It is widely assumed that English contract law does not recognise a general duty of good faith. Instead, the law has preferred an incremental, piecemeal approach of solving particular problems as and when they arise; rather than a general overriding notion of ‘good faith’. For instance, Bingham LJ said in Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] 1 QB 433, “In many...
CERC Order in the Adani Power Case
Last week, the Central Electricity Regulatory Commission (CERC) passed an order relating to Adani Power that has significant implications for the power sector in India. Adani Power, which had entered into power purchase agreements (PPAs) with state utilities in Gujarat and Haryana for sale of power, approached the CERC with a request for relief on account of escalation of imported coal prices due...
Licensee’s rights and remedies against third parties
Earlier this week, the Court of Appeal revisited the very interesting issue of the rights of a licensee and the remedies available against third parties. Leaving aside the tax-context of the case, the two issues before the Court were (i) whether a licensee can enter into a contract with a third party in relation to a right not conferred on the licensee by the license; and (ii) whether a licensee...
Excluding the ‘Breach Date Rule’ in Damages for Breach of Contract
It is well-known that a claimant who establishes that the defendant is in breach of contract is entitled to recover, as damages, any loss that was caused and which the defendant knew or ought to have known was likely to be caused by breach. As Professor Burrows explains in Remedies for Tort and Breach of Contract, the two limbs of the remoteness test in section 73 of the Indian Contract Act, 1872...
The ‘Construction’ of Exclusion Clauses
Late last year, we discussed the interesting approach adopted by English courts to the application of exclusion clauses to deliberate repudiatory breaches of contract. A couple of weeks back, the Court of Appeal decided Kudos Catering v MCCC considering very similar issues and making some highly relevant observations. Kudos Catering involved a catering contract between the claimant caterer and...
Contract Drafting: Indian Style
Ken Adams at the Koncision Blog provides a commentary about the continued use of the somewhat archaic language in contracts involving Indian parties. The examples he cites include “unless repugnant to the context or meaning thereof” and “NOW THIS MEMORANDUM WITNESSETH AND IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:” The simple question being posed is whether this usage aids...
Long term contracts and dispute resolution clauses – Part II
(Part I outlined the facts of Interserve v Katowice, and discussed its findings on variation). After holding that the side/supplemental agreement in this case did not form part of the sub-contract, the High Court movies on to consider the alternative argument based on the implication of terms. Without referring to A-G Belize or any other cases on the implication of contractual terms, the Court...
Long term contracts and dispute resolution clauses – Part I
Dispute resolution under long-running contracts with continuing obligations can often pose issues which do not commonly surface in other scenarios. Often when disputes arise under a long-running contract, it is in the interest of both parties to not terminate the ongoing relationship, but settle the dispute either by themselves or by using some form of ADR. Such a settlement may take the form of...
Indemnity clauses and criminal proceedings
Earlier this week, the Court of Appeal decided another interesting case involving contractual interpretation – this time interpreting and determining the scope of an indemnity clause. The case was one of the many fall-outs of the ongoing News of the World (“NOTW”) saga, and involved a claim brought by Mr Coulson, former editor of NOTW, against his former employers. On the termination of Mr...
Deliberate Repudiatory Breach and Exemption Clauses – Part II
An earlier post discussed the High Court decision in NetTV, which held that there is a presumption against an exemption clause in a contract also applying to deliberate repudiatory breaches, unless the clause was clearly intended to apply to such breaches. However, in a subsequent decision in June last year, Flaux J severely criticised the line of reasoning adopted in NetTV, considering it...
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