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ILN Today Post

Veto rights in contracts: can they be exercised freely?

Parties to commercial contracts generally assume that the express written terms of a contact will be given effect relatively strictly under English law.

However, recent court decisions illustrate the courts’ willingness to look beyond the written terms of contracts and to imply unwritten terms in order to give effect to what they consider to have been the parties’ intentions.

Overview

In one recent case, the High Court decided that a clause in a share option agreement – which stated that the option could only be exercised with the consent of the board of directors of the granting company – did not give the board an unequivocal veto.

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Legitimate business protection or unenforceable restraint of trade – the problem with post-termination restrictions

Michael McCartney comments on a recent Court of Appeal decision in Egon Zehnder v Tillman highlighting the challenge employers face when enforcing clauses designed to prevent competition from employees after they leave.

The Court of Appeal held that a non-compete restriction which purported to prevent Ms Tillman from having an “interest” in a competing business was too broad to be enforced. The restriction would have prevented her from holding any shares at all in a competitor, regardless of their value. This position was at odds with her contractual right during her employment to hold a limited number of shares up to a maximum of 5%. There was clearly no basis upon which Egon Zehnder could possibly justify a more stringent protection after employment than had existed during it.

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Payment dates – Miss them at your peril!

Two recent cases highlight the importance of ensuring both landlords and tenants diarise important dates in legal documents, especially those which involve payments. It seems obvious on the face of it that dates such as rent payment dates in leases must be met. Yet in practice, it happens more often than one would expect that after completion, dates are not recorded and landlords and tenants miss deadlines. The consequences can be disastrous.

The first case is Vivienne Westwood Ltd v Conduit Street Development Ltd [2017] EWHC 350 (Ch). The claimant tenant asked the court to determine the effect of a side letter which it had entered into with the defendant landlord. The tenant leased retail premises from the landlord for a term of 15 years from November 2009, at an initial rent of £110,000 per annum, subject to open market rent reviews in the fifth and tenth years. The side letter was entered into at the same time as the lease.

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EU General Court opinion delivers boost to brands selling online

You don’t need to be a PR guru to know that branding is all about image. This is never truer than for high-end or luxury brands, which strive to deliver a customer experience that is consistent with, and can be justified by, the price tag. This sensitivity to customer experience is borne out in distributor brands seeking to exercise control over the environment (whether bricks-and-mortar or online) in which their products are sold to consumers.

Unfortunately for distributors, this hankering for control comes up against competition law in the UK and EU, where the imposition of restraints on who can sell products in a distribution chain is considered to be anti-competitive (and therefore illegal).  Mercifully for prestige brands, an exception to this prohibition exists in the form of “selective distribution networks”, which allow brands to control the ultimate seller of their products on the basis of certain qualitative, uniformly applied, criteria (such as requiring all to provide a certain level customer service).

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CIS taxation: who is caught by the regime?

The Construction Industry Scheme (CIS) regime was introduced under the Finance Act 2004 to regulate tax on payments between contractors and subcontractors for construction work.

The regime requires subcontractors to be registered with HMRC in order to receive payments gross (i.e. without deduction of tax). If subcontractors are not registered, contractors are then obliged to make payments net of tax and to account directly to HMRC for the tax due. The point to be aware of is that it is a contractor’s responsibility to check whether a subcontractor is entitled to be paid gross or not.

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What does the Great Repeal Bill mean for direct taxation in the UK?

Neal Todd, a partner at Fladgate LLP, goes over what the Great Repeal Bill could mean for direct taxation, as the UK exits the EU

Whatever aspects of life the electorate thought they were bringing back under control by voting to leave the European Union in last year’s referendum, it is hard to believe that direct taxation was high amongst their list of priorities.

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Inheritance Tax planning for business owners is often overlooked

 

When it comes to selling up or transferring on a business to the next generation, entrepreneurs and family business owners are usually encouraged to take measures to reduce the level of Capital Gains Tax payable on the disposal of the business.  Far fewer entrepreneurs are advised to consider their Inheritance Tax (IHT) planning, though, and yet failure to consider the IHT aspects of a sale can cost families dearly in the long term, when 40% IHT is levied on the proceeds of the business sale in due course.Many think of IHT as a tax which only afflicts family wealth if the business owner is still holding the proceeds of the business sale on their death.  However, IHT is a complex tax, affecting lifetime gifts as well as assets held on death.  Successful IHT planning is not just about being caught with the proceeds ‘when the music stops’ (i.e. on death!).  It is not the tax equivalent of a game of musical chairs!
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The seven deadly sins: common mistakes made when constructing and operating fairground and amusement rides

Following a number of recent high profile accidents, the issue of health and safety in the themed entertainment industry continues to be under close scrutiny. Indeed, there is recognition that work remains to be done to satisfy the high health and safety standards that the public clearly expects.  Unfortunately, there are some common, but avoidable, mistakes that are often made when constructing and operating rides:

  1. Not appointing a qualified ride inspector: As complex engineering structures, rides are subject to rigorous inspection and testing. Registered inspectors certify whether a ride is safe to use by members of the public. Any inspections are to be carried out according to local requirements. In the UK, this essentially means by those registered under the Amusement Devices Inspection Procedure Scheme (ADIPS) or under the PIPA scheme for inflatables.

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UK beneficial ownership registers: now it’s your turn, trustees

On 26 June 2017, the UK Government introduced a beneficial ownership register for trusts for the first time, in response to its need to comply with the EU’s 4th Anti-Money Laundering Directive.  Which trusts will be affected and what will trustees have to do?

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Don’t get caught “softlifting”

Fines to UK SMEs exceeded £900,000 in 2016 for using unlicensed software

It is certainly no secret that software has become an integral part of the success of modern businesses in recent years. Business management software has assisted with running operations more efficiently, cost reduction and replacement of paper processes. Cloud computing software has also opened the door to unprecedented levels of connectivity, productivity, and efficiency.

However, with the ubiquity of devices and ease of online downloads available, together with the increasing complexity of software licence agreements, it is not difficult to imagine how businesses, including retailers, might end up with unlicensed software being used by their employees, without their knowledge.

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