Europe-wide Contract Law Proposed

On 1 July 2010 the European Commission published a Green Paper setting out policy options for introducing a European contract law for consumers and businesses.

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DANGEROUS LETTERS OF INTENT

Oct 2010: Müller supplies dairy products and RTS supplies and installs machinery for packaging food products. Müller selected RTS to supply it with a system to package yoghurt pots and start was agreed under a letter of intent that set out the full contract sum and it also stated that the final contract would be based on Müller’s amended form of MF1 and for a limited four-week “initial” period. Negotiations dragged and the initial period came and went and the letter of intent was not issued. RTS worked and Müller paid until a dispute aose. RTS refused to finish installing the equipment. Mr Justice Clarke of Technology and Construction Court found that the letter of intent had expired at the end of the initial period and did not govern the relationship between the parties thereafter. It also decided that as the parties continued to carry out works after the letter of intent had expired, they intended to create legal relations and enter into a contract but was not the MF1 terms but one that excluded some of the MF/1 terms (limited contract). RTS now argued that no contract was concluded after the letter of intent expired and as there was no formal contract RTS was entitled to bring a quantum meruit claim. The Court of Appeal decided that there was no contract between the parties because the MF1 terms included a “subject to contract” clause and therefore that no contract was formed. The Supreme Court confirmed that the letter of intent had expired at the end of the initial period; and conduct thereafter suggested that parties intended to enter into a contract and amounted to a waiver of the “subject to contract” clause and that therefore the full MF1 had been entered into. Comment: Three separate court proceedings! Three different decisions! Make sure letters of intent are for (i) a limited scope of works and (ii) a limited period of time and (iii) for a limited maximum sum and (iv) must specify what will happen when the letter expires and the default position if the expected position does not occur. RTS Flexible Systems Limited v Molkerei Alois Müller Gmbh & Company KG (UK Production) (2010). (The Müller case)

Far Out Productions Inc v Unilever UK & CN Holdings Ltd & Ors, Ch Div (N Strauss QC), (16 December 2009)
Far Out Productions Inc v Unilever UK & CN Holdings Ltd & Ors, Ch Div (N Strauss QC), (16 December 2009)

Where an action for copyright infringement against four defendants had been settled as against the first three and discontinued as against the fourth, the claimant was liable for the costs the fourth defendant had incurred until the date the notice of discontinuance was served. Costs were awarded on an indemnity basis because of the claimant’s unreasonable behaviour in joining the fourth defendant, delaying progress and refusing to negotiate. The action had concerned infringement of copyright in a sound recording used in an advertisement. Court: High Court (Chancery Division) (England and Wales)

BSW Ltd v Balltec Ltd [2006] EWHC 822 (Ch) (11 April 2006)
BSW Ltd v Balltec Ltd [2006] EWHC 822 (Ch) (11 April 2006)

An application for pre-action disclosure of design drawings belonging to a potential defendant to a design right and copyright claim was rejected. The applicant alleged that it was impossible for the respondent to have designed, produced and tested a range of products in a short period of time without copying the applicant’s designs. However, the applicant was unable to particularise its claim without pre-action disclosure of the respondent’s designs. The claim was speculative and based on uncorroborated statements of impression and theory not supported by expert evidence, and disclosure might damage the respondent, whose designs were secret and alleged to be valuable. Court: High Court (Chancery Division) (England and Wales)

Procter & Gamble Company v Reckitt Benckiser (UK) Ltd [2007] EWCA Civ 936 (10 October 2007)
Procter & Gamble Company v Reckitt Benckiser (UK) Ltd [2007] EWCA Civ 936 (10 October 2007)

An appeal was allowed against a decision that P’s registered Community design for an air freshener spray container had been infringed by R’s product. It was sufficient to avoid infringement if the accused product was of a design which produced a different overall impression. There was no policy requirement that it be ‘clearly’ different. It was legitimate to compare the registered design and the alleged infringement with a reasonable degree of care. The possibility of imperfect recollection had a limited part to play in the exercise. In the instant case, the similarities between the products were at too general a level to say fairly that they would produce on the informed user the same overall impression. Court: Court Of Appeal (Civil Division) (England and Wales)

Red Spider Technology v Omega Completions Technology, Ch Div (Mann J), 21/1/10
Red Spider Technology v Omega Completions Technology, Ch Div (Mann J), 21/1/10 Claims for infringement of a patent concerning a water-based injection valve for use in oilfield exploration, and for infringement of design right in the valve, both failed. Further, the patent was invalid for anticipation and obviousness. Properly construed, the patent did not claim the feature relied on. Further, the priority document relied on did not disclose all the integers of Claim 1, and so the sale of the valve by the patentee before the patent application date anticipated the patent. Further, the invention was obvious over the common general knowledge and a piece of prior art. The defendant’s reproduction of the valve by working from the patent drawings was not copying of the valve design for design right purposes because the ideas taken were at a high level of abstraction. Court: No court set yet