Archived News - February 2010
15 February 2010 - BSkyB wins Dispute – Fraudulent Misrepresentation
Be careful what your salesmen say! In a recent important court case the court looked at a perennial issue of salesmen conning customers about what was on offer to induce them to sign the contract.
Jonathan Eales a partner in Kenneth Bush says “In most consumer and business to business contract negotiations the issue of enforceability of clauses excluding and limiting liability raises its ugly head. Most of those involved with contract drafting know that it is not possible under English law to exclude liability for fraudulent misrepresentation. In a long awaited High Court Judgment in January 2010, which runs to over 400 pages, a judge has held that exclusion clauses are void and that BSkyB has won its fight against EDS over an allegedly failed IT system. The Customer Relationship Management system was defective in the buyer’s view and BSkyB’s legal costs between 2007 and 2009 alone ran to £40m. EDS probably spent as much but, with £700m at stake, those costs are chickenfeed.
One of the witnesses for EDS claimed to have an MBA from Concordia College and described the buildings where he had attended lectures. BSkyB’s QC produced a certificate in court which the main witness accepted as from that organization. The QC could prove he had bought it on line for his dog Lulu. The College did not exist and the witness lost his job the day after he gave evidence. However, it is the detailed examination of legal issues on exclusion of liability which are of interest in the judgment.
When did you last have your clauses excluding liability in contracts checked by a lawyer? Are they reasonable enough to be valid under the Unfair Contract Terms Act 1977? Do you ensure you do NOT exclude liability for fraud? If you exclude it the entire clause can be void.
Notes
1. A Lawyer article on the case is at http://www.thelawyer.com/reaching-for-the-sky/1003263.article.
2. Herbert Smith acted for BSkyB and they said the damages would come to a minimum of £200m. The judge will hear arguments this month to determine the level of damages paid. BSkyB claims £700m in damages from EDS. The judge decided that there had been fraudulent misrepresentations made to win the business. The software was to run BSkyB’s new contact centre.
The claims were for deceit, negligent misrepresentation and breach of contract by EDS and the damages sought were much higher than the original contract value of £48m. Indeed the legal fees are over £70m in total on both sides, possibly double the value of the contract. The contract began in 2000 when EDS was hired to build a customer service system and the contract terminated in March 2002 after a "woeful" performance by EDS.
3. The judgment is on line at
http://www.bailii.org/ew/cases/EWHC/TCC/2010/86.html
15 February 2010 - New Intestacy Rules
From 1 February 2010 new intestacy rules apply. "Intestacy" means who inherits if you leave no will. The law decides. In most cases it is better to make a will. It is rarely sensible to write your own will as the rules are complex. Two witnesses must sign in the presence of the person making the will at the same time, and there are other legal complications. Get it wrong and the will is invalid.
Julian Hallett a partner in Kenneth Bush says
"If there is no will but a spouse (or civil partner) and children are left, the spouse now keeps all the assets up to £250,000 (up from £125,000) and in addition own all the personal chattels (possessions) whatever their value. Over £250,000, half of the remaining assets go on trust for the surviving spouse and the children receive the other half. Therefore someone dying leaving a house worth £1m and no other assets, for example, would find that their spouse has to sell the house to give the children half of £750,000 immediately. If they make a will they do not have to do this. On death of the surviving spouse in such a case, the half on trust goes to the children.
If someone dies intestate and there are no children but there are siblings of the deceased, then the spouse receives chattels - £450,000 (up from £250,000 under the previous law) and half the remaining assets immediately go to the siblings with the balance on trust for them after the spouse's death.
Now might be a good time for you to make or update your will. In addition, if you live with a partner and are not married nor in a "civil partnership" with them, they have no rights to inherit although they may be able to bring a claim under the Inheritance, Provision for Family and Dependents Act if you were supporting them. If you wish a partner to inherit, it is simpler to make a will which sets out your wishes expressly. It may also be wise to have a written agreement about how any properties you jointly own will be handled if the relationship breaks down. This is also wise for those buying a property together who are not also in a relationship.
Notes
1. General article about the new intestacy rules.
A useful summary of the rules is at http://www.hmcourts-service.gov.uk/infoabout/civil/probate/why_will.htm#chart
15 February 2010 - Safeway Sues Employees
Plenty of employees get the law wrong and the employer picks up the tab in areas as far apart as health & safety and data protection. Companies can only operate through employees and are responsible in most cases for what employees do. In a ground breaking case, Safeway has sued personally former employees and directors for alleged breach of the competition rules. Safeway itself might be fined for breach of competition rules in the milk sector by Morrisons, a company which it acquired. It is understood that the directors may have had an insurance policy and that Safeway is therefore seeking to cover its potential fines by recouping them under the insurance which most directors do hold when sitting on boards.
Paul Croker a partner in Kenneth Bush says "Whilst very rare, sometimes organisations have sued members of staff for provision of bad advice which led to the employer being held negligent to its customers. This case is along similar lines. The ex-employees and directors in this competition case applied to have the case thrown out of court but failed. Morrisons here disputes all allegations of breach of competition law. Safeway entered into an agreement with the OFT about liability since it took over Morrisons. The employees tried to throw the case out on the grounds that if the company were liable it could not go to court to seek recovery - a long standing legal principle that you cannot profit from your own wrong, in the same way as when someone murders their spouse to recover insurance policy monies then their claim will fail.
It is likely that, if the case succeeds at trial, insurance for directors will become more expensive and insurers will want to check there have been no competition law breaches before offering the policy in each case. The case also illustrates the importance of having good competition law compliance policies and training in place for employees.
Notes
1. Mr Justice Flaux said that Safeway had "a real prospect of successfully defeating at trial any defence of ex turpi causa or that their claims are contrary to the competition regime".
2. See FT article at http://www.ft.com/cms/s/0/068a67f8-0f9c-11df-b10f-00144feabdc0.html
15 February 2010 - GUIDE TO LASTING POWERS OF ATTORNEY
No one likes to think about losing the capacity to manage their own affairs. However, with over 700,000 currently diagnosed with dementia and those who may have brain injuries or existing mental health issues, now is the time to appoint someone you trust to manage your affairs.
You can make a Property and Financial Affairs Lasting Power of Attorney which allows you to choose a person (or persons) you trust to make decisions about how to spend your money and the way your property and affairs are managed. Once registered, and unless you have put a restriction on it, this type of Lasting Power of Attorney can be used by your attorney(s) immediately after registration.
You can also make a Health and Welfare Lasting Power of Attorney. This allows you to choose someone you trust to make decisions on your behalf relating to your personal healthcare and welfare including decisions to give or refuse consent for treatment on your behalf and deciding where you live. These decisions can only be taken on your behalf when the Lasting Power of Attorney has been registered and you lack the capacity to make the necessary decision for yourself.
Whenever an attorney makes a decision under a Lasting Power of Attorney, by law they must act in the best interests of the donor who has given them the power.
If you want to make plans for the future while you still have the mental capacity to handle your own affairs, creating an LPA now will allow you to choose one or more people to act as decision-makers.
An LPA can be made by anyone aged 18 or over who has the mental capacity but can only be used once it has been registered with the Office of the Public Guardian.
If you are unable to look after your own affairs and you do not have an LPA, the Court of Protection will appoint a Deputy to manage your affairs for you. There will be significant legal fees to pay and the Deputy may not be aware of your personal circumstances. This could apply to anyone, at any age, by reason of illness, disability or mental impairment who may no longer be able to deal with even simple matters like handling a bank or building society account or transacting a house sale.
For a comprehensive, caring and professional service, please call Kenneth Bush Solicitors on 01553 692233 and ask to speak to someone in our Probate Department.
15 February 2010 - GUIDE TO MAKING A WILL
Who should make a Will?
If you care about what happens to your property after you die, you should make a Will. Without one, the State directs who inherits, so your family, friends and favourite charities may get nothing.
It is particularly important to make a Will if you are not married or are not in a registered civil partnership. This is because the law does not automatically recognise partners who live together as having the same rights as husbands, wives or civil partners. As a result, even if you have lived together for many years, your partner may be left with nothing if you have not made a Will.
A Will is also vital if you have children or dependants who may not be able to care for themselves. Without a Will there could be uncertainty about who will look after or provide for them if you die.
You should consider take legal advice about making a Will if:
• several people could make a claim on your estate when you die because they depend on you financially;
• you want to include a trust in your Will (perhaps to provide for young children or a disabled person, save tax or simply protect your assets in some way after you die);
• your permanent home is not in the UK or you are not a British Citizen;
• you live here but you have overseas property; or
• you own all or part of a business.
Once you have had a Will drawn up, some changes to your circumstances, i.e. marriage, civil partnership, separation or divorce can make all or part of your Will invalid or inadequate. This means that you must review your Will regularly to reflect any major life changes.
What your Solicitor will need to know
What you own
Details of everything you own, including property, cars, personal valuables, stocks and shares, bank accounts, insurance policies, any businesses you own, and pensions.
Who gets what?
Who do you want to leave these assets to? How do you want to divide your property between your loved ones, friends or charities? Are there any conditions you want to attach to these gifts (for example, that young people must reach a particular age before they are paid money you have left them)?
Family and other beneficiaries
Details of your family and status. Are you divorced or has your civil partnership been dissolved? Have you remarried or entered into a new civil partnership? Or are you living with someone without being married to them or being their civil partner? do you have any children or other dependents? Anyone who depends on you financially can ask a court to review your will if they feel you have not provided properly for them. If you give your solicitors relevant details, they can tell you about any legal pitfalls.
Guardians
If you have children that may still be under 18 when you die, you may need to name someone as their legal guardian.
Other wishes
Do you have any particular wishes for your funeral? Do you want to be buried or cremated? Are there any other instructions?
Executors of your Will
You must also name the people you want to appoint as "Executors" of your Will – the people who will carry out the administration of your will after your death. These can be friends or family members or a professional such as your solicitor. A good combination would be a good friend, family member and a professional. Ideally, you should choose someone who is familiar with financial matters. It is a good idea to speak to them first to ask whether they would be happy to carry out this task for you.
Signing the will
Once the will has been drawn up it is not effective until it is signed. There are several rules affecting the signature process which, if not followed correctly, will make your will invalid. Many people use staff at their solicitor’s office to act as their witnesses to avoid this problem.
Where to keep the will
It is important to keep you will in a safe place and tell your Executors, close friend or relative where it is. Most solicitors can store your wills for free.
For a comprehensive, caring and professional service, please call Kenneth Bush Solicitors on 01553 692233 and ask to speak to someone in our Probate Department.
15 February 2010 - Are you a member of the World Wildlife Fund?
Are you a member of the World Wildlife Fund, if so you may be eligible for discounted will writing services. Click here for more information – www.wwf.org.uk. If you are not a member follow our link to our Guide to making a Will and our Guide to Lasting Powers of Attorney.
15 February 2010 - Kenneth Bush are proud to be the West Norfolk prosecuting solicitor for the RSPCA
Kenneth Bush are proud to be the West Norfolk prosecuting solicitor for the RSPCA.
To see more of the RSPCA’s work click here – www.rspca.org.uk.
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