofol. AZ foresaw that it might, at some point in the future, be more beneficial to be supplied with propofol rather than DIP, and the agreement contained a provision that, if AZ did want to make such a change to its process, it would give AI first refusal on the supply of propofol.

AZ later told AI of its intention to enter into an agreement with a third party (“S”) for the supply of propofol. AI objected as it wanted to continue to supply and cited the first refusal provision in the agreement. Negotiations ensued, but, despite AI matching the third party offer of supply, no agreement was reached, and AI served notice to terminate for AZ’s breach of the first refusal provision which had not been remedied on demand. During the negotiations, AZ attempted to stockpile the goods, whilst AI refused to supply two additional orders made by AZ under the agreement, although this did not affect AZ’s operations. Things got rather messy as allegations were thrown around about who was breaching the agreement.

AZ issued proceedings against AI for breach of contract as AI had failed to supply the two additional orders. AZ argued this was a repudiatory breach entitling AZ to terminate the agreement and claim damages. AI denied the claim, and further argued that any liability it might have was, in any case, limited by an exclusion clause in the agreement. AZ argued that AI could not rely on the exclusion clause because (following the ruling in the NetTV case) the breach was deliberate and repudiatory. AI then counter-claimed for breach of contract due to the alleged failure to give it first refusal on the right to supply propofol, but AZ denied liability.

The ruling

The High Court ruled that AI was, on the facts, in breach to AZ for its failure to fulfil one of the two additional orders and was liable in damages for that breach. However, it went on to rule that failure in respect of one or two orders did not amount to a repudiatory breach of a minimum three year contract.

Meanwhile, AZ was also liable for failing to honour the first refusal provision and AI was entitled to terminate the contract as a result of that breach. However, despite that liability, the High Court had to decide whether the exclusion clause excluded or limited the liability of either party and in particular whether AI could claim for its loss of profits despite an apparent provision excluding liability for lost profits. Meanwhile, although AI’s failure to supply was not serious enough to be repudiatory and although the breach was not deliberate (as AI had had legal advice that suggested that it would not be breaching the agreement in the circumstances by failing to supply), the court went on to consider the issue of deliberate repudiatory breach anyway.

Right of first refusal

Where AZ had decided to move to buying propofol rather than DIP and it was considering an offer to supply from a third party, AZ was under an obligation to provide AI with full details so that AI could match the opportunity. Of course, issues may arise in the course of negotiating that could mean that AI would not supply on the terms offered by S, but if AI was willing to match the terms that AZ was minded to accept from a third party (as happened here) then AZ was obliged to accept AI’s offer. The right of first refusal clause had to mean something. AZ was obliged to provide full disclosure of the terms of the proposed deal with S and act in good faith to AI. The only sensible construction of a right of first opportunity was to give AI sufficient opportunity and right to match the offer and not just as AZ was about to award the contract to S. AZ was in breach of the right of first refusal clause, and AI had rightly given AZ 30 days to remedy the breach and then rightly terminated the contract when the breach was not remedied.

Waiver

The court added that AI’s willingness to continue negotiating after that 30 day period had expired did not amount to a waiver of its rights. It could still terminate despite not exercising that termination right immediately.

Deliberate Repudiatory Breach

The High Court ruled that, if there had been a repudiatory breach by AI, it had not been deliberate as AI had followed legal advice that it was acting within its contractual rights (albeit the legal advice had been incorrect). As such, there was no question that the exclusion clause applied and limited AI’s liability. However, the Court went on to consider what would have been the position had the breach been deliberate and repudiatory. It said that the decision in NetTV had in fact been misguided, and that deliberate repudiatory breaches should not be treated any differently from any other breach. The High Court said that, although it was not necessary to consider whether or not an exclusion clause applied to a deliberate personal repudiatory breach, it would be inclined not to follow the NetTV ruling if it did.

Limited “Contra Proferentem” interpretation of exclusion clause in relation to breach of right of first refusal provision

The exclusion clause said “No claims by AZ of any kind whether as to the products delivered or for non-delivery of the products, or otherwise, shall be greater in amount than the purchase price of the product…; and failure to give written notice of claim within 60 days from the date of delivery, or in the case of non-delivery, from the date fixed for delivery, shall constitute a waiver by AZ of all claims with respect thereto. In no case shall AZ or Albermarle be liable for loss of profits or incidental or consequential damages.”

AZ argued that it was not liable for AI’s lost profits arising out of its breach of the right of first refusal provision. However, the Court ruled that, in line with English law rules of interpretation on liability clauses, the exclusion clause had to be construed against the party seeking to rely on it if there was the slightest bit of doubt in the meaning (a rule known as “contra proferentem”). AZ’s interpretation would have meant that the first refusal provision would have been no more than a statement of intent, leaving AZ with no incentive to comply with it, which a court would always seek to do everything to avoid if there is no alternative construction.

In this case, the alternative construction was that the second sentence in the exclusion clause (ie the exclusion of lost profits) had to be read in the same light as the first sentence within the same paragraph – ie applying to late or non-delivery of DIP products. On that interpretation, it was not intended to deal with loss of profits arising out of not giving AI the opportunity to supply propofol.

Comment

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments, “This ruling is important because it deals with four important issues relating to commercial contracts – deliberate repudiatory breach, the meaning of rights of first refusal, waiver during contract negotiations and contra proferentem.

 ”The ruling in NetTV stated that deliberate repudiatory breaches can, in some circumstances, be covered by an exclusion clause but only if express words are used. This ruling suggests the opposite, in that liability would be restricted or excluded for deliberate repudiatory breach just as much as with other forms of liability. Those comments are not strictly binding on future cases, as the High Court did not need to make a ruling on that issue, as it had already ruled that the breach was not deliberate or repudiatory anyway. This uncertainty is not particularly helpful for businesses that need to know how to draft contracts going forward, but the best advice would be to draft appropriate wording to reflect the level of risk the parties are willing to take and not leave it to the courts to decide.

“The part of the ruling dealing with the narrow interpretation of an exclusion clause against the party seeking to rely on it – the ‘contra-proferentem rule’ – which meant that breach of the right of first refusal provision in the agreement was not covered by the exclusion clause is actually just a very useful reminder of existing rules. Exclusion clauses should be professionally drafted by specialist lawyers. A party to a contract should play devil’s advocate when drafting an exclusion clause and try to understand what a court might see from the outside looking in, rather than just looking on what might be beneficial for the business itself.

“The interpretation of the phrase “right of first refusal” was also extremely useful. That phrase is sometimes used in a contract but this ruling gives real insight into what that actually means.

“Finally, the decision that one party had not waived its rights of termination when it continued to negotiate for a few weeks in good faith was also helpful.

“All in all, this is a major judgment that affects all commercial dealings. We will have to see, though, whether the ruling will be appealed.”

The High Court has ruled that AP did have design rights. When the intermediary showed the design to NC, NC took that on board in designing its new carton. Some designs were inevitably similar not because they were copied but because they shared some common functional requirements. The particular combination of all features of AP’s design was not commonplace and so it would have design right protection. NC had been provided with that and NC’s design had not been produced independently of AP’s carton. However, that did not necessarily mean that AP’s design had been infringed as the article could still derive from multiple sources. Indeed, that was the case here. NC’s design was not made exactly to AP’s design and any similarities were actually derived from another independent design. NC’s design did not owe a substantial part of its design to AP’s. Therefore, there was no design right infringement in this case.

After this date there will be a significant reduction in the annual investment allowance for qualifying expenditure which potentially could result in lost 100% up-front tax relief.

Claiming on the balance not covered by AIA at rates applicable to the general, special or short-life asset pools spreads the claim for tax relief over much longer periods.

Here is an example I’ve seen from accountants Smith & Williamson:

Using an example of a 30 June 2012 year end, the table below shows the effect of delaying expenditure until after 1 April 2012 or 6 April 2012 on the maximum amount of AIA claimable for that year.

Businesses need to consider more than just the availability of allowances when incurring expenditure, however this change in allowances is significant enough to justify very careful consideration of when to incur qualifying expenditure.

For more information, please email me on shimon.shaw@mablaw.com.

Ed Davey said, “ Our objective is to introduce a final Bill in the Second Session, although we will look at the opportunity for introducing the Bill earlier if parliamentary time allows. One reason for publishing the draft Bill as soon as possible is that if parliamentary time allows, we may be able to make it a first Session Bill, but that is not within my control.”

The background to the draft Bill which will set up a “supermarket ombudsman” is that the Groceries Supply Code of Practice was recommended by the Competition Commission following its market inquiry into the supply of groceries and report in April 2008. The Commission concluded that, although the exercise of buying power by grocery retailers was in general a good thing for consumers, it could raise concerns in certain circumstances. For instance, if retailers transfer excessive risks or unexpected costs to their suppliers in the hope of gaining a competitive advantage, it is likely to blunt suppliers’ incentives to invest in new capacity, products and production processes. Which in turn could be bad for consumers, and the Code of Practice is intended to remedy the problem.

The groceries supply code will apply to all companies active in the sector with an annual retail groceries turnover of £1 billion or more. Its provisions are now included in all retailers’ contracts with their grocery suppliers. It gives suppliers greater security, which should encourage them to invest in their operations. In essence, the code is about introducing clear standards and greater certainty.

The Competition Commission concluded that the code would be far more effective if it was enforced by an adjudicator. The idea is to dispel the climate of fear among suppliers, who felt they risked being black listed by the big supermarkets if they invoked the previous Code of Practice. The Commission does not have the power to establish an ombudsman. After failing to win agreement amongst the retailers to establish such a body on a voluntary basis, it asked the previous Government to act. The Coalition Government agrees that the Code of Practice needs to be independently monitored and enforced if it is to succeed.

The “supermarket ombudsman” will act as arbitrator in disputes arising under the code, and will have investigatory powers and, one assumes, powers to fine and censure retailers in the more serious cases of code abuse. We will know more when the draft Bill is published.

But who will ultimately benefit from the new Code and the appointment of an ombudsman? The consumer, the food supplier or both? Only time will tell. But one thing is for sure, the large grocery retailers in the UK will not be hiding under their duvets in fear of the new Bill. The Government will not want to risk being too onerous on them. After all, with a weak UK economy forecast for the foreseeable future, the last thing any Government will want to do is to alienate a sector which continues to increase trade and revenue even in these times of austerity. The big supermarkets provide UK plc with a lot of tax revenue, which is much needed in the Treasury coffers in the current climate. The ombudsman may be on his way, but he is unlikely to be changing too much any time soon.

The Government is calling on interested parties to submit a response on the website, suggesting which regulations should be scrapped, merged with other regulations, simplified, or improved.

In the recent Budget Report and Plan for Growth document, the Chancellor outlined proposals to reduce the number of UK regulations in an effort to boost economic growth. (Click here for further details.) This ‘Red Tape Challenge’ is the first step.

There are 21,000 regulations in the UK, and these will be grouped into themes on the website. Every 1-3 weeks, the Government will publish the regulations that relate to a specific sector (‘themes’), with interested parties given a set amount of time to comment on them. The Government will then collate the comments and, after the theme has been closed for public comment, the relevant government departments will have three months in which to justify the continued existence of the regulations called into question. The Government will then decide which regulations should stay, which should go and which should change. All regulations that are to be repealed will be listed on the website.

NB: regulations regarding tax and national security are exempt from this project.

At the time of writing, the timetable for comment is:

7 April – Retail;

6 May – Hospitality, food and drink;

20 May – Road transportation;

2 June – Fisheries, marine enterprises and internal waterways;

16 June – Manufacturing;

23 June – Healthy living and social care;

7 July – Media and creative services;

21 July – Utilities and energy;

4 August – Rail and merchant shipping; and

18 August – Mining and quarrying.

Each of these themes will be split into topics. For example, the current theme, retail, is split into Sunday trading, hallmarking, weights and measures, and so on.

The project is also divided into six “cross-cutting themes”. Government departments must comment on these themes every four months. These are:

1. Employment law;

2. Pensions;

3. Company law;

4. Equalities;

5. Health and safety; and

6. Environment legislation.

The project is expected to run from April 2011 until April 2013.

To read the Government press release which launched the Red Tape Challenge, please click here.

The move seems like a step in the right direction for small businesses. If nothing else, the problem of late payment is in the public eye for all to see. The only issue? So many amendments have been proposed to the Late Payment Directive that MEPs may not vote on it until next April, at the earliest. There will therefore be a delay. But then, how important is it if things are late?

The Intellectual Property Minister says that the consequences of fake goods are more significant than damage to brands – goods can be dangerous. This month, a teenager was badly burnt after he was electrocuted from hair straighteners that had seemed genuine.

The High Court ruled that the retention of title clause was ineffective. A retention of title clause needs to be interpreted in the context of a commercial bargain as a whole. Here, the clause was part of a contract for the sale of stock designed for resale rather than the sale of goods designed for use by a business. The clause was ineffective because it was inconsistent with the parties’ intention for stock to be sold on to customers. The Court added that the termination clause did not help the clause to be enforceable. The Court was particularly influenced by the way the contract had been performed as Sandhu had at no stage sought delivery up of the stock but sought instead to recover monies for the value of the stock sold from the administrators. A retention of title clause is not a right to priority over sales actually made (which would act as a charge) but a right to recover possession of goods.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: ‘Our insolvency lawyers often see cases where clients wish to rely on retention of title clauses when their customers have suffered an insolvency type event. Often, those clauses do not give adequate protection. However, we also see clauses which have been inadequately drafted and try to go further than is allowed and this can render the entire clause ineffective.

‘Given the current fragile state of the economy, retention of title clauses are being closely examined at the moment due to the risks of customers defaulting on payment. They should be closely reviewed and updated by suppliers as necessary in light of the ever-changing case law in this area. It should also be realised that those clauses have limitations to their use and should be seen as one tool in a supplier’s armoury that may include short (or no) credit periods, parent guarantees and risk insurance.’

The High Court said that Dyson’s registered designs had a wide application, so one point scored there for Dyson. The High Court said that in considering the overall impression between the designs of the two vacuums, the informed user would also notice certain similarities, so another point for Dyson. However, Dyson’s claim suffered a knock-out blow when the High Court said that the informed user would also notice main significant differences. Vax could continue to market the product but the victory was delivered with some judicial analysis that they would probably much rather forget, though – the judge said that the overall impression produced by Dyson’s machine was smooth, curving and elegant; whereas MACH ZEN was rugged, angular and industrial. Charming!

A legal victory to Vax then, but they are left in a quandary as to where to go from here: do they continue to market their uglier product (as the court case has given them the green light to do) or do they make the product look more beautiful to try to beat Dyson in the marketplace?

The big news is that companies that fail to register their energy use by next month will be hit with fines that could reach £45,000 under the little-known rules. 

Those that do participate in the Carbon Reduction Commitment (CRC) initiative by declaring their energy use will face charges for every ton of greenhouse gas they produce.  These payments are expected to average £38,000 a year for medium-sized firms, and could reach £100,000 for larger organisations.

Many businesses are (understandably) aggrieved at this prospect fines which will put pressure at a time when bottom lines are shrinking.

Any company or public sector organisation that consumes more than 6,000 megawatt hours (MWh) of energy a year – meaning a power bill of about £500,000 – must register its energy use by the end of next month.  From April 2011, they will need to buy permits for each tonne of carbon dioxide emitted. For those using 6,000MWh, that could mean £38,000.

Of about 4,000 organisations estimated to qualify for the scheme, only 1,229 have registered to date.   Missing the Sept 30 deadline leads to an immediate £5,000 fine, and £500 for each day after that, up to a maximum of £45,000.

Another 15,000 smaller organisations are also required to register and could be expected to buy permits in the future. If they miss the September deadline, they face fines of £500.

For more information click here for the Environment Agency (who administer the scheme).

R tendered alone for a possible contract, and C clubbed together with another supplier. C went into liquidation and its rights were taken by J. R won the tender. J claimed that R had breached the prohibitions in its agreement with C and that if it had been unable to do what it did, then it would have had to bid with C (now J) and they could have won the bid together. R claimed that the prohibition was an unenforceable restraint of trade and breached Article 101 of the Treaty on the Functioning of the European Union (formerly Article 81 of the EC Treaty).

The High Court ruled that the restriction was unenforceable under EU competition law and granted R summary judgment on the issue. The wide scope of the restrictions and the people affected as well as what was covered by C’s ‘confidential information’ meant that if R had information relating to C or its business practices, finances, dealings and clients received from C, it would breach the contract if any group company made contact with C’s existing or prospective clients. It was very wide in time and unlimited in geography. It went further than could reasonably be required to protect C’s confidential information. This breached Article 101, as it amounted to an agreement that had the object or effect of distorting competition and which could affect trade between Member States of the EU. Since the parties were not operating at a different level of supply – as C was not purchasing or supplying to R but merely assisting clients with obtaining supplies – a possible block exemption for vertical agreements under Article 101(3) did not apply to exempt the arrangement.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: ‘This case should act as a warning to commercial entities that want to agree non-compete provisions. If they are too wide in scope, they could infringe EU competition law. That in turn could entail large fines, unenforceable agreements and third parties suing for damages.’

In this case, G supplied products to Ford. E was a supplier of components to G. E’s products were defective, causing G to incur big losses. G wanted to claim those losses from E. The question was whether E’s terms (which severely limited its liability), G’s terms (which required E to have unlimited liability) or some other terms applied? Each side referred to their own terms and conditions applying in their relevant order documents. However, it was clear that the parties did not agree to the other side’s terms. They were both hoping to negotiate a mutually agreeable limit on liability, but this was not done.

On these facts, the High Court ruled that neither party’s terms and conditions applied. It was clear that they were not accepting the others’ terms. There was clearly a contract, so which terms did apply to the contract? The court said that the terms implied at law – ie in the Sale of Goods Act – applied because of the clear deadlock.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: ‘This case highlights the dangers of entering a contract without agreeing the terms. Parties often hope for the best if there is a sticking point, but if and when something does go wrong and one party suffers big losses that they want to claim from another, that is generally not the best time to agree what to do. Consequently, the parties can end up in dispute, costing them management time and money.

‘In this particular case, with the court finding that neither terms apply and the underlying legal position did, that would involve no limit on liability. That means that G effectively won. Is that what E would have wanted from the stalemate?’

The legal importance of the decision is that it is the first reported authority in which commercial agents and their principals have been found to have a mutual duty of trust and confidence akin to a contract of employment.

I will write a longer post shortly.

This case surrounds an action brought by L’Oréal for trade mark infringement against Bellure. Bellure sold look-alike/smell-alike perfumes – perfumes that looked and smelt like some of L’Oréal’s established fine fragrance brands. This case was not about the fact that the perfumes smelt similar but about the get-up of the infringing articles and use of the brand names in comparison lists. The High Court had ruled in favour of L’Oréal. The defendants appealed, and the Court of Appeal referred questions to the European Court of Justice to answer so as to interpret EU trade mark law.

The ECJ came down in L’Oréal’s favour, particularly that the general get-up took unfair advantage of the more famous brands and free-rode on the coat-tails of that brand. The ECJ also said that using comparison lists could amount to trade mark infringement. Comparative advertising may be trade mark use, but could not be stopped by a trade mark owner if it satisfied the list of conditions in Article 3a(1) of the Comparative Advertising Directive. However, that list included not taking unfair advantage of the reputation of a trade mark, and not presenting goods or services as imitations of goods or services bearing a protected trade mark. The ECJ said that the Directive prevented an advertiser from stating or suggesting in comparative advertising that the product or service was an imitation or replica of something with a well-known mark. That would take unfair advantage of the reputation of that mark. The ECJ said use of a competitor’s trade mark in comparative advertising was allowed where the comparison objectively highlighted differences and did not give rise to unfair competition. Unfair competition arose because the imitator was effectively free-riding on the coat-tails of the more famous brand and benefiting from its reputation, despite no one actually being confused.

The Court of Appeal has applied that decision in its own judgment. It had no option but to rule that Bellure had infringed L’Oréal’s trade marks because it had used the brand names in respect of identical types of goods in advertising and, on the ECJ’s analysis, that was trade mark (rather than purely descriptive) use which could not be justified under comparative advertising law, even though there was no question of customers being confused. Lord Justice Jacob criticised this. He said that the comparison lists merely gave consumers buying perfumes at the lower end of the market an opportunity and informed choice as to which perfumes smelt a bit like the much more expensive branded products. Referring to someone else’s trade mark in that way when no one was confused and simply telling the truth that a product was a much cheaper imitation was a positive thing, he thought. He felt that trade mark law now effectively stopped people from telling the truth about comparing someone’s products with those of their competitors in a non-confusing way, and this could have a chilling effect on being able to compete.

Needless to say, Qualtex thinks the ruling is rubbish. However, at least the result has meant that Henry ended up happy and was able to smile once more.

• Agreement as to the actual or minimum resale price.
• Restrictions on the territories or customers to whom the buyer may sell, subject to certain exemptions such as an exclusive territory reserved to the supplier or another distributor.
• Restrictions on members of a selective distribution system from selling to end users.
• An prohibition on the buyer not to supply competing goods if that prohibition is indefinite or more than five years.

The Commission’s Guidelines, which need to be read alongside the new Regulation, contain particular points around use of the Internet. Receiving orders on a web site is generally considered to be passive selling, and passive selling cannot be restricted. This is also the case where a customer opts in to be automatically informed about developments and this leads to a sale. It is unacceptable to have a provision that prohibits a distributor from preventing customers in another territory from viewing its web site or automatically re-routing those customers to another distributor. However, a web site can have a link to another distributor’s site. Likewise, you cannot terminate a customer’s Internet transaction once it is clear from credit card data which shows an address not within the distributor’s own territory.

A further web development is that a distributor cannot be required to have a limit on the amount of Internet sales as a proportion of its overall sales. However, one new development which appeals to operators of selective distribution networks is that the supplier can require the buyer to sell a certain absolute amount (in value or volume) off-line in a bricks and mortar shop. The supplier can also require the buyer’s web site to be consistent with the supplier’s overall brand.

The Guidelines also consider the extent to which Internet advertising would be active or passive selling. Banner advertising or advertising on third party web sites addressed to certain customers is active selling, as is paying search engine service providers or other online ads where (in each case) the advertising is directed to users in a particular territory.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com, comments: ‘It’s good news in terms of certainty that the previous rules have been largely replicated. One interesting change of emphasis is on Internet selling. The European Commission is keen to promote and enhance trade between Member States and the latest rules try to prohibit restrictions on distributors from using the Internet to obtain what are seen as ‘passive sales’ from customers in other countries.

It is important for businesses to conform with competition law, because I have often had to advise clients against use of terms that they do not realise infringe competition law. Failure to comply with the law in this area could have serious implications: fines of up to 10% of global turnover, an unenforceable agreement, and the right for third parties to sue for damages.’

The justification of this is that the programme will raise awareness among small businesses that they need to keep good records. The show will aim to help Britain’s small businesses improve their all round business knowledge and direction, cash flow, marketing strategy and in some cases even their enthusiasm.

The show will start in March, but if you can’t wait until then the good news is that here at MAB we have a business health check product which might prove even more useful than a TV show….Click here for info on our Business Healthcheck

The High Court ruled that the effective termination date was January 2007, so the agent was in time to make a claim. There was little in the way of initial written contract or clear termination notice. Everything had been dealt with in an informal way. The termination date had been left vague because although the supplier had wanted to bring the sales function in-house, it wanted to leave open the possibility of the agent continuing to act for one more season until the right staff were recruited. The main selling for the Spring/Summer 2007 season had concluded in October 2006, but there was continuing commercial activity beyond that date. In November, the supplier sent an email to the agent about a particular customer’s request for some dresses. In addition, customer queries regarding the Spring/Summer 2007 season were passed to the agent to deal with, up until January 2007. Both of those things showed that the agent had continuing authority to negotiate beyond January 2007. The Court said that although the Regulations defines the agent’s role by reference to a continuing authority to negotiate, an agency contract does not terminate when an agent stops negotiating sales, if the agent is still carrying out agency duties, as here.

Paul Gershlick, editor of www.Upload-IT.com and a Partner at Matthew Arnold & Baldwin LLP, comments: ‘This case highlights the importance of agreeing everything clearly in writing. Even if parties to a contract start off intending only to have good relations, this does not always turn out to be the case further down the line. That’s when the value of a good contract is noticed. There is a further reason for principals to have contracts with their agents: under the Commercial Agents Regulations, they may be worse off if they don’t stipulate in writing that the indemnity alternative applies rather than compensation – agents could be able to claim for more money on termination, and that’s something principals should seek to avoid.’

The Court of Appeal disagreed with the High Court’s analysis. The traditional analysis of offer and acceptance applied unless it was clear that their common intention was for some other terms to apply. The parties had opportunities to agree to a single set of terms and conditions but had never done so. It could not be inferred from the facts that the parties never intended for S’s terms and conditions to apply. Although a long-term relationship and parties’ conduct may displace traditional offer and acceptance analysis, that was not strong enough here.

Paul Gershlick, editor of www.Upload-IT.com and a Partner at Matthew Arnold & Baldwin LLP, comments: ‘This case shows the importance of having clear contracts so everyone knows the terms on which they are dealing. This is especially so if the contract goods or services are complex or worth significant sums of money as they are more likely to end up in dispute. Sometimes people refer in their quotations, order forms and order acknowledgements to their own terms and conditions applying, without ever getting to the bottom of which set of terms really do apply. The parties in this case have ended up incurring significant time and legal expense in going to court – time and money that could have been better used elsewhere. Far better if they would have had clear contracts instead.’