In Apple’s business model, it calls itself an agent and gets a commission on the sale price. In genuine agency situations, the supplier is free to tell the agent what price to sell at. However, if it is not a genuine agency situation, this is forbidden. The EU rules as to what amounts to a genuine agency are complex. They include looking at who bears the financial risk or commercial risk in the sale of the books.

The Commission will now investigate. If found guilty, the parties to anti-competitive arrangements can be fined up to 10% of their turnover, the agreements are unenforceable and third parties can sue for damages.

The European Court of Justice has backed up the French Competition Board’s decision. The ECJ looked specifically at the question of selective distribution networks. It said that establishing those networks are not prohibited by Article 101 if resellers are chosen based on objective criteria, where those criteria are applied uniformly and non-discriminately, where the characteristics of the products need to preserve the quality and ensure proper use, and the criteria only go as far as is necessary. However, provisions within those networks may still end up offending against competition law. The ECJ has not accepted arguments relating to the need to provide individual advice to customers and to ensure their protection against incorrect use of products in the context of non-prescription based products to justify an Internet sales ban. Contract provisions that effectively prohibited Internet sales meant that the benefit of the block exemption did not apply. That said, it would still be for the national court to ascertain whether the contract had an individual exemption, as the failure of an agreement to fall within block exemption parameters does not automatically mean that it will not be found to be individually exempt on other criteria.

The High Court has agreed with the OFT that such a minimum term was unfair and designed to take advantage of the naivety and inexperience of the average consumer and were weighted in favour of the gym or health club causing a significant imbalance in the parties’ rights and obligations. Gym members would not anticipate all the events which might render the use of the gym impractical and the agreements did not address the tendency of users to overestimate the amount that they would want to use the gym when signing up. Accordingly, those provisions were unfair contrary to the Unfair Terms in Consumer Contracts Regulations 1999 and were unenforceable.

In addition, the practice of describing members who wanted to terminate their agreements as defaulters and registering or threatening to register that with credit reference agencies was an unfair commercial practice and harmed the collective interests of consumers, contrary to the Consumer Protection from Unfair Trading Regulations 2008.

Now, the OFT has published a report evaluating the impact of its 2001 decision. It has concluded that, as a result of its intervention, the prices in the hospital sector have risen so that other people can compete, Napp’s market share has dropped significantly, and prices in the community sector have come down (and by far more than the OFT had required in its decision). This has therefore been a significant success for boosting fair competition.

This case is an interesting example of the type of claims a borrower with PPI can attempt to raise and the court’s approach to these claims. Borrowers are notorious for making numerous claims in relation to PPI, some of which may have substance, but the majority of which are, as the court here pointed out, “unnecessary embellishments”.  

This was an application by the claimants Mr and Mrs Barnes to re-amend their Particulars of Claim.  The claim related to PPI policies sold in relation to three different loans made by the defendant Black Horse Limited (“Black Horse”) to Mr and Mrs Barnes.  The first loan was made on 31 July 2002 for £2,000 with the PPI premium of £563.  This first loan was rolled up and discharged by the second loan made on 27 October 2003 for a further £4,500 and PPI of £2,021.48.  This in turn was then rolled up and discharged by a further written agreement dated 8 June 2004 for a further PPI policy of £2,694.48. Monies were still owing in respect of the third loan. 

Mr and Mrs Barnes wished to amend their Particulars of Claim to claim:

• Breach of Fiduciary Duty;
• Duty of Care;
• Breach of Contract;
• Unenforceability; and
• Unfair Relationship. 

Breach of Fiduciary Duty

As the court noted, it is exceptional for a creditor to have any fiduciary duty to the borrower at all.  The mere giving of advice does not itself import a fiduciary relationship and only exceptionally will the line be crossed from that of mere honesty care and skill and the like to a fiduciary obligation such that the adviser is held to be acting in the other party’s interests in terms of advice, information and so on. 

In order to establish a fiduciary duty, Mr and Mrs Barnes relied on the voluntary private customer code produced by the General Insurance Standards Council (the GISC) as evidence of the fiduciary relationship.  The GISC was abolished in 2004 and was replaced by ICOB, a FSA regulated scheme. 

Judge Waksman explained that the notion that you could infer a fiduciary relationship between the lender and the customer taking out a loan with PPI simply because the lender (or the insurers for whom it acted as agent in offering the policy) was a member of the GISC was absurd.

Mr and Mrs Barnes also relied on the OFT non-status lending guidelines for lenders and brokers.  These were guidelines which were specifically said to be operable where there is secured lending to non-status customers.  Mr and Mrs Barnes were not non-status nor was it secured lending.  Although the guidelines contained guidance in relation to all aspects of their business activity, none of this was sufficient to support a fiduciary obligation. 

Mr and Mrs Barnes also placed considerable reliance on the judicial review proceedings British Bankers Association v FSA, but again that did not assist a breach of fiduciary relationship.  The Judge found as a matter of law that there was no fiduciary relationship and explained that, in any event, he would have found it surprising for there to be a fiduciary relationship as it would have meant that every time a lender sold a single product PPI policy to accompany a loan agreement then without more (assuming the insurer was a member of GISC) fiduciary obligations would arise. 

Duty of care

The whole thrust of the Barnes case was that on the first occasion Black Horse sold the PPI insurance they said that in effect that the purchase of the PPI was mandatory and that this was then implicit on the second and third occasions. However, the court found there was no factual basis for pleading a duty of care.  It was not suggested that Black Horse had assumed a responsibility here to give particular advice on the facts of the case nor was it suggested that Black Horse was either asked to or was expected to or purported to give advice of any kind and therefore there was no arguable case presently pleaded in negligence.

Breach of contract

Mr and Mrs Barnes also claimed that the code produced by the GISC was incorporated into the loan agreement.  They alleged that by reason S75 of the Consumer Credit Act 1974 (“the Act”),  the creditor would be jointly and severally liable for any breach of contract.  However, there was no incorporation of the code and therefore any claim for breach of contract based upon it fell away.

Unenforceability

Mr and Mrs Barnes alleged that when the first PPI was taken out they were told that it was “needed”. If that statement was made, it is arguable that taking the PPI policy was a condition of taking the principal loan and if so, the premiums should have comprised part of the total charge for credit.  As this was not done in the first agreement then it would be improperly executed.

As there were issues of fact and inferences this would be matters for a trial to consider. Full particulars of the factual allegation in relation to what exactly was said on the occasion of the first agreement and what was said and/or understood in relation to the second and third agreements about the necessity or otherwise of the PPI policy must be given and also as to how precisely the claim that there has been a failure to state the credit should be provided. Accordingly this claim could be made.

Unfair relationship

Under Section 140A of the Act the court can make an order in relation to the credit agreement if there is an unfair relationship between the creditor and borrower. Black Horse contended that the court had no jurisdiction to entertain a claim for unfair relationship because the relevant statutory provisions exclude the ability to make such a claim where one or both of the borrowers had the opportunity to make that claim in the context of prior proceedings.  The court found that Mr Barnes was not able to mount his own unfair relationship claim because this could have been raised by him in previous proceedings between Black Horse and Mr Barnes, but Mrs Barnes could raise this argument since she was not a party to those prior proceedings.

Black Horse also attempted to argue that the court was excluded from considering the two earlier agreements as they ceased to operate before 6 April 2007 when the relevant statutory provisions came into force.  The Judge disagreed with Black Horse and said that the court was entitled to take into account two earlier completed, but related agreements and therefore the Particulars of Claim could be amended to refer to the first and second agreements.

The court also looked at the factual matters raised to support the claim of unfair relationship. Their complaint was that:

a.  They were sold benefits when they already had such benefit;

b.  The policies were very expensive;

c.  Black Horse did not advise them to shop around for PPI policies;

d.  They were told the policies were compulsory when they were not;

e.  Black Horse did not establish that the policies were in their interests; and

f.  Black Horse failed to follow the terms of certain documents.

The court pointed out that the unfair relationship jurisdiction is very wide and although there may be matters which were not sufficient to found a fiduciary relationship, they may be sufficient for an unfair relationship.  Accordingly the court was not prepared to rule out the claim in respect of point a. above.  The Barnes claimed that the policies were very expensive.  However, they never produced an appendix which they had indicated they would do and so no permission was granted at this stage to include this factual matter although permission may be granted in the future.

The Judge was prepared to allow the amendment in relation to the claim under point d.. As to points c. and f. the Judge stated that that these were not particularly strong allegations, but he allowed these claim to be made because the unfair relationship jurisdiction is quite wide. He also allowed the claim to be made in relation to the documents.

 Conclusion

Despite Mr and Mrs Barnes’ attempts to raise numerous claims, the court concluded that the only viable claim was for an unfair relationship alongside the narrow unenforceability claim.  All the rest were “unnecessary embellishments”.  Even in respect of the claims that has been allowed to go forward, the court pointed out that this should not give the Barnes any particular encouragement in terms of their prospects of success.

Comment

This is a useful decision as it demonstrates that the “kitchen sink” approach of alleging numerous claims in an attempt to attack PPI cannot be sustained.  Where, however, an allegation is made that the borrowers were told that PPI was compulsory, the court will need to look at all the evidence and the circumstances of the case in order to evaluate this allegation.  It is clear that the scope of unfair relationship claims under section 140A of the Act can be wide although as the Judge hinted in this decision, this will not necessarily mean that the borrowers will ultimately succeed.

Shelley Barnes and Darren Barnes v Black Horse Limited [2011] EWHC 1416

The High Court said that Guna was in breach of the agreement and should have transferred the registrations. It struck out Guna’s competition law defence. For that defence to work, it should have produced detailed evidence. Instead, the evidence was only general and sketchy. These were complex issues and the arguments needed to be fully made out and argued with good supporting evidence. It may have been that Nelsons’ market share was very high and that its actions were not permitted in the circumstances, but this was not clear from the evidence presented. As the defence was uncertain, what was left was that Guna was in breach of contract.

The High Court found that SR had breached the clause requiring him not to solicit TR’s customers, and this was shown by him having taken his Outlook contact list. This justified an injunction. However, the fact that he had set up in business within five miles should not be held against him as that clause was too wide to be enforceable. Although five miles was a reasonable distance given the nature of the business, most of SR’s work for TR had not involved recurring business and was therefore not capable of creating a customer connection worth protecting. The restriction on him from setting up in business within five miles was therefore unreasonably wide in the circumstances and so it was unenforceable. TR was already well protected by the other two restrictions.

The Court of Appeal ruled as follows:

¨          The entire agreement clause excluded collateral warranties, but it did not exclude any liability for misrepresentations. The clause was interpreted narrowly so as only to reference terms, or even “representations” that would have become part of the contract but for the entire agreement clause. It did not stop a party from arguing that it had been induced into entering into the subsequent contract by a misrepresentation. The words “representations” and “supersede” were interpreted as talking about the terms of the contract itself rather than an inducement to enter the contract. Exclusion of liability for misrepresentation had to be clearly stated. Usual ways to do this would be to state that there had been no representations or that there had been no reliance on any representations in entering into the contract.

¨          The entire agreement clause did not stop terms from being implied into the contract to give it business efficacy.

¨          Having an entire agreement clause was reasonable and should not be struck out under the Unfair Contract Terms Act.

The franchise agreement contained three different provisions in separate sub-clauses: the non-solicitation clause prohibited soliciting clients and staff for one year in respect of the Restricted Area; the non-supply clause prohibited supply of competing goods for one year in respect of the Restricted Area; and the non-compete clause prohibited engaging in a competing business in respect of the Restricted Area. The “Restricted Area” was defined only in the non-compete clause, by reference to the franchise territory but also some other surrounding areas. The agreement also contained a severability clause, which is often used to encourage a judge to treat each provision separately and remove any offending words.

The parties fell into dispute. They did agree that the non-solicitation clause was valid in all of the Restricted Area. However, the non-compete clause would be invalid if it extended to the whole of the Restricted Area as it was too wide. The High Court therefore had to rule on the ability to sever any offending words.

The High Court ruled that it would not sever the Restricted Area in order to save the unenforceable non-compete clause. If the Court would have reduced the wording so that the definition referred just to the original territory, this would have changed the meaning of the defined term in the other sub-clauses (the non-solicitation clause and non-supply clause), which did not need changing in order to make them enforceable. Therefore it was not possible to sever.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: “This case shows the danger of using the same defined term, and particularly defining the term itself, within particular sub-clauses if the intention by drafting separate sub-clauses is that offending unenforceable sub-clauses may be severed with the rest left intact.”

The Office of Fair Trading (OFT) launched an investigation in January 2005 into allegations of collusion between producers of dairy products and supermarkets in relation to retail pricing. In September 2007 the OFT informed a number of businesses, including Tesco, Sainsbury, Asda, Morrisons and Safeway (which was bought by Morrisons in 2004), that the OFT had found evidence of their involvement in collusion that infringed Chapter I of the Competition Act 1998. Chapter I of the Competition Act 1998 prohibits an agreement, decision or concerted practice between undertakings which may affect trade in the UK (or part of the UK) and has as its object or effect the restriction, prevention or distortion of competition within the UK.

The OFT reached early resolution agreements with many of those accused, under which those businesses admitted that they had been involved in collusion, accepted liability and any fine imposed by the OFT, and agreed to assist the OFT in the continued investigation. Under the early resolution agreement, Safeway agreed to pay a fine of more than £10 million, which had been reduced from £16 million under the terms of the agreement.

A number of companies within the Safeway ‘group’ filed proceedings in order to recover damages from former directors and other former employees, and hoped to obtain an indemnity against the costs of the OFT investigation and fine. Safeway argued that those former employees had breached their contracts of employment, had breached fiduciary duties they owed to Safeway, and had been negligent.

The defendants applied to the court for a summary judgment or to have the claim struck out on the grounds that, firstly, the claim went against the principle of ‘ex turpi causa – that a claimant cannot pursue an action if it arises in connection with the claimant’s own wrongdoing, and a court will not assist a claimant seeking to recover a benefit from that wrongdoing – and, secondly, that the claim went against the Competition Act 1998 and accompanying competition regime.

The High Court ruled that the case should proceed to trial on the grounds that Safeway had a real prospect of defeating any defence brought by the defendants based on the ‘ex turpi causa’ principle as Safeway’s liability was arguably not personal, primary or direct, and it was possible that the defendants had been the ‘directing mind and will’ of Safeway at the time of the breach. The High Court also ruled that moving the fine from Safeway to the former employees at fault was consistent with the competition law regime under the Competition Act 1998. The High Court therefore ruled that the case should proceed to trial for a more thorough consideration of the facts. The defendants appealed the ruling.

The Court of Appeal ruled in December 2010 that the appeal should be allowed, and that the defendants were entitled to summary judgment such that Safeway’s claims were struck out. In a unanimous verdict, the Court of Appeal ruled that the ‘ex turpi causa’ principle did apply, such that Safeway could not recover the amount of the fine due to the OFT from its former employees alleged to be at fault for the breach of competition law. The Court of Appeal ruled that Safeway’s liability was personal and could not be passed to its employees, and that the aim of the Competition Act 1998 is to protect consumers, and the general public, from distorting trade practices, which would be undermined if a company could then pass on any liability to individual employees.

The High Court had arguably put directors at risk of huge financial liabilities if their companies infringed competition law. However, the ruling of the Court of Appeal ensured that directors are no longer at personal risk under competition law, and clearly states that the competition law regime imposed by the Competition Act 1998 places liability on companies themselves, and that such liability must remain personal to those companies and not passed on to employees past or present, even if those employees were at fault for the infringement.

The full text of the ruling can be found here.

In this particular case, a liquidated damages clause in a contract between AB and H’s subsidiary involved the subsidiary having to make a payment within a particular time or AB could terminate the contract and be paid 20% of the contract price. H guaranteed the payment of its subsidiary. AB terminated for default and sued H and H’s subsidiary. They refused to pay the 20% and argued that it was an unenforceable penalty. AB successfully sued for summary judgment.

The High Court stated that there was no arguable case of the liquidated damages clause being a penalty. It is possible for a liquidated damages clause to be neither a pre-estimate of loss nor a penalty. It could still be enforceable if it was commercially justifiable, as long as the main purpose was not to deter the other party from breach. A clause which was negotiated, as here, was likely to be seen as being commercially justifiable as providing a balance between the parties. Evidence of negotiation over the clause can be used to show whether or not a clause had a commercial purpose. In commercial contracts, what the parties have agreed should normally be upheld.

This case shows that anyone looking to agree a liquidated damages clause and later argue it is an unenforceable penalty are playing a dangerous game. Courts look to take a freedom of contract approach and uphold a negotiated agreement where possible. Parties wanting to ensure their liquidated damages clause is enforceable should keep clear records of negotiations. That said, a party wanting to enforce such a clause should not do anything to suggest that the clause may be a penalty by calling the clause a penalty or stipulating an amount that is out of all proportion.

In this case, the contract was for the construction and sale by the claimant of a yacht costing €38 million. The buyer of the yacht failed to pay the first instalment and the claimant terminated the contract.  The claimant sought to rely on a clause in the contract which provided that upon lawful termination the claimant would be entitled to recover 20% of the contract price by way of liquidated damages as compensation for its estimated losses.

The claimant pursued the defendant under his personal guarantee and the defendant asserted that the clause entitling the claimant to 20% of the contract price was a penalty and therefore unenforceable.  The guarantee itself contained a provision that the liability of the guarantor was “not to be impaired, diminished, discharged or released by reason or in consequence of ……. the irregularity, unenforceable or invalidity in whole or in part” of the principal contract. Accordingly the claimant argued that liabilities of the guarantor and the principal debtor were not co-extensive and the defendant was liable even if the principal debtor was not.

The Judge stated that should the clause be a penalty, the claimant would not be able to recover the sum due from the guarantor as the reason for it being irrecoverable from the principal debtor was ultimately based on public policy.    Since a penalty clause does not bring into existence any obligation on the part of the debtor, there is no relevant liability covered by the guarantee and nothing in the guarantee upon which the  protective provisions could operate.

Ultimately the Judge decided that the clause was not a penalty as it was not a deterrent and was commercially justifiable as providing a commercial balance between the parties on lawful termination by the claimant.  The Judge also noted that both parties had the benefit of expert representation in the conclusion of the contract.

Although the Judge’s comments on the effect of the co-extensive provision in the guarantee were obiter and not binding, the case demonstrates that there are potential limitations to such a clause and it may not always be possible to rely on this provision where the principal contract is not enforceable.

Azimut-Benetti SpA v Darrell Healey [2010] EWHC 2234

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.’

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.’

The High Court agreed that the contract was in restraint of trade and it was therefore void. It had been entered into when the footballer was just 17 years old. He had no commercial experience and was unsophisticated in financial and contractual matters. The terms of the agreement had been dictated by P and there had been no negotiation as to the terms. The contract was for a long period of time and did not provide for different commission rates according to revenue levels. Rooney and S had not taken independent legal advice as to the terms of the agreement. In those circumstances, the contract was unreasonable and unenforceable. However, P was entitled to receive payment on a restitutionary basis for services provided for which it had not yet received commission.

In this particular case, Caja de Madrid, a Spanish mortgage lender, had a contract term saying that interest would be rounded up to the nearest quarter of a percentage point. Ausbanc, a consumer group, argued that the term was unfair. The matter went to the highest Spanish court. Caja de Madrid said that it was a core term and so should not be assessed for fairness, but Ausbanc countered that the Spanish laws implementing the Directive had not made that proviso and so it could be assessed.

The question was whether Spanish laws could bring the Directive into law in a more consumer-beneficial way than was provided for under the Directive. The European Court of Justice said that it could. That Directive was one that ensured consumers had minimum rights, but there was nothing to stop each country from increasing the benefit for consumers by the way they implemented the laws. The UK implemented the Directive with the exemption, so the consumers would be unable to challenge it here. However, the case is interesting if the Government ever wants to change English law to give consumers more protection. A key reason for the banks winning their high-profile bank charges case a few months ago was that those terms were core to the bargain and so could not be challenged under English law.

The Court of Appeal has ruled that the contract was not too vague so as to be enforceable. It was sufficiently certain. Where possible, courts should look to uphold contracts even if not every detail was included. It was also unnecessary to imply a term into the contract providing that the Airline would operate the aircraft in a way that was reasonable in all the circumstances. In deciding whether a breach of contract had occurred, the only question was whether the Airline had in a real and genuine sense been flying its aircraft there. The question as to how many times this happened was entirely a matter for the Airline’s discretion.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: ‘This case gives a practical reminder that parties to a contract should ensure that their contracts contain sufficient detail. Don’t rely on something to be implied. If the Airport had wanted the Airline to have a certain number of flights a week, it should have said so in the contract.’

The High Court said that the warranty did not apply because no operating documents had been provided by the time of the contract. There was therefore a disconnect between what Red Sky provided in its contracts and its actual processes. Instead of the contractual warranty, implied warranties applied based on the Sale of Goods Act and Supply of Goods and Services Act (notwithstanding that the contract terms had purported to exclude those terms) as no other reasonable warranty applied. The software was not of satisfactory quality or fit for its purpose. In addition, the exclusions and proposed cap on liability did not apply because, in deciding upon reasonableness, the judge took account of the fact that the parties were not of equal bargaining power, the standard terms had sought to exclude the statutory implied terms without providing reasonable replacements, and Kingsway did not know of the existence of the exclusions and limitations on liability. The judge sided with the customer to a large part based on its inability to satisfy itself with the system unless there were clear demonstrations or operating documents.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com, comments: ‘This case impacts on anyone who deals with consumers for long-term contracts. The impact is serious. The OFT has clearly taken the view here that three year terms without the right to cancel are too long. The business in question presumably thought it had a debt owing and sent the matter to debt collectors. However, since the OFT considered the clause to be unfair, its tactics in pressurising the consumers to pay up was deemed to be aggressive. Breach of the 1999 Regulations only mean that a term is unenforceable, whereas breaching the 2008 Regulations would amount to a criminal offence. For now, we don’t know what a court will decide – only that the OFT doesn’t like what AMS has done – so it will be worth watching the outcome from the courts.’