legal dollar

legal dollar

Home - 2018

Year: 2018

Commercial Law – Contract Construction – ‘Reasonable’ & ‘Best’ Endeavours

Posted on December 19, 2018 in Uncategorized

The recent case of Rhodia International Holdings Limited and Rhodia UK Limited v Huntsman International LLC [2007], provides new guidance on a long-disputed area of contract law. According to the judgment of the High Court, a duty to exercise ‘reasonable endeavours’ requires less than ‘best endeavours’ but can still demand a party to act against its own commercial interests, although the case does not resolve all the uncertainty surrounding the difference between ‘reasonable’ and ‘best’ endeavours.

The case confirms that ‘reasonable endeavours’ is a less stringent obligation than ‘best endeavours’ – a concept which is commonly assumed. The case also confirms that a ‘reasonable endeavours’ obligation may be discharged by exhausting just one of a number of possible solutions, whereas a ‘best endeavours’ obligation requires all avenues to be explored.

Huntsman International LLC (“Huntsman”) had agreed to buy Rhodia International Holdings Limited and Rhodia UK Limited (“Rhodia”), a chemicals company. As part of the sale and purchase agreement both parties were to use reasonable endeavours to ensure that all supplier contracts passed from Rhodia to Huntsman, including one with a power company called Cogen.

However, Cogen refused to accept the transfer of the contract without a guarantee from Huntsman’s parent company. The argument over what was meant by reasonable endeavours focussed on Huntsman’s refusal to provide that guarantee. That refusal therefore affected the transfer of the contract with Cogen for the supply of power.

Huntsman paid for the power from the date of its purchase of Rhodia in 2001 until 2004. However, in 2004 Huntsman told Rhodia that it was pulling out of the location and that responsibility for the power contract remained with Rhodia until the contract expired in 2009. Huntsman submitted the reason for this being that the contract for the supply of power had not been transferred. Cogen claimed that £14.8m worth of power and services was owed, and the case concerned Huntsman and Rhodia arguing over who owed Cogen that amount.

The case was eventually decided on what constituted ‘reasonable endeavours’ to ensure the contract transferred from one company to the other. It was ruled that Huntsman International had breached the sale agreement by not using its reasonable endeavours to provide a guarantee for a power contract. Julian Flaux QC, sitting as a deputy High Court Judge in the case said:

“An obligation to use reasonable endeavours to achieve the aim probably only requires a party to take one reasonable course, not all of them, whereas an obligation to use best endeavours probably requires a party to take all the reasonable courses he can. In that context, it may well be that an obligation to use all reasonable endeavours equates with using best endeavours…”

The ruling in the case made it clear that the terms of the sale contract were binding, even if its terms no longer suited one of the parties. The companies must abide by their contractual obligation to make a reasonable endeavour even if it is against their company interests.

However, there are other authorities which suggest a slightly different viewpoint. In the absence of a specific course of action assumed by a party in the context of a reasonable or best endeavours obligation, neither obligation is likely to require a party to sacrifice it own commercial interests. It appears from the other authorities – which were not discussed in this case – that ‘reasonable endeavours’ may not even require the party giving such an obligation to act to its own disadvantage. This would suggest that relatively little effort is required to comply with a ‘reasonable endeavours’ obligation.

As far as the drafting of contracts is concerned, the best way to achieve certainty would be to specify the actions a party must take in using its ‘best’ or ‘reasonable’ endeavours wherever possible. The relevant party will then be bound to take those actions in any event and the question of whether those actions are contrary to that party’s commercial interests will not arise.

© RT COOPERS, 2007. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.

Corporate and Commercial Lawyer and Law Practice Areas

Posted on December 3, 2018 in Uncategorized

Other than the work responsibilities, the business including corporate and commercial sectors deal with different complex agreements, arrangements, contracts etc. Guidance is a must for a smooth and profitable running of business and legal services. This is the place where a professional corporate and commercial lawyers play a crucial role.

Leading law firms that come with experienced corporate and commercial lawyers are known to serve different participants of the business world, like the entrepreneurs, enterprises, businessmen, corporations, business organizations and various companies. The experts deal with different matters of their clients by taking into accounts the intense competitive business practices and trends.

Through this article, we will come to know more about the corporate and commercial law practices and lawyers in detail. Please go through the points discussed below.

Corporate Compliance

Every national or international business is required to follow some strict regulatory rules and regulations. A breach of such rules can result in corporate probation or may be any kind of ignominious legal actions. Professional corporate lawyers believe that these rules and regulations are essential to follow for maintaining the profitability, goodwill and popularity of any company or corporation. This is why they serve clients with corporate compliance legal services to different sectors of the economy.

Law Practice Areas

If we talk about the law practice areas, the experienced lawyers working in a law firm offer legal assistance for different commercial issues, like advices for the formation of any company, services for varied commercial and corporate contracts etc.

More about the law practices; the attorneys also serve individuals looking for legal assistance related to intellectual property matters, capital market, insurance matters, public relations, industrial relations, human resource management etc.

Research Aspects of Corporate Law

Like a personal injury lawyer and other kinds of professional attorneys, a corporate lawyer also opt for researching different aspects of law including accounting, securities law, bankruptcy, tax law, intellectual property rights and other regulations concerning business specifics. The lawyers always keep one thing in mind that a transaction is not conflicted with different kinds of law including federal, local or state laws.

Team Oriented

As compared to other kinds of trial law, the corporate law is found as team-oriented. Rather than behaving as strict competitors in the court, they work on common goals that can help clients of both. They make use of their incisive mind and skills to make things clear between the parties, both in terms of written and oral form of communication.

Thus, from the above discussions, it can be said that corporate and commercial law practice areas and lawyers come with different aspects as compared to other trial laws and lawyers.

Commercial Law – Oral Agreement – Potential Agency Agreement – Oral Terms

Posted on November 16, 2018 in Uncategorized

The case of Aboualsaud v Aboukhater and Another [2007], concerned an agency arrangement where a Claimant contended entitlement to commission pursuant to a binding oral agreement. The claimant was the executive vice-president of the Kuwait Investment Office in London and a financial adviser to both a petroleum corporation in Kuwait and to the Minister of Energy. The first defendant was a commercial director of the office of the government of one of the United Arab Emirates in London. The second defendant, the first defendant’s father, was the beneficial owner of a number of large hotels.

In the 1990’s, the claimant and the first defendant had a meeting in London. They subsequently became close friends. They would see each other every week and would speak on the telephone most days. Then, in late 2002, the claimant alleged that the first defendant had spoken to him about the sale of one of his father’s hotels. The specific hotel concerned was the ‘Monte Carlo Grand Hotel’ (“MGCH”).

The claimant further contended that a binding oral agreement had been made with the first defendant. He claimed that the agreement arose out of various meetings and telephone calls and that the terms were that if he introduced a party to the defendants, and that party went on to purchase the MCGH for a price that was acceptable to them, he would be entitled to a commission of EUR 21.5million.

In December 2004, the MCGH was sold to Kingdom, a member of the joint venture FHR European Ventures LLP. The claimant argued that the sale had been facilitated by the introduction of HRH Prince Al Waleed bin Talal bin Abdulaziz al Saud, who was the principal owner of Kingdom.

The defendants denied that there was any binding agreement for the payment of commission in the terms that the claimant had alleged. The defendants felt that the case was simply one where a friend had sought the help of another friend, and that if that help were to be successful then payment in recognition of that help could be expected.

The case proceeded to trial.

The issue which arose to be decided by the courts was whether there was an agency agreement between the claimant and the first defendant, the latter acting for himself and his father.

The court held that on the evidence, the first defendant’s account was more convincing than that of the claimant. This was mainly in respect of the essential points in dispute, namely, how the discussions between the friends arose, how the discussions progressed and what the outcome of those discussions was.

The court felt that on that basis, there could not be any agency agreement upon which a binding legal contract could be established. Therefore, judgment would be made in favour of the defendants.

Top