News and Insights
The Statute of Limitations explained in relation to Simple Contracts
Jul 25, 2018
Supplier disputes commonly arise out of contractual breaches, where either the supplier fails to fulfil the service as defined, or to levy the agreed prices for those services. Such breaches are often resolved through discreet negotiations but, where those breaches occurred some time in the past and only come to light much later, such claims run a significant risk of being time barred.
This time barring stems from the limitation act, passed by the UK government and enshrined in law since 1980, and often cited by suppliers as the outside boundary for considering an invoice dispute.
The Statutory limitation period for breach of contract claims under contract
The Limitation Act enshrines in the law the limitation periods which apply to breaches of contract in (amongst other things) Simple Contracts and Deeds. The Act specifies a time limit within which a legal action can be brought through the UK courts, in relation to a contractual breach, such as being overcharged for a service.
Under the Act, this limitation is set at 6 years from the cause of action for Simple Contracts. The cause of action being the earliest point at which the disputing party could have known that a breach had occurred. This is usually, but not always, the date that they received the invoice on which the overcharge occurred, not the date of the contract. Where the contract is executed under a formal deed, this limitation period is set at 12 years, though these sorts of contract are much less common.
The courts themselves are not bound to invoke a limitation period themselves, rather it is the right of the disputed party to refer to this limitation in its defence. Where exercised, this right usually results in the claim being struck out by the courts as Statute Barred.
Further limitations by contracting out of Statutory Limitation periods under UK law
The courts are generally of the view that contracting parties have the right to further limit their statutory rights to dispute a contract. A supplier may bargain away additional services or reduced pricing in return for a shorter limitation of their liabilities.
Such limitation clauses are subjected to reasonableness tests by the courts when exercising provisions designed to prevent unfair contract terms.
Nonetheless, large organisations seeking to enter into supply of goods or services arrangements should always consider the implications of such shortening of limitation periods on their rights to query the charges they have paid.
Underlining the risks of failing to comply with a Statutory Information Request
Apr 17, 2018
When undertaking investigations, often instigated by themselves, OfCom has the power to request information, as needed, under the 2003 Communications Act, from CPs.
It is very important, if information is requested from a CP, that the correct details are provided, in a timely manner, as failure to do so may result in OfCom levying a penalty charge on the relevant CP.
One of the most recent examples of this happening was back in January of this year, 2018, when OfCom imposed a penalty of £70,000 on BT after finding that it had contravened requirements to provide information in two separate statutory information requests issued as part of the ongoing Wholesale Local Access market review.
The incorrect information supplied by BT had unintentionally been provided in error. OfCom took account of the fact that they had already levied a penalty of £300,000 on BT in April 2017 when they had contravened three information requests (the ‘deemed consent contraventions’).
Ofcom’s Penalty Guidelines explain that the main objective of imposing any penalty is deterrence. The level of the penalty must be sufficient to deter the business from contravening regulatory requirements, and to deter the wider industry from doing so, having regard to the seriousness of the infringement.
Under section 139(5) of the Communications Act, the statutory maximum penalty that Ofcom can impose in relation to contraventions of information requirements is £2,000,000. This was increased on 13th July 2011 from the previous maximum of £50,000. However, although the maximum penalty allowed is now £2,000,000 the Act does specify that the level of the penalty imposed should be appropriate and proportionate to the contravention(s) in respect of which it is imposed.
Therefore, it can be a very expensive mistake to either ignore, or not give full attention, to a Statutory Information Request, if one is ever received.
The investment debate continues to rage around Dark Fibre
Apr 16, 2018
The investment debate continues to rage around Dark Fibre as Ofcom confirmed on Thursday that it will not be requiring BT to provide a Dark Fibre product until 2019. This will be welcome news to the likes of Virgin Media, Vodafone and City Fibre who continue to plough investment onto expanding their own Fibre Networks.
With business demand for Fibre to the Premises expanding in a linear trajectory and FTTP demand set to become an issue for the residential markets from 2020 onwards, the UK desperately needs more infrastructure providers and a levelling of the playing field when it comes to the offerings.
It will be interesting to see how the Dark Fibre argument develops throughout 2018 and the impact that these expanding networks will have on BT's existing monopolies.
Read Ofcom's full statement below;