Commercial Law from a Professional Support Lawyer

ISPA have published guidelines to ISPs on how to deal with spam, a growing problem, with 3 key strategies:

1. Attribution of emails - ISPs should not relay emails for non-verified third parties, and should be able to attribute email genertated on their systems to a user.
2. Abuse management - ISPs should have in place a system for users to report Spam, and to ensure that these reports are dealt with.
3. Customer information - ISPs should make sure that customers understand what Spam is, what action will be taken if they send it, and then follow up by publicising the action they take against those who abuse the system

ISPA publishes anti-spam standard - 04/Apr/2007 - ComputerWeekly.com

There are a number of blogs in the US currently commenting on the impact of Vista to electronic discovery.  Recent changes in the US to the Federal Rules of Civil Procedure around discovery of electronic documents have brought this subject close to the hearts of US attorneys, but the comment is no less significant in the UK.

Metadata is already an issue for businesses, as even outside the scope of litigation, documents which are let loose into the world electronically can contain information not immediately apparent to the naked eye - details of who had edited the document, changes from previous versions, even the originating document that this one is based on.

Microsoft’s new operating system Vista does not change the need for caution in this sphere, but its new security features may cause additional data to be disclosed during a disclosure process.  These features will no doubt be a welcome relief for those lawyers busily drafting late at night who suddenly “lose” hours of carefully crafted work when their computer crashes (or they close it without saving!).  But by saving numerous versions of the document as “shadow” documents, comments which may not be intended to see the light of day could find themselves basking in the sunlight.

I have yet to see any case where the existence of metadata has made or broken the case (although I’m willing to be proven wrong), and whether this does become an issue remains to be seen.  In the meantime, businesses should at least be aware of the information their computer systems are collecting about the work their employees are doing, and consider their information management strategies accordingly.

Legal Technology - Microsoft Brings an Altered Vista to EDD [via Dennis Kennedy’s blog]

No. 

The House of Lords have recently looked at the operation of s 35 (6)(a) of the Sale of Goods Act 1979 where a customer and a seller had agreed to the repair of defective goods.

s35 can be a confusing provision which sets out when a customer may be “deemed” to have accepted goods purchased under a contract for the sale of goods. 

In this case, the customer had used the goods (a power harrow) for a few days before it was clear they were defective.  The supplier took them away to investigate.  On investigation, the defect was identified and fixed.  So no problem?

Well, not quite.  The customer asked what the problem had been and what had been done to fix it - but the supplier would only tell him that the problem had been resolved.  When the customer found out what the problem had been, he was concerned that the use before the repair could have caused long term damage - and he wouldn’t find that out until next spring when next cultivating the soil. 

s 35 (6)(a) says that the buyer is not obligated to accept goods just because he has agreed to their repair.  But it goes no further regarding what the effect of agreeing to repair has on the contract of sale.

The House of Lords have tried to fill this gap.  They held that there was a separate contract for the repair of the goods, which did not in itself affect the customer’s right to rescind the contract of sale, but which must contain an implied term that if it was performed correctly, the customer would not exercise this right.  This was required for business efficacy.

There was also an implied term in the repair contract that the customer would be informed of the defect and the actions taken to cure it - this was required to enable the customer to make an informed decision about whether to accept the repaired goods.

Failure to comply with this implied term was a material breach.  The customer was entitled to rescind the repair contract, and then the contract of sale.

Phew.  All in all, a complex analysis, but one which was required by the absence of detail in the statute. 

Tip: If you are negotiating a sale of goods contract which includes an option for the supplier to repair any defective goods, consider including provisions which explain what this means rather than relying on the statutory provisions.  What information does each party need to provide?  How long will the repairs take?  Can the customer reject the repaired products?

This applies whether you are acting for the customer or the supplier - the certainty that can be obtained through a clearly drafted clause has to be preferable to costly court action to determine the outcome.

J & H Ritchie Ltd v Lloyd Ltd [2007] UKHL 9, 7 March 2007 [link from BAILII]

Not of a legal nature, and please excuse the subtle hint, but this article gives some really useful tips on how to avoid being late. More importantly, it highlights the effect that being late has on the people around you - something that I think is important to recognise when everyone is so busy.

There are often just too much to do in any given day - the tips to be honest with yourself and to prioritise are key - but don’t keep this a secret - if you have decided a meeting isn’t worth your time, let the other attendees know so that they don’t waste theirs waiting for you…

5 Ways to stop being late [Brazen Careerist via lifehacker.com]

There have been a number of recent decisions of note in the world of freedom of information.

Some recent decisions have looked at the interaction between the Data Protection Act and the Freedom of Information Act.

Doncaster Metropolitan Council has been ordered to reveal the names of some officials who repaid money to the Council following excessive expenses claims. The details of those who made voluntary repayments will not be disclosed, but the details of those who were convicted following a criminal prosecution. Such a disclosure would not contravene the Data Protection Act as the information is the result of a conviction which has followed due process and took place in the relatively recent past.

Braintree District Council has been ordered to disclose a list of council properties which it owned, only excluding addresses in respect of which a data subject had exercised their right under s10 to object to the disclosure of their personal data. The Council may also exclude from the list any addresses whose disclosure to a member of the public might reasonably be considered likely to cause distress to any resident of those properties. This is a surprising decision which seems to give priority to the right under the Freedom of Information Act. The ICO considered that whilst the information was personal data, there was not a breach of the data protection principles. In particular, he discounted the claim that it would be in breach of principle 2, use of data for a purpose other than that it was obtained for, as this would defeat all FOIA requests.

Finally, the Information Tribunal in the case of Dr Christopher Lamb v Information Commissioner has imposed a positive duty on public authorities to seek clarification of a request, pursuant to their s16 duty to provide advice and assistance to an applicant for information, in order to prevent the true nature of a requested to be “transformed into something other than what may have been thought to be its original ambit and purpose”.

The courts have once again had reason to consider a contractual obligation to act reasonably and in good faith in the case of Tramtrack Croydon Ltd v London Bus Services Ltd [2007] EWHC 107 (Comm). In the contract the parties had agreed to agree (acting reasonably) some particular financial arrangments and to refer any failure to agree to expert determination. Considering the authorities including Walford v Miles [1992] 1 All ER 453, the parties did not contest that the clause was unenforceable for lack of certainty, and the court went on to confirm this stating: “In those circumstances the Court can, in my judgment, decide, in the case of dispute, at least what they, and the expert, acting reasonably, are bound to take into account or ignore. An agreement such as this should not be construed to mean that the parties (or the expert) may legitimately take into account anything (however unreasonable or irrelevant) they choose, or that their contractual fate is to be determined by whatever the appointed expert happens (on whatever basis) to decide. Reasonableness is a criterion on which the Court (and the expert) can make a judgment; and, if the parties cannot agree whether it would be unreasonable to take into account, or to exclude, a particular consideration, the Court may determine the question.”

Yesterday, the European Commission published its long awaited “Green Paper on the Review of Consumer Acquis” - the body of rights held by consumers in the European Union.

The review covers the 8 main directives aimed at protecting consumers, including the familiar roll-call of the Unfair Terms in Consumer Contracts Directive, the Consumer Sales and Guarantees Directive, the Distance Selling Directive, the Doorstep Selling Directive and the Package Travel Directive. It pulls on a number of surveys which show that despite attempts at harmonisation, trade between member states in consumer goods is not what it could be - many businesses would like to sell to consumers in other member states but are fearful of doing so because of varying regulatory requirements, and many consumers who purchase goods from another member state are running into difficulties when their rights vary state to state.

The main objective of the review is to remove this stumbling block, allowing consumers and businesses within the European Union to trade without concern as to where the other party is based, primarily to benefit consumers by allowing for consistency, but also to reduce the burden of SMEs by creating a more predictable regulatory environment within the European Union.

The green paper is consulting on a number of issues including the proposed approach (either a vertical approach requiring the revision of individual directives, or a horizontal approach requiring the implementation of a framework addressing issues for all consumer contracts), the definitions of consumer and professional (recognising that there is not currently a consistent approach to this), the potential introduction of a general duty to act in good faith, and detailed questions regarding unfair terms, withdrawal, delivery, remedies and other issues.

Responses to the consultation are requested by 15 May 2007. The green paper can be found here.

The Department for Constitutional Affairs has announced that it intends to take forward the ICO’s suggestion that custodial sentences be available for breach of s55 of the Data Protection Act 1998. This will be introduced when parliamentary time allows.

The recent case of Marplace (No. 512) Limited v Chaffe Street [2006] revisits some of the issues raised in Football League Ltd v Edge Ellison (a Firm) [2006] EWHC 1462 regarding the scope of a solicitor’s duty to advise on the commercial aspects of a transaction, and caps on solicitor’s liability for negligence. The firm of solicitors advised a company on a corporate acquisition. For various reasons the acquisition went wrong and the solicitors were accused of negligence.

Ultimately the solicitors were found not to be negligent. The scope of a solicitor’s duty depended on the context of his instructions from his client. 

A solicitor may be duty bound to proffer unsolicited advice or seek further instructions for example, if they were not involved in the negotiation of a transaction but were simply instructed to implement that transaction, the solicitor must still point out any legal obscurities of which the client may be unaware, or point out any hidden pitfalls.

However, a solicitor is not under a duty to review the whole range of commercial considerations underlying a particular deal to which the client may have given insufficient thought. In this instance, the solicitors in question had been entitled to take the view that their clients were intelligent, sophisticated and experienced businessmen who were perfectly able to seek advice if they desired it.

The case went on to comment on the cap on liability.  The solicitors letter of engagement said “You agree that … our maximum aggregate liability to you in the event of professional negligence on any matter in relation to which we are instructed shall be £20 million… should you want to vary these limitations we shall be pleased to discuss it with you but we reserve the right to vary our fees accordingly”.

As context:

• Chaffe Street’s turnover was low - about £4 million.
• The amount of the limitation set by Chaffe Street with its various clients did vary from one transaction to another.
• Chaffe Street’s insurance at the time of the alleged breach was £25 million.
• Chaffe Street accepted that the Unfair Contract Terms Act applied to the cap on liability and therefore they were obliged to demonstrate it was reasonable.

The court did find that limitation was reasonable for the following reasons:

• The claimant was a sophisticated and wealthy consumer, and therefore the bargaining positions of the parties were equal. In particular the claimant was used to contracting with professionals and the basis of limitations of liability.
• The claimant was aware of the cap on liability and had in fact discussed it with Chaffe Street. It had not been imposed as a non-negotiable term (albeit the court recognises that it would have probably been difficult to switch solicitors at the time).
• The engagement letter made it clear that if the claimant wanted different limitations of liability then Chaffe Street was prepared to discuss that.
• Chaffe Street determined the £20 million limit on reasonable commercial principles taking into account insurance cover, expenses and circumstances of the transaction.

We don’t frequently get suggestions from the court as to what levels of limitation of liability will be reasonable under UCTA.  It’s always nice when one comes along!

In the case of Point Solutions Limited v Focus Business Solutions Limited and another [2007] EWCA Civ 14 [from BAILII], Point Solutions were appealing the decision to decline their request for a declaration that they had not infringed the IPR of Focus in developing its software.  Point had had access to Focus’ software during a period of providing outsourcing services to Focus.

The court found that without the instruction of an expert to assess whether there had been any infringement, and for a number of other reasons, Point had not been able to satisfy the court that it had independently created the software.  There was no reason for Point to require the declaration - Point could alternatively resolve the dispute by appointing an independent expert to determine whether or not copying had taken place.

In what was all in all an unsatisfactory judgement, Chadwick LJ pointed out that the case could have been avoided if the parties had simply appointed a joint expert as ordered by an earlier hearing - without this, insufficient evidence was placed before the court to enable it to make such a declaration.