• At Kemp Little, we are known for our ability to serve the very particular needs of a large but diverse technology client base. Our hands-on industry know-how makes us a good fit with many of the world's biggest technology and digital media businesses, yet means we are equally relevant to companies with a technology bias, in sectors such as professional services, financial services, retail, travel and healthcare.
  • Kemp Little specialises in the technology and digital media sectors and provides a range of legal services that are crucial to fast-moving, innovative businesses.Our blend of sector awareness, technical excellence and responsiveness, means we are regularly ranked as a leading firm by directories such as Legal 500, Chambers and PLC Which Lawyer. Our practice areas cover a wide range of legal issues and advice.
  • Our Commercial Technology team has established itself as one of the strongest in the UK. We are ranked in Legal 500, Chambers & Partners and PLC Which Lawyer, with four of our partners recommended.
  • Our team provides practical and commercial advice founded on years of experience and technical know-how to technology and digital media companies that need to be alert to the rules and regulations of competition law.
  • Our Corporate Practice has a reputation for delivering sound legal advice, backed up with extensive industry experience and credentials, to get the best results from technology and digital media transactions.
  • In the fast-changing world of employment law our clients need practical, commercial and cost-effective advice. They get this from our team of employment law professionals.
  • Our team of leading IP advisors deliver cost-effective, strategic and commercial advice to ensure that your IP assets are protected and leveraged to add real value to your business.
  • Our litigation practice advises on all aspects of dispute resolution, with a particular focus on ownership, exploitation and infringement of intellectual property rights and commercial disputes in the technology sector.
  • We have an industry-leading reputation for our outsourcing expertise. Our professionals deliver credible legal advice to providers and acquirers of IT and business process outsourcing (BPO) services.
  • We work alongside companies, many with disruptive technologies, that seek funding, as well as with the venture capital firms, institutional investors and corporate ventures that want to invest in exciting business opportunities.
  • Our regulatory specialists work alongside Kemp Little’s corporate and commercial professionals to help meet their compliance obligations.
  • With a service that is commercial and responsive to our clients’ needs, you will find our tax advice easy to understand, cost-effective and geared towards maximising your tax benefits.
  • At Kemp Little, we advise clients in diverse sectors where technology is fundamental to the ongoing success of their businesses.They include companies that provide technology as a service and businesses where the use of technology is key to their business model, enabling them to bring their product or service to market.
  • We bring our commercial understanding of digital business models, our legal expertise and our reputation for delivering high quality, cost-effective services to this dynamic sector.
  • Acting for market leaders and market changers within the media industry, we combine in-depth knowledge of the structural technology that underpins content delivery and the impact of digitisation on the rights of producers and consumers.
  • We understand the risks facing this sector and work with our clients to conquer those challenges. Testimony to our success is the continued growth in our team of professionals and the clients we serve.
  • We advise at the forefront of the technological intersection between life sciences and healthcare. We advise leading technology and data analytics providers, healthcare institutions as well as manufacturers of medical devices, pharmaceuticals and biotechnological products.
  • For clients operating in the online sector, our teams are structured to meet their commercial, financing, M&A, competition and regulatory, employment and intellectual property legal needs.
  • Our focus on technology makes us especially well positioned to give advice on the legal aspects of digital marketing. We advise on high-profile, multi-channel, cross-border cases and on highly complex campaigns.
  • The mobile and telecoms sector is fast changing and hugely dependent on technology advances. We help mobile and wireless and fixed telecoms clients to tackle the legal challenges that this evolving sector presents.
  • Whether ERP, Linux or Windows; software or infrastructure as a service in the cloud, in a virtualised environment, or as a mobile or service-oriented architecture, we have the experience to resolve legal issues across the spectrum of commercial computer platforms.
  • Our clients trust us to apply our solutions and know-how to help them make the best use of technology in structuring deals, mitigating key risks to their businesses and in achieving their commercial objectives.
  • We have extensive experience of advising customers and suppliers in the retail sector on technology development, licensing and supply projects, and in advising on all aspects of procurement and online operations.
  • Our legal professionals work alongside social media providers and users in relation to the commercial, privacy, data, advertising, intellectual property, employment and corporate issues that arise in this dynamic sector.
  • Our years of working alongside diverse software clients have given us an in-depth understanding of the dynamics of the software marketplace, market practice and alternative negotiating strategies.
  • Working with direct providers of travel services, including aggregators, facilitators and suppliers of transport and technology, our team has developed a unique specialist knowledge of the sector
  • Your life as an entrepreneur is full of daily challenges as you seek to grow your business. One of the key strengths of our firm is that we understand these challenges.
  • Kemp Little is trusted by some of the world’s leading luxury brands and some of the most innovative e-commerce retailers changing the face of the industry.
  • HR Bytes is an exclusive, comprehensive, online service that will provide you with a wide range of practical, insightful and current employment law information. HR Bytes members get priority booking for events, key insight and a range of employment materials for free.
  • FlightDeck is our portal designed especially with start-up and emerging technology businesses in mind to help you get your business up and running in the right way. We provide a free pack of all the things no-one tells you and things they don’t give away to get you started.

Paying the penalty - don't forget to check liquidated damages clauses when negotiating a deal

In the recent case of Unaoil Ltd v. Leighton Offshore Pte Ltd [2014] EWHC 2965 (Comm) the Commercial Court rejected Unaoil’s claim for liquidated damages on the basis that the relevant clause was an unenforceable penalty. However, the Court held that the clause did not constitute a penalty at the time the contract was made, but rather it became such when the contract was amended. This is a departure from previous authority. It remains to be seen whether the judgement will stand, and whether or not it will be followed.

Leighton engaged Unaoil as a sub-contractor to provide construction, and other related, services in relation to an oil pipeline project in Iraq that Leighton was tendering for as contractor. The parties entered into a memorandum of understanding (“MOA”), which stipulated an all-inclusive price of $75 million for the project.  The MOA provided that Leighton would pay Unaoil $40 million in “liquidated damages” if it did not adhere to the agreed terms. The MOA also required Leighton to make various advance payments, amounting to approximately US$12 million.

The MOA was subsequently amended, to the effect that Unaoil was to be paid a reduced price of $55 million for construction and marketing services in relation to the project (including a minimum marketing fee of $25 million), plus an additional percentage of any amount that Leighton received in payment above US$500 million.

Leighton was engaged as contractor, but failed to enter into a sub-contract with Unaoil, selecting another sub-contractor instead. Unaoil brought a claim for: (i) the advance payments, (ii) the liquidated damages and (iii) damages for loss of profit resulting from Leighton’s breach of contract.

The Court allowed the debt claim for the advance payments. In addition, the Court held that Unaoil was entitled to damages for loss of profit due to Leighton’s repudiatory breach. However, the Court’s assessment of the amount of damages for loss of profit did not exceed the amount of the advance payments. As Unaoil had conceded that it would give credit for the advance payments, the damages element did not impact on the aggregate amount awarded to Unaoil (approximately $12 million).

The most interesting aspect of the judgement related to Unaoil’s claim for liquidated damages. The Court said that the liquidated damages clause was or at least may have been a genuine pre-estimate of loss at the time the MOA was signed. However, when the MOA was amended and the contract price was reduced, the Court held that the figure of $40 million was “manifestly one which could no longer be a genuine pre-estimate of likely loss”.

It is accepted law that the question of whether or not a clause is a penalty must be viewed at the time the contract is made. This was one of Lord Dunedin’s propositions in the seminal case of Dunlop Pneumatic Tyre Co Ltd v. New Garage and Motor Co Ltd [1915] A.C. 79, and has been followed ever since. Indeed, this principle formed part of the ratio in the recent Court of Appeal decision in El Makdessi v Cavendish Square Holdings BV and another [2013] EWCA Civ 1539 (and was one of the reasons the Court of Appeal reversed the High Court’s ruling), a case cited by the Court in Unaoil. Justice Eder conceded that there was no authority for the proposition that the relevant date for ascertaining whether the clause was penalty was the date of the amendment of the contract. 

It remains to be seen whether or not this decision will be appealed, but needless to say, Leighton will have some fairly persuasive arguments to put forward if it is. In the meantime, parties to commercial contracts and their lawyers should be mindful of the unintended impact of amending agreements, particularly where there is a change in price and the agreement provides for liquidated damages. 


For more information, please contact Andy Moseby