Monday, August 11, 2008

Legal News In Brief from Around the World

I read this somewhere, "The difficult task, after one learns how to think like a lawyer, is relearning how to write like a human being." Floyd Abrams. So true, isnt it?

Writing brings to mind the stereotype lawyer who makes notes on a note pad. Recent news in the U.S. indicate that the 'legal pad' is going to turn extinct, a relic that no longer works or serves the next generation, hi-tech lawyers. The latest U.S. state court rules will permit attorneys and even those who enter a courtroom to bring and use laptop computers to take notes. However, a judge's permission is required for this.

Another interesting news that got coverage recently was that more than 30% of businesses that are based in the UK do not use professional help for drafting their company contracts. A survey indicated further that more than a quarter of start up companies in the U.K. do not plan to take any form of legal support.

An estimate of 27% indicated that they will draft their own contracts, without legal help. That sounds scary and it looks like Indian companies are far more responsible on that count as most contracts and agreements are scanned carefully by legal experts of both parties before it is taken further.

Where any company sets its own terms and conditions for business, it is naturally bound to set limits for its liability so that it can curb claims from its clients or customers. There is often very little thought applied to the precise wording of such a limitation clause.

As drafting is integral to law, let's go through a recent case that reinforced what we believe is our niche area: accuracy, preciseness, and clarity while drafting any notice, agreement etc.

The Bristows Law Firm published details about an interesting case that brought forth interesting drafting points to the notice of attorneys. Here is what we at Axcess Legal Corp consider as the useful points:

-Review exclusion and limitation of liability clauses on a regular basis because enforceability is a vital factor that no one can take chances with.
-Drafting must be clear and unambiguous.
-It is not fair to deprive any party of a remedy for breach of contract on your side though that is the general practice.
-The question of reasonableness depends entirely on the individual facts that make each case truly unique.

Let's chime into the case details of Regus (UK) Ltd v Epcot Solutions Ltd.

Office space belonging to Regus was rented out by Epcot for several years based on the standard business terms of Regus. Due to problems relating to air conditioning in the office, Epcot began to service charges to Regus which would otherwise be typically paid to Regus. As a result, Regus was quick to issue a notice of suspension of its services to Epcot and also issued proceedings for sums owing to its service charges.

Epcot counterclaimed an huge amount for damages which Regus refuted by emphasising on the standard exclusion clause.The UCTA clause stated that:

"We will not in any circumstances have any liability for loss of business, loss of profits, loss of anticipated savings, loss of or damage to data, third party claims or any consequential loss...."

Based on the High Court's findings that the air conditioning was defective and that Regus had breached contract, it was held that Epcot was entitled to recover damages.

The more significant aspect is that the High Court held that the so called exclusion clause did not fulfil the test of reasonableness as it was too broad in a way that effectively depirved Epcot of any legal remedy for Regus's failure to ensure that a basic service like air conditioning is tackled properly.

Naturally, Regus appealed. The Court of Appeal did not observe any inequality of bargaining power between Epcot and Regus and overturned the High Court decision. The Court of Appeal held that the exclusion clause fulfilled the test of reasonableness. It is clear that the signal was that courts must continue to respect the contractual terms which have been freely negotiated by the concerned parties.

Do mail/scrap or share your thoughts with us. We look forward to hearing from you. Thanks!