ABG Commercial Newsletter – September 2013

Incorrect party name in Contract corrected by the Court

In a recent case the High Court has held that a mistake in a contract as to the name of a party could be corrected using the principles of construction. The principle of Construction involves the Court ascertaining the intention of the parties by considering all the background knowledge that was available to the parties at the time of the contract.

A misnomer, often a simple typographical or clerical error, can be corrected by the Court substituting an incorrect term in a contract for the correct one using the principles of construction. In this case A drafted a contract for use with C that was subsequently signed. In fact, C was a dormant group company and the contract should have been with the main operating company, B. A claimed that B owed it approximately £l142,000 in unpaid fees. A alleged that it had intended to contract with B but had mistakenly used the wrong company name from the Companies House website. A argued that references to C were a misnomer and should be read as B as a matter of construction.

The Court held that, as a matter of construction, the parties had intended the contracting party to be B. On the facts, it was strictly not a misnomer as A admitted that it had merely guessed the name of the correct group company. A proper misnomer is where a party knows to whom it wishes to refer, but by mistake uses the wrong name. Despite this, the Court held that the error should be corrected as a matter of construction.

This decision is a useful reminder of the importance of identifying the correct contracting party in a contract. In this case, the parties had been in a contractual relationship for approximately two years before the misnomer was discovered. The Court decided that B’s argument that no contract had been concluded due to a mistake in identifying the party had little merit.

Bank of Scotland fined for serious breach of The Data Protection Act 1998

The Information Commissioner’s Office (ICO) has fined the Bank of Scotland £75,000 for a serious breach of the Data Protection Act 1998 (DPA) (and the seventh data protection principle). In particular, the Bank failed to take sufficient appropriate technical and organisational measures against the unauthorised processing of personal data so as to effectively prevent such unauthorised processing occurring.

The ICO found that, over a four-year period, the Bank repeatedly sent faxes containing customers’ personal data to the wrong recipients, by transposing numbers when dialling fax numbers. The data in the faxes included payslips, bank statements and mortgage applications. The intended recipient was a department within the Bank that routinely uploaded documents onto the Bank’s system. The error was repeated across a number of the Bank’s staff and offices. The first incident was reported to the Bank by a third-party organisation in February 2009. A member of the public also received a number of misdirected faxes. Despite the Bank being informed of the problem on numerous occasions, the errors continued. The matter was eventually referred to the ICO by the third-party organisation in March 2011. The Bank sent further misdirected faxes as the ICO investigated the breaches.

The Information Commissioner has taken the opportunity to reinforce the need for data controllers to review the sending of confidential and sensitive personal data by fax to ensure either that:

  • More secure measures are used.
  • As a minimum, appropriate and effective security measures are applied to the use of fax machines

Introduction of a fast track trade mark opposition procedure

Following consultation, the Government has decided to introduce a fast track trade mark opposition procedure which will be introduced in October 2013. A summary of the new procedure is set out below:-

  • The new procedure will be limited to double identity and likelihood of confusion cases.
  • The filing fee will be £100 compared with the £200 fee for a conventional opposition.
  • The opponent can rely on three previous marks.
  • The opponent will be required to provide proof of use of their earlier marks when filing the opposition.
  • The opponent will require leave to file further evidence.
  • A decision will normally be made on the papers without an oral hearing.
  • There will be an appeal fee of £250 to discourage frivolous or unmeritorious appeals.

Although the fast track opposition fee is £100 less than the conventional opposition fee it is possible that that the requirement to provide proof of use of their trade mark at the filing stage may discourage opponents from using the fast track procedure.

Draft consumer protection regulations published

The Department for Business, Innovation & Skills (BIS) has published the draft Consumer Protection from Unfair Trading (Amendment) Regulations 2013 which will apply to misleading or aggressive commercial practices.

The draft regulations amend the Consumer Protection from Unfair Trading Regulations 2008 (CPRs), which prohibit traders from engaging in misleading or aggressive practices in their dealings with consumers. The CPRs are currently enforced by trading standards and the Office of Fair Trading, which can bring criminal and civil proceedings against traders on behalf of consumers.

The draft regulations will give consumers a new private right for consumers to seek redress from traders and, where appropriate, compensation if the consumer has entered into a contract or made a payment (for example, a debt claim) due to misleading or aggressive practices by the trader.

The draft regulations will also introduce the following standard remedies for consumers who are victims of misleading or aggressive practices:

  • A right to be released from the contract if the consumer rejects the goods or services within 90 days together with a right of a full refund. The 90-day period starts on the date consumer entering into the contract, or when the goods are delivered, whichever is the latest.
  • A right to a discount on the price paid if the goods or services are kept. The level of the discount depends on the trader’s behaviour, the impact of that behaviour and the amount of time that has passed; for example, if the prohibited practice is minor, the discount will be 25%, and for a very serious prohibited practice, the discount will be 100%.

In addition to the standard remedies, consumers will be entitled to further compensation if they can prove that the misleading and aggressive practices caused further economic losses, distress or inconvenience.

The draft regulations have been put forward in response to a report by the Law Commission, which concluded that it is difficult for consumers to get their money back when they have been victims of a misleading or aggressive practice. The draft regulations are designed to provide consumers with more options for redress against rogue traders; reduce the administrative costs for traders; and combat practices that undermine competitive markets.

 

The comments in this note are of a general nature only. Full advice should be sought on any specific problems.

Tim Sisson
tsisson@abg-law.com
+44 (0)115 934 3333

Andrew Sutton
asutton@abg-law.com
+44 (0)115 934 3303