Dealer claimed bonuses from unlawful registrations - Automotive Management

Dealer claimed bonuses from unlawful registrations: 23 September 2011



'via Blog this'

Right of first refusal

There are many reasons why a contract might contain a right of first refusal. In a case a couple of months ago,
Astrazeneca UK Ltd v Albemarle International Corp & Anor [2011] EWHC 1574 (Comm) (21 June 2011) the Commercial Court considered such a provision in an agreement for the supply of a chemical used in the manufacture of the active ingredient of an anaesthetic. It provided that if Astrazeneca stopped distilling the active ingredient Albemarle would have "the first opportunity and right of first refusal to supply [the active ingredient] to [AstraZeneca] under mutually acceptable terms and conditions". Was that a (very weak) agreement to agree, or something stronger? No, said the court, Albemarle had the right to be allowed to match any third party offer, notwithstanding that with detailed terms to be agreed this was itself a little vague. The information about the third party offer has to be given to the party with the right of first refusal before the offer is accepted, which could be a practical difficulty. If you are in a situation where such a contractual right needs to be given, make sure it is clear in the contract - and that you understand clearly what it is that you have to do.

When is a business fit to have a consumer credit licence?

The Office of Fair Trading has drawn attention to what makes someone fit to hold a consumer credit licence, after the Consumer Credit Appeals Tribunal rejected an appeal by a company which had had its licence revoked. The appeal decision is here and the OFT's press release is here. Although the company in question was a debt collection agency, the same principles could apply to other businesses that need licences.

The OFT points out that the decision highlights the need for credit businesses to check that when communicating with their customers they are clear and transparent and do not place undue pressure on the debtor. The Tribunal considered in particular that the company was not fit to hold a licence because:

• It  lacked sufficient skills, knowledge and experience to operate a consumer debt collection business.
• It did not have practices or procedures to deal fairly and properly with consumers.
• The payment demand letter was designed to look like an official or legal document, against OFT guidance.
• The managing director described himself to debtors as a lawyer, which was intended to create a misleading impression.
• The company was persistently obstructive in dealing with enquiries from the OFT and Trading Standards.

None of which is very reassuring in the light of the reorganisation of the apparatus of consumer protection and the abolition of the OFT.

US dealer awarded damages for negative publicity

Not something we are likely to see here. The story is in Automotive News and involves a Suzuki dealer in Missouri. The manufacturer was ordered to pay $18.5 million, not a trifling sum by any standards. The case arose from a "no payments for life" promotion run by a neighbouring Suzuki dealer (both in Kansas City), which, perhaps on the well-known principle that if something looks too good to be true it probably is, collapsed. Unfortunately, the dealerships belonged to brothers so the family name featured in both, and the fallout from the one stuck to the other.

So why should the manufacturer be liable? Because it had approved and funded some of the ads through co-op programmes. Mind, this is one of those jury awards that you get in the States - an English judge, even if liability were shown, might make a much more modest award. And of course jury verdicts can be challenged - as the AN report says,

American Suzuki spokesman Jeff Holland said the company is "disappointed" by the verdict and intends to appeal.

"Disappointed" might be in the running for an award for understatement of the year.

OFT on private motor insurance premiums

The press release starts:

The OFT today issued a call for evidence to establish the background to recent reports of rising UK private motor insurance premiums, and consider whether further work may be necessary to improve the way the market works.

There's certainly a problem there - but is it something the OFT can do anything about? One factor they mention is the provision of credit hire vehicles - and in the light of the Veolia case I blogged about the other day, it's easy enough to see how that might be part of the problem.

Credit hire vehicles: the latest round

W v Veolia Environmental Services (UK) Plc [2011] EWHC 2020 (QB) (27 July 2011) is another round in the long-running struggle between providers of credit hire vehicles and the insurers of defendants in motor accident claims. Two issues arise in this case:

• The defendant said that the credit hire charges were irrecoverable because of the effect of The Cancellation of Contracts Made in a Consumer's Home or Place of Work etc. Regulations 2008 ("the Regulations"). 
• The claimant raised the second issue, that since the hire charges in this case had already been paid (by one insurance company to another) questions of unenforceability under the Regulations are irrelevant and the only question is whether the payment amounted to a failure to mitigate.

The claimant's 21-year-old Bentley was damaged when it was struck by the defendants' refuse vehicle. He entered into a credit hire agreement, hiring a modern Bentley at an eye-watering rate of £860 a day. Being an actuary, he argued that he had to have an impressive car, but a little surprisingly he was unable to pay to hire the car himself (which would have cost an eminently reasonable £485 a day). The car was delivered to his home, where he signed the hire documents and an application for insurance for the hire charges. The indemnit under this policy was limited to £100,000, but he exceeded that by £38,000 and the defendants' insurers refused to cover the charges.

The defendants sought to rely on the requirement under the Regulations that a cancellation notice be given to the hirer, and this had not been done. The court agreed with that point. They argued that, because of this omission, the hire agreement was unenforceable and therefore the claimant had suffered no loss. However, this position became more complicated when the insurance company paid the charges in full to the hire company - what the judge referred to as "a litigation tactic". So, whether or not he was obliged to do so, the claimant had effectively paid the hire charges and had therefore suffered a loss. His duty to mitigate his loss did not extend to challenging the hire charges on the basis that the agreement was unenforceable: all he had to do was hire a car and pay the charges he incurred. Had he not done so he would have had a claim for loss of use instead.

Not surprisingly given the sums involved it seems that an appeal is likely, so we might hear more of this yet.

Acas code on social media

The use of social media in the workplace is a problem for businesses that's just going to get bigger and bigger - like, I suppose, the problem of giving workers access to telephones once was. The capacity for mischief is much greater with social media, though. It's not just the amount of time people might spend at work on Twitter, Facebook or their own blogs: it's the liability they could create for their employers when they write something bad, and it's the damage they might cause to their employers' reputations.
Acas (I don't know whether to put it in capitals or not: I can still remember when it was the Advisory, Conciliation and Arbitration Service, which it still seems to be although it appears to prefer the trendy acronym) has produced a guide which employers should find useful to help them find a way through this maze.

Compensation for pothole damage

Coventry City Council has faces having to pay £2,000 to a driver who claimed for damage to the wheels of his Mercedes car caused by potholes that developed in the winter of 2010. The Daily Telegraph reported the case in Coventry County Court - the council denied liability, but the judge had no doubt that its failure to keep the carriageway in good repair had caused the damage. I imagine there could be a problem with this case opening up the floodgates, and perhaps the council will be inclined to appeal: there are some complicated policy considerations involved, to put it mildly.

This comes not long after Thomas v Warwickshire County Council (2011) EWHC 772 (QB) - and not far away, either - in which the High Court extended the duty of the highway authority to maintain the road0. A lump of concrete which had dried to the surface was part of the fabric of the highway, not just a contaminant, and therefore it fell within the authority's duty to maintain the fabric under section 41 of the Highways Act 1980. The case is reported by Lawdit Solicitors here.

First prosecution under Bribery Act

And it has nothing to do with corporate hospitality - which is what people seem to have been most worried about. After all, if you were accustomed to going to sporting events or having slap-up dinners at someone else's expense, you would be concerned.

But this first prosecution is much more prosaic, albeit pretty worying. The Guardian reports that the first person to be prosecuted is a magistrates' court clerk who seems to have suggested that he could make a motoring offence go away for £500. Beside the massive figures that prompted the introduction of the legislation in the first place, that's not even small beer. It doesn't even count as still water. But it certainly shows that zero tolerance is with us, as it surely should be, and the hapless clerk is in custody, due to appear at Southwark Crown Court on 14 October.

But of course this proves nothing about the tricky corporate offence of failing to prevent bribery from happening. There's a lot more to the Act than one minor court official soliciting a payment.