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TMT legal update: Lessons Learned from SCL Case Law Update

  • United Kingdom
  • Technology, Media and Telecoms - Technology



On 4 February 2014, the Society for Computers and Law (“SCL”) held its popular annual contract law update at Eversheds’ Leeds office in which SCL’s expert speaker, Richard Stephens, highlighted a number of key learning points for those involved with contracts in the TMT sector.


Richard Stephens, fellow of the Society for Computers and Law, presented SCL’s annual contract law update which assessed the impact of contract cases decided in 2013 on the IT industry and set out a number of learning points for those who are involved in drafting or negotiating IT contracts.

So what?

This article focuses on a few (by no means all) of the learning points or reminders raised during the contract law update as a reminder of some key principles to consider when dealing with contracts in the TMT sector.

Key learning points:

  • Do not rely on terms being implied into a contract: Neither should you assume that a court would interpret the contract as you intended in the absence of clear and  express provisions. If you wish to include a particular principle in a contract, you should:

(i) clearly and expressly include provisions dealing with such principles in the contract;

(ii) check to make sure the contract contains no contradictory terms; and

(iii) consider using narrative language and worked examples to supplement legal drafting if it would help a third party (e.g. a judge) to interpret what has been agreed by the parties.

  • Be clear as to what is intended when a party must act in “good faith”: The principle of “good faith” does not have a settled meaning under English law. If you introduce an obligation on the other party to use good faith, you should be clear exactly:

(i) what you mean by an obligation to use good faith (e.g. would it simply require a party to deal honestly or would the party be expected to sacrifice any of its personal/commercial interests?); and

(ii) which provisions are impacted by the obligation to use good faith.

  • Ensure consistency of terminology across all contractual documents: Whilst an easy trap to fall into (especially when different people are working on different sections of the contract), a lack of consistency throughout a contract can create confusion which could potentially result in expensive litigation. You should:

(i) check all documents prior to entering into a contract to ensure that the contract and schedules are consistent and use the same terminology throughout (e.g.  defined terms);

(ii) where applicable, ensure that the language of any acceptance certificates mirrors or cross-refers to the acceptance provisions of the contract;

(iii) whilst useful specify the order of precedence of the contractual documents, don’t rely on an “order of precedence” provision as means of resolving contractual inconsistencies; and

(iv) avoid using too many different documents in the contract – the more documents that make up the contract, the more chance there is that inconsistencies will arise.

  • If you wish to exclude liability, make the exclusion of liability absolutely clear: As a general legal principle, in the event of any ambiguity of a contractual provision, a court will interpret the provision against the person seeking to rely on it. If you wish to exclude your liability for certain types of losses, you should:

(i) be absolutely clear as to what liabilities you are seeking to exclude;

(ii) remember that exclusions of liability may be construed in the context of the other provisions of the contract; and

(iii) consider the likelihood that the exclusion of liability may be deemed unenforceable under the Unfair Contract Terms Act 1977 or the Unfair Terms in Consumer Contracts Regulations 1999.

For information on training and other events hosted by Eversheds, please click here.

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