Most contracts provide some mechanism for ending the contract if a party is in breach of the contract. Indeed, English law can imply such a right where there is a breach of a particularly important term or breach has particularly important consequences. But increasingly, parties agree "termination for convenience" that is, a right to bring the contract to an end even if the other party has fully performed its obligations to date.
The Commercial Court has recently decided that such a clause will operate in effect as an exclusion of liability preventing a claim against the party entitled to terminate under the clause even it has not operated the clause.
In Comau UK Ltd v Lotus Lightweight Structures Ltd  EWHC 2122 (Comm) this conclusion was reached by a conventional route: damages for breach of contract are assessed on the basis that the party in breach would have exercised any choice it had between different ways of performing the contact in the way that will minimise the damages payable. So, if the contract could have been terminated without giving any reason, the innocent party cannot recover damages on the basis that the contract would have continued for its full term.
To that extent, the decision is uncontroversial, but it is a clear warning to parties agreeing such a clause that its effect may go beyond a simple entitlement to terminate.
A more controversial aspect of decision was that the Deputy Judge decided that the clause would have this effect even though it could not in fact be operated to terminate the contract. The clause provided expressly that the right to terminate could only be exercised for convenience if the terminating party was not then in breach of its payment obligations. In fact, it was in breach of its payment obligations. The innocent party accepted that as a repudiatory breach of the contract thereby bringing the contract to an end. It then sued for damages measured by the profits that would have been earned if the contract had run its full course.
The Deputy Judge rejected this, holding that the breach did not prevent the clause acting as an exclusion of a claim for lost profits.
It is by no means clear that he was right to reject the claim on that basis. His reasoning is terse. He simply said "the fact… that [the defendant] was only entitled to invoke [the termination for convenience clause] if it was not in breach, does not appear to be relevant because the assessment looks at what [the defendant] would do if they had not been a breach".
It may be that the Deputy Judge had in mind the dictum of Diplock LJ in Laverack v Woods of Colchester  1 QB 278 (which was quoted in the Court of Appeal decision cited earlier by the Deputy Judge - Durham Tees Valley Airport v BMI Baby Ltd  1 All ER (Comm) 731) that "where there is an anticipatory breach by wrongful repudiation…it involves assuming that what has not occurred and never will occur has occurred and will occur, i.e., that the defendant since the breach performed his legal obligations under the contract".
However, whilst this does indeed, in one sense, require breach by the wrongdoer to be ignored, it is only for a narrow purpose, namely making the assumption that the contract would have continued in operation strictly in accordance with its terms. The position in Comau was surely different: if it was assumed that henceforth the contract would be operated strictly in accordance with its terms, the wrongdoer had no right to terminate because its right to terminate had been eliminated by its failure to make payment.
Whether a Court would or should be prepared to make the further assumption in favour of the wrongdoer that it would have cured its payment breach and thereby reacquired a right to terminate is unclear, but that is not what the Deputy judge in Comau said he was doing. This was a summary judgment application that failed and it is possible that the point may be reconsidered at trial.
In the meantime, however, it follows that both parties need to be wary of the operation of a termination for convenience clause as an exclusion of liability: the party who has conferred such a right on the other needs to be aware of the possibility that it may operate as an exclusion, but the wrongdoer should not rely on that if there is a risk that it could be said that breach had eliminated the right altogether.
Teacher Stern is delighted to announce that Rod Cowper has joined as a partner and Head of International Dispute Resolution. Cowper has conducted international arbitrations in major centres around the World for over 30 years and litigation in all commercial divisions of the High Court, the Court of Appeal, the Supreme Court and the Privy Council. He regularly works with lawyers in the major offshore centres to manage litigation there, often as part of coordinated multi-forum disputes.
Corporate and Insolvency disputes, particularly arising in a cross-border contexts, feature heavily in his practice, a large part of which involves acting for and against Banks in disputes ranging from lending and guarantee issues to those arising from derivatives and other less traditional transactions.
Cowper said “Teacher Stern is a solid and supportive platform from which to address the dispute resolution requirements of clients involved in financial and investment business in London and across the Globe”.
David Salisbury , Managing Partner, commented “We welcome Rod as an important element of our strategic growth as we address together the challenges and opportunities of the current international business environment.” He continued “ Teacher Stern has grown significantly over the last year or so starting with the very successful merger with Butcher Burns in May 2013. Since then we have added another 8 new fee earners and further additions are in the pipeline. This is indicative of our positive view for the future and the need to meet the demands of an increasing client base across all departments.”
Teacher Stern, established in 1967, is a full service commercial law firm based in Holborn, London with over 70 fee earners.
Download: Press release
Triangle has completed a £212.5m off-market purchase of the Holborn Links Estate, WC1, financed by Deutsche Bank.
The price reflects a capital value of £534 per sq ft. It was bought on behalf of Perez International, which represents a consortium of international investors managed by Triangle Group.
The 3.3-acre estate comprises 42 buildings totalling 320,000 sq ft, including shops and restaurants along Southampton Row and Sicilian Avenue, as well as offices and flats on Southampton Place.
Triangle bought the assets from Eliasz Englander’s Englander Group.
The completion comes more than six months after Triangle exchanged contracts on the deal. It had put down a £4.5m deposit to buy the buildings. This money was later deducted from the purchase price.
Deutsche Bank is understood to have financed the purchase with a loan of between 50% and 60% LTV, equating to between £106.3m and £127.5m.
Triangle and Deutsche Bank declined to comment on the funding.
Since buying the Holborn Links Estate for £118m in 2000 from Hammerson and Standard Life, Englander Group invested heavily in making the portfolio boutique and popular.
Tunc Guven, partner and group chief financial officer at Triangle, said the company is now planning to further invest in the portfolio, including more asset management to increase the value, and changing the use of some of the properties.
Rick Denton, chief executive of Triangle, added:“This strategic acquisition is a consequence of our international clients seeking to grow their presence in London. The Holborn Links portfolio compiles a valuable balance of property assets and includes our second hotel acquisition in the area. Our first being the Lifestyle Hotel L’Oscar, a creation of Jacques Garcia which is currently under development and due to open at the end of 2015.”
Savills advised the buyer; the vendor was not represented.
With effect from 1 May 2014, Teacher Stern are pleased to announce that 2 long serving solicitors have been promoted to Partners. Eytan Weisz in the Property department and Rajesh Pabla in the Litigation department.
The Partners are pleased to announce that Sarah Cardew has joined the corporate commercial department as our new tax Partner.
Sarah was head of Corporate Tax at Penningtons Manches which is ranked Tier One by both Chambers and The Legal 500. Sarah was also at BLP for nearly 12 years before she joined Penningtons.
David Salisbury, head of Corporate, notes "Sarah has a wealth of experience and expertise across a broad range of sectors within the corporate and real estate tax sectors and she will be a great addition to the partnership."
We are delighted to announce that Dov Katz joins us today as the Head of Capital Markets.
David Salisbury says "Dov joins us from HowardKennedyFSI where he was a partner in their Corporate department and Head of AIM. Having trained at Fladgate, Dov has also worked at Dechert LLP and Rosenblatts and brings a wealth of experience especially in corporate finance. This will greatly enhance our service offering to clients."
The Partners of Teacher Stern are delighted to announce that from 1 October 2013, Victoria Hodges will be joining the partnership.
David Salisbury notes "Since Victoria first joined us a trainee in September 2005 and following her qualification into the property department, she has become a highly valued and integral member of the firm and we are delighted to make this announcement."
We are very sorry to announce that Leonard Ross passed away on Thursday 5 September 2013.
Leonard joined Teacher Stern as a consultant in 2005 following many successful years in his well known practice of Ross and Craig.
Leonard was a delightful person to work with and he will be sorely missed by all the partners and staff of the firm.
Teacher Stern LLP is pleased to announce that it has recently acted for Metroline Limited (a wholly owned subsidiary of ComfortDelGro Corporation), on the exchange of contracts for the acquisition of bus routes operated from five separate bus depots in West London from First Group plc for £57.5 million and is currently working towards to the completion of the transaction.
The team from Teacher Stern LLP, led by partners David Salisbury, Oliver Azurri and Kelly Whitfield, completed an extensive due diligence exercise before advising Metroline Limited on the corporate, commercial, employment, tax and property elements of the acquisition.
The business that will be acquired under the transaction comprises 31 routes utilising 494 buses operating from five West London garages - Alperton, Greenford, Hayes, Uxbridge and Willesden Junction. Completion of the transaction is set for June 2013, following which the newly acquired bus routes will operate under the Metroline brand.
The transaction is subject to regulatory approval and Teacher Stern LLP is working closely with First Group plc’s lawyers to obtain the necessary consents from Transport for London.
Kelly Whitfield said “It is an exciting time for this client, building on their existing presence in the London bus market. The Teacher Stern property, corporate, employment and tax departments all worked very hard on getting to exchange and it was because of this team effort that we managed to exchange contracts within the necessary timeframe and are now focusing on getting the relevant consents and approvals in place, ready for completion. We very much look forward to working with this interesting and exciting client both in the run up to completion and in the very future as it continues its expansion within the UK."
Teacher Stern are delighted to announce that Butcher Burns LLP will be joining us on 1st May 2013. The combined practice will be operating under the Teacher Stern LLP name and will continue to be based at the Bedford Row offices.
Managing partner, David Salisbury, is very excited by the prospect of expanding the breadth and depth of service currently provided to clients. “ We have identified a number of client synergies and common strengths and there is a cross over in a number of practice areas, particularly in property and litigation. With 14 fee earners joining us, we feel the combined firm will be better positioned to respond to our clients’ needs and provide a broader platform of services.”
The excellent reputation of both firms together with strong management and experienced lawyers will support continuous improvement.
Teacher Stern are pleased to announce that we have been accredited to the Law Society’s Conveyancing Quality Scheme (CQS) which is a new quality scheme for solicitors who deal with buying and selling property. As a member of the CQS, this means we meet the high standards the Law Society sets to ensure that we give clients a professional and quality conveyancing service.
Lex 100, the student guide to the UK’s premier law firms, have awarded Teacher Stern Lex Medals in two categories, namely Client contact and Job satisfaction.
Martine Nathan reveals how not to waste money on new branding without undertaking preliminary checks first, and how to reference trade marks correctly.
Download: Comms Dealer
Martine Nathan provides an update on the recent changes to The Privacy and Electronic Communications (EC Directive) Regulations
Download: The Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2011
Laura Bushaway a Solicitor in our Dispute Resolution department provides a summary of the Tenancy Deposit Schemes
Download: Tenancy Deposit Schemes - May 2012
James Baker provides an update to the recent changes to Employment payment amounts
Download: Changes to Employment payment amounts and limits in 2012