Our Founder Ed Cooke has spoken to Datacentre Solutions about the potential impact of Brexit on the industry.
Archives: Insight
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Season’s Greetings to all our clients, colleagues and friends around the world.
We have completed a series of three briefings with the DCA
In the third in our webinar series, Steve Hone from the Data Centre Alliance speaks to Marilyn Heward-Mills about Employment Law and Staff Wellbeing.
We have completed a series of three briefings with the DCA
In the second in our webinar series, Ian Timlin focuses on dispute resolution and the valuable role that mediation plays
We have completed a series of three briefings with the DCA.
In this first webinar, Steve Hone from the Data Centre Alliance speaks to Ed Cooke and looks at the value of relationship contracting.
Conexus Law, the specialist advisory firm that provides legal and commercial advice to clients who work in sectors where the built environment, technology, engineering and people converge, is warning companies to check the boilerplate clauses on all existing and future contracts in the light of the impact of Covid-19. The firm is warning that failure to do so could be costly and disruptive.
Ian Timlin, at Conexus Law, explains:
Boilerplate clauses, also known as standard, miscellaneous or general clauses, are generally found towards the end of most contracts or commercial agreements. They are normally standard commercial terms that do not vary much from one transaction to another. Boilerplate clauses are often not typically heavily negotiated, but they are important. They often regulate the operation of the contract (i.e. its duration, interpretation, transferability, and enforceability) and many contract disputes depend on the drafting of boilerplate clauses such as termination, force majeure, and entire agreement clauses.
Understandably when people are using an existing contract, for example a supplier agreement, they concentrate on the operative terms and conditions of the agreement and pay less attention to these standard provisions at the end of an agreement. However, many contract disputes depend on the drafting of boilerplate clauses such as termination, force majeure, and entire agreement clauses. This is particularly important during Covid-19 for organisations who are struggling to deliver a contractual service as a force majeure clause might allow for the suspension of performance as a result, for example, of quarantine or other employee restrictions.
(Of course if you now entering into new contracts it is worth considering adding a clause that specifies a pandemic, epidemic, outbreaks of infectious disease or any other public health crisis restrictions as an event of force majeure.)
In addition, most boilerplate clauses clarify the relationship between the contracting parties. Generally, subject to statutory restrictions and illegality, the parties to an English law contract are free to define their contractual relationship between each other which can provide certainty if terms in the contract are ever disputed.
This is especially important given the strain that Covid-19 has put on relationships throughout the supply chain, with many businesses now looking at their financial and logistical obligations to third parties to prepare and protect their operations and staff.
As a result, it is also worth noting that boilerplate clauses are also changing. In a limited supply marketplace, it is always worth considering having a standard clause that forces your counterparties to a contract to mediate before court proceedings can be instigated by one party against another which can save time and money. It can also help salvage a business relationship before parties become entrenched in their positions as a result of court proceedings.
However, just re-hashing clauses and omitting properly thought out boilerplate clauses may create uncertainty and expose certain elements of the relationship or agreement between parties open to interpretation in a court of law, which is often an expensive and unpredictable exercise.
Finally, it is worth checking these clauses for another reason. They may assist you in your commercial aspirations – you may be pleasantly surprised by what is hidden there!
HOW CAN CONEXUS LAW HELP?
Businesses and individuals will need legal advice to help them understand the risks they may face and the options that may be open to them.
We are available to assist in reviewing the laws in many jurisdictions across the world, and to review specific contracts. We are also available to provide practical, business-orientated advice on how to best protect yourself from the ongoing commercial effects of Covid-19.
Contact
For further advice on renegotiating your contractual obligations or pursing your contractual rights, please contact Ian Timlin.
T: +44 (0)20 7390 0280
M: : +44 (0)7767 427 332
E: [email protected]
Ed discusses why he established his own specialist legal practise, what the main legal challenges are in the sector, what impact the pandemic has had on the industry, and his views on the future of the industry.
Listen here
From 1 January 2021 the United Kingdom will lose its automatic status as a safe destination for EU data when it falls outside of the EU’s legal jurisdiction. This will affect all EU data to be transferred to the UK (or any ‘third country’ that is not an EEA member.)
According to Phil Brown, a specialist lawyer at Conexus Law, it is doubtful that transfers from the EU to the UK will be compliant with GDPR following court case in October which held UK law incompatible with EU law – and similarly no transfers to the US would be compliant following a judgement in July 2020 which rendered Privacy Shield invalid.
“This clearly poses a huge threat to international business and it is hard to see that it will be allowed to continue, although equally the contrasting views of Europe and the US as to data protection mean it is a difficult one to see resolved without wholesale legislative changes to either the European or US regimes. The UK is clearly more aligned with the rest of Europe, and so one would hope that the differences can be resolved swiftly and effectively but given the political implications of Brexit across Europe there remains a distinct lack of clarity,” comment Phil.
Phil has created a guidance paper on the subject which outlines the possible options for businesses and likely outcomes.
HOW CAN CONEXUS LAW HELP?
Businesses and individuals will need legal advice to help them understand the risks they may face and the options that may be open to them.
We are available to assist in reviewing the laws in many jurisdictions across the world, and to review specific contracts. We are also available to provide practical, business-orientated advice on how to best protect yourself from the ongoing commercial effects of Covid-19.
Contact
For further advice on GDPR or pursing your contractual rights, please contact Philip Brown.
T: +44 (0)20 7390 0289
M: +44 (0)7887 538308
E: [email protected]
Time is a funny thing. Sometimes it drags, and sometimes it flies by. I think many of us have experienced a bit of a time warp over the past few months of Zoom calls (“How can it be Friday already?”). And now, Conexus Law is a whole year old, so it seems like an appropriate time to reflect on what has been a very odd, but for me a very exciting and reaffirming, year.
Little did I know that, in addition to the normal challenges of a start-up – just six months in we would be confronted by a global pandemic. Honestly, that had not been on my list of things to worry about.
I decided to set up Conexus Law with a belief that we could create a law firm fit for the 21st century, and a determination to do just that.
I have spent most of my career at two global law firms and had made partner at an early age. Over time I came to realise that the world had moved on, the aspirations of my team were not what they had been, the demands of our clients had changed, but the traditional law firms I was working in were not innovating quickly enough to respond. I set myself four priorities for Conexus Law.
Team. Of course, my first priority was people – law firms are nothing without a premier league team. I’ve seen an exodus of people from the profession – talented lawyers who had left because of the pressures of work and the difficulties of managing a personal life alongside their careers. So, even before WFH recently became the norm, we had created a distributed law firm. Our team works from home, our office or a client’s office – whatever works best to get the job done.
We also offer flexible career paths. If they wish to, our lawyers can start out as consultants, then become employees or partners, and at any point they can take a side-step to being a consultant again, if their life demands require them to. By providing this flexibility we can tackle the lack of diversity in our profession which is critical in enabling us to see our clients’ issues from all perspectives. I’m proud to say we have the most diverse team of people I have ever worked with. Throughout the pandemic lockdown, whilst other law firms are announcing redundancy rounds, we have grown from 2 to 12 – and we are actively recruiting.
Clients. We’re delighted that our clients have continued to put their faith in us to deliver. We’ve a fantastic group of clients who are at the forefront of their sectors, making huge investment and constantly innovating. Helping them to overcome challenges truly makes our jobs worthwhile.
As a result of Covid-19, we found many of the projects our lawyers had previously worked on immediately landed back on our desks – force majeure, supply chain issues, lockdowns, contract renegotiations. The immediate aftermath was a very busy time for us, which to be honest we were not quite prepared for. I’m glad to say that most of the issues that could have become very tricky seem to have been resolved in a cooperative, non-adversarial way. August and September were, in all honesty, a bit slow whilst our clients took a well needed break, regrouped, and worked out what to do with their future investment plans. I know others felt the same challenge and for us, like them, everything is back to full speed again this month. In addition to Covid-19 related work, we’re busy on massive new projects in India, Japan, across Europe and in the UK.
We know clients hate hourly rates. But here’s the secret – lawyers hate them too. They are a blunt instrument and rarely reflect the value of work delivered. So, we are working to create a firm where the focus of billing and performance management is upon output (value delivered) rather than input (hours worked). We’re in active discussions with a number of clients now on how we can deliver legal services in that way. That excites me.
Expertise. I also wanted Conexus Law to be really focussed as traditional law firms have a “fear of missing out” and so they try to be all things to all people. Conexus Law takes a confident stand. We focus on four sectors – Built Environment, Technology Infrastructure, Digital Business and Emerging Technology. We are passionate and inquisitive about those sectors. That means we can deliver creative legal advice informed by a real contextual understanding of the markets our clients operate in.
Innovation. Being a young law firm means we are not constrained by past investments in legacy technology. We’ve been very lucky to find partners like Hyperscale and Inspire-365 who have expertly guided us in surveying the whole market for best in breed technology solutions. As a result, we have moved away from proprietary products, and have implemented systems that will give us rich data and insights, and that will integrate across the whole of our digital environment.
Our first year has been more successful then I hoped for, on every metric. We’ve learnt huge amounts, been extremely resilient to forced change, and grown despite economic uncertainty. I want to thank our team and everyone who has helped us to build something really special – we’re looking forward to developing long term relationships with you all.
Many commercial contracts for the supply of goods and/ or services contain a mutual term whereby either party to the contract has the right to terminate it, if the other party commits an act of insolvency.
In respect of a company, that can include the other party going into liquidation, entering into a voluntary arrangement or administration, the appointment of a receiver or a moratorium comes into force in respect of a company (“an Act of Insolvency”).
However, due to Covid-19, the UK government introduced a ban on termination for insolvency in July 2020 – see s.233B of the Insolvency Act as inserted by the Corporate Insolvency and Governance Act 2020 s.14 (“the Legislation”) – even if a contract provides for it.
In short, that means your contractual right to terminate a contract for a company’s Act of Insolvency is now unlikely to be enforceable or only for a further short period of time.
Further, you are prohibited from making your on-going supply of goods and services after an Act of Insolvency has occurred conditional on payment of outstanding sums that fell due before the Act of Insolvency occurred.
The Legislation applies if a company entered into an Act of Insolvency after 26 June 2020. It applies to:
- Companies;
- Mutuals (including co-operatives and community benefit societies but not credit unions);
- LLPs;
- Other bodies and associations, whether or not incorporated.
It applies to suppliers that are:
- Companies;
- Mutuals (as above);
- LLPs;
- Other bodies and associations (as above);
- Individuals carrying on a trade or business.
Exclusions apply to:
- Financial services firms and contracts;
- Public-private partnership project companies;
- Utilities, communications and IT service providers that are already covered by sections 233 and 233A of the Insolvency Act 1996.
There is also a temporary exemption to the Legislation for small suppliers but that only lasts until 30 September 2020.
Section 15 of the Legislation provides that s.233B of the Insolvency Act does not apply to (small) suppliers where two or more of the following conditions applied at the time the company entered into an Act of Insolvency:
“Where the supplier is not in its first financial year at the relevant time, … in relation to its most recent financial year:
- Condition 1: the supplier’s turnover was not more than £10.2 million;
- Condition 2: the supplier’s balance sheet total was not more than £5.1 million;
- Condition 3: the number of the supplier’s employees was not more than 50.”
(“the Small Supplier Exemption”)
There are further provisions for assessing the exemption eligibility for small suppliers that are in their first financial year.
So, if you have a right to terminate a contract with a company, you qualify as a small supplier and wish to terminate for an Act of Insolvency, you need to get on and do so by 30 September 2020 at the latest.
If you are not a “small” supplier but have a right to terminate a contract with a company due to an Act of Insolvency, and you still want to terminate it, how might you do so:
- in a case where the company has become subject to a relevant insolvency procedure such as administration, receivership, liquidation or a provisional liquidator is appointed, obtain the office-holder’s consent to the termination of the contract;
- in any other case, get the company to consent to the termination of the contract; or
- check whether the Act of Insolvency has ended (eg when a moratorium ends or the appointment of an administrator ceases). If it has, the Legislation no longer applies; or
- if after the Act of Insolvency, you supply goods and services which are not paid for on the usual contractual terms, you can terminate the contract;
- by application to the Court and it is satisfied that the continuation of the contract would cause the supplier hardship and grants permission for the termination of the contract; or
- this legislation does not apply to a company entering into a scheme of arrangement or the appointment of a fixed charge receiver (as opposed to an administrative receiver) over the company’s assets. So check if that is the position.
The Legislation is permanent and will continue to apply even after any threat of Covid-19 has passed, so this prohibition on termination clauses is here to stay. That being the case, how can new contracts include provisions to deal with the effects of the Legislation. Some suggestions are:
- The supplier including a right to terminate for convenience on notice.
- Guarantees or security for payments from others related to your company counterparty being obtained.
- Reduced payment periods to highlight a company counterparty’s payment difficulties sooner rather than later.
HOW CAN CONEXUS LAW HELP?
Businesses and individuals will need legal advice to help them understand the risks they may face and the options that may be open to them.
We are available to assist in reviewing the laws in many jurisdictions across the world, and to review specific contracts. We are also available to provide practical, business-orientated advice on how to best protect yourself from the ongoing commercial effects of Covid-19.
Contact
For further advice on renegotiating your contractual obligations or pursing your contractual rights, please contact Ian Timlin.
T: +44 (0)20 7390 0280
M: : +44 (0)7767 427 332
E: [email protected]
