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Disputes Matter – Winter 2018/19

Disputes Matter – Winter 2018/19

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Litigation privilege: Particularly nuanced protection

Walker Morris’ Head of Commercial Dispute Resolution Gwendoline Davies highlights two recent cases which demonstrate […]

Walker Morris’ Head of Commercial Dispute Resolution Gwendoline Davies highlights two recent cases which demonstrate that whether or not a party can withhold documents on the basis of litigation privilege remains a very nuanced question.

The ability to withhold documents from disclosure to the court and/or other parties, without adverse inferences being drawn, is a fundamental and vital protection within the law of England and Wales.

We were pleased to report, in September 2018, that the Court of Appeal had, in the SFO v ENRC case, reinstated the law so that documents prepared prior to court proceedings, and discussions and documents prepared in connection with the avoidance or settlement of litigation, could attract ‘litigation privilege’ – something which the High Court’s earlier decision in that litigation had threatened. The Court of Appeal’s decision was lauded amongst corporate clients and across the legal profession for its message that companies should not be discouraged from dealing responsibly and proactively with investigations and allegations for fear of their factual findings becoming disclosable.

However, as two even more recent cases demonstrate, whether or not a party can withhold documents on the basis of litigation privilege remains a very nuanced question, and one that is fraught with traps for the unwary.

Sotheby’s case: Dual purpose prevents privilege

Sotheby’s had undertaken, in a contract to sell a painting said to be by a 17^th century Dutch painter, to refund the purchase price if the painting was subsequently determining to be a fake. When allegations that the painting was a counterfeit were made, Sotheby’s instructed experts to advise on authenticity and instructed external lawyers on the basis that litigation was a real possibility. When the painting was discovered to be a fake, Sotheby’s refunded the buyer and sued the seller to recover its loss. The defendant/seller sought inspection of correspondence between Sotheby’s and the experts leading up to and following production of their reports, and Sotheby’s claimed litigation privilege.

Litigation privilege covers confidential communications between a lawyer and client, or between either of those and a third party (such as an expert adviser), so long as litigation is anticipated or ongoing and the dominant purpose for the communication is its use in litigation. There was no doubt in this case that litigation was anticipated when Sotheby’s correspondence was created, but the seller argued that its dominant purpose was not its use in the conduct, settlement or avoidance of litigation, but rather to determine what Sotheby’s needed to do to fulfil its contractual obligations to the buyer.

The High Court decided that the decision whether to refund the buyer and the need to strategise for potential litigation were of equal importance to Sotheby’s, such that it could not pass the dominant purpose test. The documents therefore had to be disclosed.

The Sotheby’s case is a harsh reminder of the existence and strict application of the dominant purpose test. Where use in strategising or preparation for; conduct of; or settlement or avoidance of, litigation is the main motivator for the production of a document, then litigation privilege may apply. Where, however, factual investigations are independently or also required, there is a risk that documents may be disclosable.

West Ham v E20 Stadium case: Consider what amounts to ‘conducting litigation’

In accordance with SFO v ENRC, the concept of ‘conducting litigation’ includes deciding whether or not to settle. This case confirms, however, that deciding whether or not to settle is one thing; whereas purely commercial discussions as to potential settlement options are something else. The former will be covered by litigation privilege; the latter probably not.

That is a very delicate, but crucial distinction, which may frequently be difficult to discern in practice in the commercial world. This area is likely to be the source of future litigation.

Practical advice

For more information and lots of practical advice about litigation privilege and legal professional privilege more generally – including how privilege arises and how to protect it – please see our more detailed earlier briefing on legal advice privilege and the privilege chapter from our upcoming Little Green Book of Dispute Resolution.

Is there a principle of ‘futility’ in English contract law?

In light of a recent Court of Appeal decision, Managing Partner and Commercial Dispute Resolution […]

In light of a recent Court of Appeal decision, Managing Partner and Commercial Dispute Resolution specialist Malcolm Simpson asks: can the courts can disregard contractual drafting where a change in facts or circumstances renders a provision ‘futile’?

“The law never compels a person to do that which is useless and unnecessary” [1], but the courts will strive to uphold the clear wording of a contract wherever possible, even if that results in a ‘bad’ bargain for any party [2]. These two equally valid but seemingly competing legal concepts have led the Court of Appeal to consider, in Astor Management AG & Anor v Atalaya Mining plc [3], whether there is a principle of ‘futility’ in English contract law.

What if compliance with contractual conditions becomes futile?

In this recent case, the defendant’s contractual obligation to make a payment to the claimant was deferred until it had obtained a “senior debt facility”. In fact, the defendant failed to obtain such a facility, but instead it obtained funding via intra-group loans. The claimant therefore argued that the contractual precondition as drafted had become futile, and that the payment to it should be made.

The Court of Appeal reviewed authorities dating back to the 1960s and concluded that it is misleading to think of a ‘principle of futility’. Rather, the question of whether, in light of subsequent events, a contractual provision may no longer apply or may cease to have effect, is a question to be considered as part of the overall contractual interpretation exercise. The Court of Appeal explained that there is no principle of law, nor even an interpretative assumption, that clear contract drafting can be disregarded just because complying with it serves no useful purpose.

On the facts of the particular case, the court found that, at the time of entering into the contract, the parties had deliberately confined the contract to a particular mode of financing. Unsecured intra-group loans are different to senior debt facilities and do not rank in priority over other repayment obligations in the same way. The court rejected the claimant’s argument that the condition precedent to obtain a senior debt facility was rendered useless and unnecessary by the obtaining of intra-group funding instead. The express language of the contract could not be ignored and the payment was not due to the claimant.

So what is the correct approach to contractual interpretation?

Contractual interpretation has hit the legal headlines several times in recent years. The Astor v Atalaya case adds the latest clarification to the correct approach, which can now be summarised as follows:

The starting point is the wording of the contract itself and the courts will strive to uphold the clear wording of the clause wherever possible, applying the objective test of what the reasonable businessperson would understand the clause to mean, even if that results in a ‘bad’ bargain for any party.
The court’s task is to ascertain the meaning of the language which the parties have chosen to express in their agreement when read in the context of the factual background known or reasonably available to the parties at the time of the agreement [4].
However, where a contract term might be interpreted in different ways, the court is entitled to prefer the interpretation which is consistent with business common sense [5].
Alternatively, where it is commercially and practically necessary, a court may imply terms into the contract to ensure business efficacy [6].
Where drafting has become futile as facts/circumstances have changed, that can be taken into account as part of the overall contractual interpretation exercise. The court may be able to disregard express contractual provisions if the changed facts or circumstances were neither intended nor contemplated at the time the contract was completed and if the court is clear what the parties did intend. However the courts cannot ignore futile drafting just to achieve a sensible commercial bargain.

Practical advice

As well as enhancing our understanding of the correct approach to contractual interpretation, the Astor v Atalaya case highlights just how vital it is that parties get the drafting of any contractual preconditions, or other similar provisions, right. Falling back on a ‘futility’ argument is likely to be inadvisable in the majority of cases.

Conditional provisions should be clear, certain and should accurately reflect both parties’ intentions. They should not generally involve indefinite obligations, and they should therefore contain long-stop dates or other mechanisms for ascertaining times for compliance. They should set out fully any steps that are required for compliance and, if necessary, any procedure for ascertaining or confirming compliance. Ideally, the parties should also pre-emptively consider, and the contract should expressly provide for, the consequences of a failure to comply.

If you would like any advice or assistance in connection with contract drafting or interpretation, or if you would like any legal and practical training on commercial contract issues, please do not hesitate to get in touch.

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[1] Lord Denning in Barrett Bros v Davies [1966] 2 All ER 972
[2] Arnold v Britton [2015] UKSC 36
[3] [2018] EWCA Civ 2407
[4] Wood v Capita Insurance Services Ltd [2017] UKSC 24
[5] Rainy Sky SA v Kookmin Bank [2011] UKSC 50
[6] M&S v BNP Paribas [2015] UKSC 72

When is a contractor a commercial agent? Businesses should look closer to home

Commercial Dispute Resolution Partner Nick Lees explains why a recent case means that businesses need […]

Commercial Dispute Resolution Partner Nick Lees explains why a recent case means that businesses need to look closer to home than ever before to establish whether any of its contractors will be afforded the enhanced protection of the Commercial Agents Regulations.

What do businesses need to know?

It is important for businesses to understand whether or not independent contractors working for them fall within the definition of ‘commercial agent’ under the Commercial Agents (Council Directive) Regulations 1993 (the Commercial Agents Regulations). If they do, the contractor/agent will be afforded enhanced protections, including the right to receive minimum periods of notice to terminate and the right to receive compensation or an indemnity on termination of the agency [1].

In accordance with the European Withdrawal Act 2018 (and subject to the terms of any final Brexit deal), the Commercial Agents Regulations will remain in force post-Brexit.

What is a ‘commercial agent’?

The Commercial Agents Regulations define commercial agents as self-employed intermediaries with continuing authority to negotiate, or to negotiate and conclude, the sale or purchase of goods on behalf of the principal. However the recent case of Zako SPRL v Sanidel SA [2] seemingly increases the ambit of that definition, such that more contractors than was hitherto thought might fall within it. Furthermore, on a practical level, they might be more difficult to spot.

The European Court of Justice decided in this case that a contractor could be a commercial agent even though it performed its activities from the principal’s premises and even though it performed some duties for the principal which were not solely focused on the negotiation or conclusion of the sale or purchase of goods.

Zako v Sanidel: What are the key takeaways?

The key points to note from this important case are:

A contractor who operates from the principal’s premises may nevertheless be a commercial agent so long as the agent’s use of the principal’s facilities does not prevent it from performing its activities independently.
To determine whether an agent’s independence is compromised by its physical proximity to the principal, it is necessary to consider:
- whether the agent is subject to the principal’s instructions;
- whether the agent’s ability to organise its own activities is limited;
- whether the agent’s economic risks of acting independently are affected.
A contractor who carries out other, unrelated, non-commercial agency roles and responsibilities for the principal may nevertheless be a commercial agent so long as those duties do not prevent it from performing its agency activities independently and so long as the agency work is ranked equally in importance.
To determine whether an agent’s independence is compromised by its carrying out other, non-agency activities, it is necessary to consider:
- the nature of the various activities;
- the manner in which various activities are carried out;
- the proportion of agency versus non-agency activities;
- the method of calculation of remuneration;
- the reality of any financial risk incurred by the agent.

Practical advice

The Zako v Sanidel case means that potentially more contractors than ever before will be entitled to the additional protections and remuneration afforded by the Commercial Agents Regulations. The case therefore highlights that it is essential for businesses to properly understand the legal status of all of their relationships with contractors/agents – even those who work very closely with the principal ‘on site’ and/or those who undertake non-agency related tasks or responsibilities.

In addition, whilst businesses cannot contract-out of the Commercial Agents Regulations, they may be able to structure commercial arrangements in such a way as to minimise the risk of the additional protections applying; they may be able to agree with any agent mutually acceptable compensation or indemnity provisions; and/or they may be able to otherwise minimise the practical and financial impact of the Commercial Agents Regulations or any claims made under them.

If you would like any further advice or assistance in connection with the Commercial Agents Regulations or any other agency-related matter, please do not hesitate to contact Nick Lees or any other member of the Commercial Dispute Resolution Team.

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[1] The underlying purpose of these additional protections is effectively to safeguard and reward the agent in return for the increase in goodwill that the agent may have generated for the business/principal during the agency period.
[2] (C-452/17) [2018] All ER (D) 112 (Nov)

Carrying out works prior to completion of contract

Walker Morris consider the common scenario where parties do business together prior to concluding a […]

Walker Morris consider the common scenario where parties do business together prior to concluding a formal contract, and offers his practical advice.

It is a very common commercial scenario: at the outset of a venture, relationships are positive and parties are eager to just get on and do business together, rather than wait for the lawyers to dot the ‘i’s and cross the ‘t’s. Parties therefore go ahead and start work, pending completion of a formal contract. However, when markets or circumstances change, relationships sour or disputes arise, the parties realise that, without a concluded contract, they lack certainty or common understanding as to the terms which govern their business relationship.

Formation of contracts: What businesses need to know

A contract is formed when all of the following key elements are present: offer; acceptance; consideration (that is, money or money’s worth); and intention to create legal relations. Contracts can be made orally (face-to-face or via some communication medium such as the telephone); via an exchange of e-mails or other correspondence; or they can even arise by virtue of the parties’ conduct. Crucially therefore, with some limited exceptions, contracts can be formed without any written documentation or other formality whatsoever.

A lack of understanding about the formation of contracts can have devastating consequences. For example, a party may have invested significant time and money in a project on the understanding that its opposite number was contractually bound to the scheme, only to find that no binding obligations are actually in effect and that its opposite number can walk away scot-free, leaving the project to collapse, at any time. Similarly, a party may be operating under the assumption that key terms (say, as to price, limitation of liability or termination options) are still to be agreed, only to find that their conduct, or something they said to their opposite number several weeks ago, has committed them contractually to what is now an unfavourable deal.

What can businesses do?

In the vast majority of commercial cases, the best advice will be for parties to wait until a formal written contract has been finalised and completed before they start work or otherwise invest any significant time or money in a venture. But what can parties do in cases where that is just not practicable?

A sensible option is often to put into place a ‘letter of intent’, which should concurrently provide comfort that the parties are equally committed to the venture and that they intend to be contractually bound in the future when contractual documentation is completed and guard against the risk of a binding contract arising inadvertently by words or conduct in the meantime.

What are the risks?

Even that option can carry risks, however. In the recent case of Arcadis Consulting v AMEC [1], the parties commenced works and put into place a letter of intent while they conducted negotiations on a construction project contract that never materialised. However, the letter of intent was not clearly drafted – either as to its legal status and force, or as to its terms. To the intense chagrin of one of the parties, the letter of intent was ultimately found, by the Court of Appeal, to constitute a contractual offer, which was accepted by exchange of correspondence and/or by conduct when works began. Not only was that party therefore inadvertently landed with a binding contract per se, but also it was bound by terms contained within what it had thought was merely a non-binding letter of intent. One of those terms was a liability cap of £610k. That proved disastrous for the party’s damages claim when works went wrong and it faced a potential loss of £40m.

WM Comment and practical advice

Commercial parties should review their negotiating practices and be aware of the risks associated with informality in the formation of contracts. It is essential that businesses educate their staff as to the risks of both inadvertent contract formation and of conducting business (and therefore going on to incur expenses and responsibilities) on the assumption that contractual backing exists when in fact it may not.

The lack of any specific requirement for formality and/or documentation means that it is important that parties should not discuss terms or act in any way that is inconsistent with their contractual intentions in case a contract comes into effect prematurely, inadvertently or on unsuitable terms.

Equally, parties should be very clear about their intention to create legal relations (or not) because, depending upon the particular circumstances (and as the Arcadis v AMEC example shows), it can be a costly mistake to assume that a contract has not come into being at all.

An understanding of some key contractual principles, as well as an awareness of the practical scenarios in which informal commercial discussions may arise for any particular business, will be key to getting the balance right between being able to quickly obtain sufficient comfort to enable parties to proceed with their plans, and becoming legally bound when that is actually required.

Letters of intent can be a very helpful tool. However, it is absolutely essential that a letter of intent is clearly and accurately drafted to confirm both that it is the parties’ intention that neither will be contractually bound unless or until formal contract documentation is completed and as to the terms (or lack of terms) that govern the parties’ relationship and venture in the meantime.

If you would like any advice, assistance or training on the issues considered in this briefing, or if you would like any specialist input on a letter of intent, please do not hesitate to get in touch.

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[1] Arcadis Consulting (UK) Ltd v AMEC BCS Ltd [2018] EWCA Civ 2222

Vicarious liability in a variety of cases

In three recent cases with very different facts, the Court of Appeal has considered vicarious […]

In three recent cases with very different facts, the Court of Appeal has considered vicarious liability – a tricky concept which is often misunderstood. In two cases the court has made findings of vicarious liability against employers for employee misconduct outside the workplace/outside working hours; and in another the court has confirmed the correct test for determining vicarious liability for a contractual agent’s fraudulent misrepresentation. Commercial Dispute Resolution specialist Lynsey Oakdene explains.

What is vicarious liability?

‘Vicarious liability’ is a legal concept under which employers or contractual principals can be found liable for the wrongful acts of their employees or agents.

Employee misconduct context

In the employment context, there must be a ‘sufficient connection’ between the employee’s wrongful act and the employee’s employment that it would be fair to hold the employer vicariously liable for its employee’s actions. This involves the court investigating the factual circumstances, including what duties/activities were entrusted to the employee; and was there a sufficient connection between the employee’s position and the wrongful conduct so as to make it just and reasonable [1] for there to be vicarious liability?

In December 2011, Northampton Recruitment Ltd held its Christmas party at a golf club. The party was attended by many staff including a sales manager called Mr Bellman and the company’s managing director, Mr Major. The party ended at around midnight, but some staff took taxis to a hotel bar (paid for by the company) and continued drinking. At around 3 am Mr Major and Mr Bellman became involved in an argument about work. Mr Major punched Mr Bellman twice which led to Mr Bellman falling and hitting his head on the ground. Mr Bellman’s skull was fractured, leading to severe brain damage. Mr Bellman sued the company on the basis of vicarious liability [2].

The Court of Appeal found for Mr Bellman, deciding that there was a sufficient connection between the employment and the assault because:

Mr Major was the MD of the company and was very autonomous and dominant in this role.
The Christmas party had been paid for and organised by Mr Major.
Mr Major had offered to pay for taxis to take staff to the nearby hotel bar after the formal party ended.
At the hotel bar, the company paid for the majority of the drinks consumed.
The attack occurred immediately after an altercation about work because Mr Major had become angry that his decisions were being questioned.
Mr Major had made comments to the staff whilst at the bar that the company was ‘his business’, he paid their wages and he got to make the decisions.

In the recent Morrisons case [3], the supermarket lost its appeal against a High Court ruling that it is vicariously liable for the actions of one of its former employees who deliberately leaked payroll data relating to almost 100,000 employees.

Morrisons submitted on appeal that the sufficient connection test was not satisfied, since the wrongdoing that caused the harm was done by the individual at his home, using his own computer, on a Sunday, several weeks after he had downloaded the data at work on to his personal USB stick. However the Court of Appeal agreed with the High Court that there was an “unbroken thread” linking the individual’s work to the disclosure of the data. The Court of Appeal also gave short shrift to the submission that, given the number of employees affected, a finding of vicarious liability would place an enormous burden on Morrisons (and on other innocent employers in future cases).

Contractual principal/agent context

Businesses should be aware that vicarious liability also arises in a commercial contract context, where businesses (or contractual principals) may become vicariously liable for the acts of their agents or representatives. A common scenario is where an agent or representative makes fraudulent representations in the context of arranging a deal.

That is what happened in James Scott Winter v Hockley Mint Ltd [4], when the Court of Appeal confirmed that the correct test, in this context, is the ‘ostensible authority’ test. Ostensible (or ‘apparent’) authority is the authority of an agent as it appears to others. So a principal will only be liable for the deceit of his agent if there has been a holding out or representation to the claimant (which was intended to be and was in fact acted upon by the claimant), that the agent had actual authority to do what he or she did, or that what was done was within the usual scope of the agent’s ostensible authority [5].

In such cases it is important to note that actual authority can arise from the express conferring of authority by the principal on the agent to enter into a particular transaction, or a class of transactions; or it can be implied from the conduct of the parties and the circumstances of the case.

Conclusions and practical lessons

These three very different cases highlight to businesses:

The correct test as to whether a business could face vicarious liability differs subtly depending on the particular legal relationship between the parties involved; and
Both the employer/employee ‘sufficient connection’ test and the principal/agent ‘ostensible authority’ test can have a very wide reach and can apply in hugely varying factual scenarios.

So, are there any practical lessons for businesses to take away?

The Bellman case was an unusual case of a Managing Director trying to assert his authority at work by using physical aggression outside of work. It does not set a precedent that vicarious liability will always arise from an assault following an argument about work because it will always depend on the specific facts of the case. To emphasise this point, the Court of Appeal stated that its decision was “not authority for the proposition that employers become insurers for violent acts by their employees”. The decision does, however, make clear that employers can be vicariously liable for wrongful acts outside of the normal employment environment and hours.

Businesses should therefore remind staff that any harassment or verbal or physical aggression by or between employees either within or outside the working environment or during or after working hours could lead to disciplinary consequences.

It would also be prudent, in light of the Morrisons decision, for businesses to review their existing policies and procedures and to consider imposing strict[er] internal controls to guard against the risk of employees ‘going rogue’ – especially in those parts of the business where employees are regularly entrusted with personal data and confidential or sensitive information.

In the agency context, businesses should make sure that their contractual arrangements clearly and expressly define the scope and extent of authority conferred upon any agents. Businesses should also carry out regular training (in relation to both the legalities and practicalities of the agency arrangement itself and as to the law of misrepresentation more generally) and perhaps even undertake spot checks to ensure that agents and representatives are working within permitted and acceptable parameters.

Finally, businesses should check the terms of their insurance to ensure that they are adequately protected, should any vicarious liability claim arise.

If you would like any advice, assistance or training on any of the vicarious liability or agency issues covered in this briefing, please do not hesitate to context Lynsey Oakdene or any member of Walker Morris’ Commercial Dispute Resolution Team.

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[1] In Mohamud v WM Morrison Supermarkets plc [2016] UKSC 11 the Supreme Court said that the question of whether it is ‘just and reasonable for there to be vicarious liability’ should be considered in line with the principle that businesses should bear the loss caused by business related risks materialising, including the risk of an employee misusing his or her position.
[2] Bellman v Northampton Recruitment [2018] EWCA Civ 2214
[3] WM Morrison Supermarkets Plc v Various Claimants [2018] EWCA Civ 2339
[4] [2018] EWCA Civ 2480
[5] Armagas Ltd v Mundogas S.A. The Ocean Frost [1986] 1 A.C. 717 (HL)

Ban on harmful gender stereotypes: What businesses need to know

Commercial Dispute Resolution specialist Claire Acklam explains the Committee of Advertising Practice’s imminent ban on […]

Commercial Dispute Resolution specialist Claire Acklam explains the Committee of Advertising Practice’s imminent ban on harmful gender stereotyping and offers her practical advice for businesses.

What is changing, and why?

We reported last year that the Committee of Advertising Practice (CAP) planned to introduce new rules banning harmful gender stereotyping in advertising. That followed the Advertising Standards Authority’s (ASA) review which looked at gender stereotyping in advertising and concluded that harmful stereotypes can “restrict the choices, aspirations and opportunities of children, young people and adults”.

On 14 December 2018 new rules were introduced into CAP’s non-broadcast and broadcast codes that marketing communications must not include gender stereotypes that are likely to cause harm or serious or widespread offence. The new rules will take effect on 14 June 2019.

What does this mean for businesses?

All businesses need to think very carefully about the use of gender stereotypes within their marketing and other communications, and this is an increasingly nuanced area.

From a strictly legal perspective, expert advice may be required as to exactly what potential marketing methods will be caught; and as to whether or not proposed content may be harmful.

There are also, however, more practical considerations.

In the run-up to Christmas, Marks and Spencer faced widespread criticism when its ‘Christmas must-haves’ window display posed women in fancy underwear alongside men in smart suits. Whilst (depending upon the exact content of the window display including any offers or other promotional material) the new CAP rules would not have applied, the window display attracted significant negative PR for M&S, with the juxtaposition of female and male aspirations sparking outrage and upset. Businesses of all types should take care to avoid any messaging or misstep which could make them seem old-fashioned, unethical or out-of-touch.

By comparison, recent months have seen announcements by retailers including John Lewis, Boots, Abercrombie and Fitch and Nununu about the removal of ‘boys’ and ‘girls’ signage from toys and even some clothing lines. These announcements have generally been very positively received within the press and on social media, with some even attracting celebrity endorsement.

Following last year’s announcement that a ban on harmful gender stereotyping was pending, image asset library Shutterstock commissioned a survey amongst world-wide marketers as to the use of diverse [1] imagery in their campaigns [2]. The survey revealed that by October 2018 some 75% of UK marketers had already been impacted by the imminent new rules; that 60% agree that gender is no longer as important a factor when it comes to targeting in marketing campaigns; and that 88% of Generation X and 90% of Millennials believe that more diverse representation helps a brand’s reputation today.

What will be caught by CAP’s new rules?

The CAP codes apply to marketing communications and therefore cover traditional advertisements in newspapers and magazines; on the TV and radio; and via posters, mail shots and the like. They also cover ‘new’ media such as blogs, social media, websites, text message, etc.

It is also important to note that the new rules do not ban gender stereotyping per se. Rather, only harmful gender stereotypes are prohibited. CAP has stated that the aim is to identify specific harm that should be prevented and not to ban gender stereotypes outright; but it has also made clear that the use of humour or banter is unlikely to mitigate against the potential for harm.

CAP has published guidance to help marketers understand and apply the new rules. For example, the new rules do not necessarily ban adverts which feature “glamorous, attractive, successful, aspirational or healthy people or lifestyles” or which feature one gender only; but they would capture any advert which depicted a man or woman failing to achieve a task specifically because of their gender [4].

The rules do not, however, just deal with potential sexism or contrast between the sexes – they are much wider than that.

For example, the new rules would ban an advert aimed at new mums which suggested that looking attractive or maintaining a new home are priorities; or an advert aimed at young people which directly or indirectly prioritised a particular appearance or body shape over other qualities. Such scenarios may involve gender stereotypes which can negatively impact the emotional and physical wellbeing of vulnerable people.

Next steps

Businesses now have just under six months in which to familiarise themselves, and train their staff, as to the details of, and guiding principles surrounding, the new CAP rules.

As well as satisfying themselves as to the legalities, businesses should ensure that they consider the wider commercial and reputational issues associated with any proposed marketing communications/campaigns and any policies or publicity relating thereto.

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[1] including diversity in terms of race, gender and abilities
[2] See https://www.shutterstock.com/blog/visualizing-diversity-in-advertising-around-the-world; and
http://www.netimperative.com/2018/11/asa-gender-stereotyping-ban-marketers-embracing-more-diversity-in-images/ for more information
[3] although the position may be different if a point of sale display includes a promotion or incentive offer of any kind
[4] given examples include a man struggling to change a nappy or a woman struggling to park a car

Contacts

Gwendoline Davies - Partner, Commercial Dispute Resolution at Walker Morris LLP

Gwendoline Davies
Partner
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Malcolm Simpson, Partner, Litigation & Dispute Resolution

Malcolm Simpson
Partner
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Nick Lees
Partner
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