Clarkslegal LLP - Solicitors in Reading and London

Legal Updates

“As soon as reasonably practicable”: does it mean anything?

17 March 2016 #Dispute Resolution


Clarkslegal, specialist Dispute Resolution lawyers in London, Reading and throughout the Thames Valley.

Commercial contracts often include obligations carrying the qualification “as soon as reasonably practicable”.  A case earlier this month has given some insight into how the courts will interpret and apply such obligations. 

The 2008 financial crisis generated a significant amount of litigation, much of it about complicated financial products.  One such case is Goldman Sachs –v- Videocon Global.  The precise details of that dispute, involving a currency swap transaction are not important.  The point of interest, however, is that the Court of Appeal had to consider the impact of a failure by one party to serve a statement setting out details of the calculation of certain charges “as soon as reasonably practicable”. 

The paying party argued that, because the statement had not been provided as soon as reasonably practicable, the obligation to pay, which was dependent on the provision of the statement, had never arisen.  The payee, on the other hand, argued that although the statement had indeed been delivered later than was “reasonably practicable” this did not invalidate the statement once it had eventually been delivered.

The Court of Appeal agreed with the payee: even though it had failed to deliver the statement as soon as “reasonably practicable” that did not, in this case, invalidate the statement and the payor was still required to pay.

The usual health warning applies to this Judgment, in that the construction of the meaning of any commercial agreement will be particular to that agreement.  There are, of course, also ways that a clause of this sort could be worded in order to give a real remedy to the payor if it was not complied with.  However the case does provide an insight into how the courts will approach such provisions in commercial agreements and apply commercial common sense to these types of arguments. 

 

For further information about this or any other Dispute Resolution matter please contact Clarkslegal's dispute resolution team by email at disputeresolution@clarkslegal.com by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.

Read more articles

Antony Morris

Antony Morris
Partner

E: amorris@clarkslegal.com
T: 0118 960 4646
M: 07768 552 356

Contact

Dispute Resolution team
+44 (0)118 958 5321