HomeInsightsNeed to Know – 2012.10.01

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General

High Court rules that limitation clause in project manager’s Terms of Appointment failed UCTA reasonableness test.

High Court finds typical no set-off clause satisfied UCTA reasonableness test.

Technology

European Commission publishes cloud computing strategy.

Data Protection

Information Commissioner’s Office reminds businesses of personal data responsibilities when using cloud computing to process personal information.

Broadcasting

Ofcom rejects footballer’s complaints of unfair treatment and unwarranted infringement of privacy in BBC 3’s Britain’s Gay Footballers.

Music

European Commission approves Universal Music Group’s acquisition of EMI’s recorded music business subject to conditions.

Publishing

Press Complaints Commission upholds complaint of inaccuracy.

Film & TV

European Commission adopts first report on promotion of European works in EU television and on-demand audiovisual media services for the period 2009 to 2010.

EU Audiovisual sector Social Dialogue Committee publishes joint opinion on European Audiovisual Observatory.

Advertising

Committee of Advertising Practice publishes advice on creating “scary” advertisements.

General

High Court rules that limitation clause in project manager’s Terms of Appointment failed UCTA reasonableness test.

Ruling on quantum in a negligence claim arising out of a delay to the construction of boarding accommodation at Ampleforth College, His Honour Judge Keyser QC, sitting as a High Court Judge, held that a project manager could not rely on a limitation clause in its Terms of Appointment.  The judge held that the clause failed the reasonableness test under the Unfair Contract Terms Act 1977, first in that it purported to limit liability in damages to the contract price of £200,000 in the face of an obligation on the project manager to take out professional indemnity insurance of £10 million; and, secondly, on account of the fact that the project manager did not bring the clause to the claimant’s attention, notwithstanding the absence of any such limitation in the terms that applied to two previous projects undertaken on the claimant’s behalf. 

The project manager argued that the clause should be considered reasonable because, had the claimant Trust bothered to read the Terms of Appointment, the clause itself was clear and unambiguous, there was no inequality of bargaining power and the Trust neither received an inducement to accept the project manager’s terms nor suffered from any restriction upon its freedom to contract elsewhere.  The judge acknowledged the force in these arguments, and also in the notion that commercial parties should be “free to apportion the risks as they think fit… and respecting their decisions” (see Photo Productions Ltd v Securicor Transport Ltd [1980] AC 827), but in his view these matters clearly did not outweigh the lack of notice and the inconsistency between the contractual terms themselves.  (The Trustees of Ampleforth Abbey Trust v Turner & Townsend Project Management Ltd [2012] EWHC 2137 (TCC) (27 July 2012) – to read the judgment in full, click here). 

High Court finds typical no set-off clause satisfied UCTA reasonableness test.

Ruling on a preliminary issue in a commercial dispute between a supplier of generators and a significant ex-customer that exported the generators to Nigeria, the High Court held that a no set-off clause, which essentially sought to protect the supplier’s cash flow, satisfied the test of reasonableness under the Unfair Contract Terms Act 1977.  Noting in particular the high value of the products and extended credit available to the buyer, Mr Justice Popplewell said that the clause was common in many commercial contracts and while the supplier was a much larger concern than the buyer their relationship was “symbiotic” since there was a degree of dependence on both sides as reflected in the buyer’s successful negotiation of those credit terms notwithstanding significant overdue debt. 

The court also held that the supplier was not precluded from relying on the no set-off clause by the operation of s 49 of the Sale of Goods Act 1979.  The no set-off clause applied only to claims for price and an action to recover a price could be brought by a seller only where property had passed or the specific conditions of that provision were satisfied.  The court was however satisfied that in this case property in the goods had passed, notwithstanding a retention of title clause in the supplier’s standard terms.  The effect of the retention of title clause was not (as the buyer sought to argue) that the buyer was acting as agent in relation to sub-sales.  It did not state that the buyer was to sell as agent but rather that the buyer was to be entitled to resell the products in the ordinary course of business and, given the trading history and relationship between the parties, it was clear that reselling in the ordinary course of business meant selling as principal.  In any event, property in the goods passed for the purposes of s 49 on sale to the sub-buyer.  (FG Wilson (Engineering) Ltd v John Holt & Company (Liverpool) Ltd [2012] EWHC 2477 (Comm) (5 September 2012) – to read the judgment in full, click here). 

Technology

European Commission publishes cloud computing strategy.

The Commission’s new strategy, Unleashing the potential of cloud computing in Europe, outlines actions to deliver a net gain of 2.5 million new European jobs, and an annual boost of 160 billion Euros to EU GDP (around 1%), by 2020.

The strategy is designed to speed up and increase the use of cloud computing across the economy and follows the Commission’s 2012 proposal to update European data protection rules.  It comes ahead of a European Strategy for Cyber Security to be proposed in the coming months.

The Commission says that whilst many popular services such as Facebook, Spotify and web-based email already use cloud computing technologies, the real economic benefits would come through widespread use of cloud solutions by businesses and the public sector.

The Commission says that development of European cloud rules is “a precondition for the seamless digital space that will bring us a true Digital Single Market”.  In the absence of common standards and clear contracts, many potential users are, the Commission says, “deterred from adopting cloud solutions as they are not sure what standards and certificates they should look for to meet their requirements and legal obligations”.  Cloud providers and users are also looking for “clearer rules when it comes to the delivery of cloud services”, for example regarding the question of where legal disputes will be resolved or how to ensure easy movement of data and software between different cloud providers.

Key actions of the strategy include:

  • cutting through the jungle of technical standards so that cloud users get interoperability, data portability and reversibility – necessary standards should be identified by 2013;
  • support for EU-wide certification schemes for trustworthy cloud providers;
  • development of model “safe and fair” contract terms for cloud computing contracts including Service Level Agreements; and
  • a European Cloud Partnership with Member States and industry to harness the public sector’s buying power (20% of all IT spending) to shape the European cloud market, boost the chances for European cloud providers to grow to achieve a competitive scale, and deliver cheaper and better eGovernment.

Vice-President Neelie Kroes said: “Cloud computing is a game-changer for our economy. Without EU action, we will stay stuck in national fortresses and miss out on billions in economic gains.  We must achieve critical mass and a single set of rules across Europe.  We must tackle the perceived risks of cloud computing head-on”.  To read the Commission’s press release in full, click here.

Data Protection

Information Commissioner’s Office reminds businesses of personal data responsibilities when using cloud computing to process personal information.

With the current growth in cloud computing, the ICO says that it is concerned that many businesses do not realise that they remain responsible for how personal data is looked after, even after passing such data to the cloud network provider.

The guidelines give tips to businesses including:

  • seek assurances from cloud network providers as to how the data will be kept safe.  Ask how secure the cloud network is and what systems are in place to stop someone hacking in or disrupting access to the data;
  • think about the physical security of the cloud provider;
  • ensure that a written contract is put in place with the cloud provider;
  • put a policy in place to make clear what is expected of the cloud provider.  This is key, the ICO says, where services are funded through adverts targeted at the business’ customers: if the provider is using personal data and the business in question has not asked customers’ permission, that will be a breach of data protection law; and
  • remember the obligations associated with transferring data internationally, which includes using cloud storage abroad.

Dr Simon Rice, ICO technology policy advisor, said: “The law on outsourcing data is very clear.  As a business, you are responsible for keeping your data safe.  You can outsource some of the processing of that data, as happens with cloud computing, but how that data is used and protected remains your responsibility.  It would be naïve for an organisation to take the attitude that these guidelines are too much effort to simply store some data in a different place.  Where personal information is involved, the stakes are high and the ICO has already demonstrated it will act firmly against those who don’t meet data protection laws”.  To read the ICO press release in full and for a link to the complete guidelines, click here.

Broadcasting

Ofcom rejects footballer’s complaints of unfair treatment and unwarranted infringement of privacy in BBC 3’s Britain’s Gay Footballers.

The programme explored the reasons why there had been no openly gay professional footballers since Mr Justin Fashanu came out publicly as gay in 1990, and featured interviews with professional footballers and some celebrities.  Mr Mkandawire, a professional football player for Millwall FC, was filmed and broadcast being asked if he would give his views on the subject and he responded by saying he would think about it.

Mr Mkandawire complained that he had not given his consent to be included in the programme and said that he was portrayed as homophobic and unwilling to talk about the subject of homophobia.  He also complained that his privacy was unwarrantably infringed in connection with the obtaining of material included in the programme and in the programme as broadcast.

The BBC stated that Mr Mkandawire’s reaction was a fair reflection of the circumstances and that there were no grounds for suggesting that he was homophobic.  It also said that Mr Mkandawire did not raise any objection to being filmed.

Ofcom found that the information provided to Mr Mkandawire was sufficient in the circumstances for him to be able to make an informed decision on whether he wanted to give a fuller contribution.  Ofcom said that although the footage might have given the impression that Mr Mkandawire was reluctant to talk on camera, this was a fair representation of his reaction.  It also found that there was nothing within the programme that could reasonably be taken to signal that he was homophobic.

On the issues of the manner in which material was obtained and the lack of specific consent to be included in the programme, Ofcom took the view that Mr Mkandawire did have a legitimate expectation of privacy that he would not be filmed at his private club gym.  However, it said that this was limited because he was informed about the documentary and what sort of contribution it was seeking from him, he was filmed openly, and was not filmed doing or saying anything of a particularly private nature.  Because Mr Mkandawire had been filmed in the gym earlier on and had not raised any objection, Ofcom concluded that he had given implied consent to being filmed.

On the complaint of unwarranted infringement of privacy in relation to the broadcast without prior consent of the footage, Ofcom again considered that there was a limited expectation of privacy, but found that any intrusion into that privacy was proportionate, justified and relevant to the editorial subject matter of a programme with undeniable interest to the public.  To read Ofcom’s adjudication on a Complaint by Mr Tamika Paul Mkandawire published in Issue 214 of the Broadcast Bulletin (24 September 2012), click here.

Music

European Commission approves Universal Music Group’s acquisition of EMI’s recorded music business subject to conditions.

The approval is conditional upon the divestment of EMI’s Parlophone label and numerous other music assets on a worldwide level.  The Commission says that it had “concerns that the transaction, as initially notified, would have allowed Universal to significantly worsen the licensing terms it offers to digital platforms that sell music to consumers”. To meet these concerns, Universal offered substantial commitments and in light of these commitments, the Commission concluded that the transaction will no longer raise competition concerns.

The merger, the completion of which was announced on Friday 28th September, brings together two of the four so-called global “major” record companies, leaving only three majors.  The Commission had concerns that following the merger, Universal would enjoy excessive market power vis-à-vis its direct customers, who sell physical and digital recorded music at retail level.  In particular, the Commission focused its investigation on the markets where record companies license their music to digital retailers such as Apple and Spotify.  The Commission says that the transaction, as initially notified, would have increased Universal’s size in a way that would be likely to enable it to impose higher prices and more onerous licensing terms on digital music providers.  This could have “negatively affected the possibilities for innovative providers to expand or launch new music offerings and would ultimately have reduced consumers’ choice for digital music, as well as cultural diversity in the European Economic Area”, the Commission says.

To address the Commission’s concerns, Universal committed to divest significant assets, including EMI Recording Limited, which holds the iconic Parlophone label (home to artists such as Coldplay, Lilly Allen, Tinie Tempah, Blur, Gorillaz, Kylie Minogue, Pink Floyd, Cliff Richard, David Bowie, Tina Turner and Duran Duran), EMI’s classical music label, Chrysalis, the Mute label (home to Depeche Mode, Moby and Nick Cave & The Bad Seeds) as well as various other labels and a large number of local EMI entities.  In addition, Universal committed to selling EMI’s 50% stake in the popular Now! That’s What I Call Music compilation JV and to continue licensing its repertoire for that compilation in the next ten years.

The rights to be divested are worldwide and cover both digital and physical music.  This will, the Commission says, “ensure a viable and competitive exploitation of the divested artists and catalogue by the purchaser of the assets”.

Universal also committed not to include Most Favoured Nation clauses in its favour in any new or renegotiated contract with digital customers in the EEA for ten years.  According to the Commission, this commitment will allow Universal’s competitors to negotiate more freely with digital customers and will level the playing field between these competitors and Universal.

In light of these commitments, the Commission concluded that competition in the digital music markets in the EEA will be “adequately preserved and that the transaction will have no negative impact on consumers”.  To read the Commission’s press release in full and for a link to the decision, click here.

Publishing

Press Complaints Commission upholds complaint of inaccuracy.

Rebecca Morris complained that an article headlined “Model pix cop has quit force”, published in the Halesowen News on 7 June 2012 was inaccurate in breach of Clause 1 (Accuracy) of the Editors’ Code of Practice.

The article reported that the complainant had left her employment as a Police Community Support Officer following press reports about photographs of her modelling that had been published online.  The complainant denied the newspaper’s claim that she was “carving out a second career as a motor show promotions model”; she had not been paid for the photographs posted online, which had been taken as part of a hobby.  She also considered that the article suggested, inaccurately, that she had left her job because of the publicity surrounding the photographs.

The newspaper took 45 days to provide an initial response to the complaint and denied having published any inaccuracies.

The PCC said that the complainant had raised a number of significant concerns about the accuracy of the story.  It noted that the newspaper stood by its story.  However, it had not provided evidence to corroborate the disputed claims, including most substantively that the complainant had been “carving out a second career” as a model, or to demonstrate that it had taken care, as required by Clause 1 (Accuracy), not to publish inaccurate or misleading information.

The PCC said that it was “deeply concerned by the newspaper’s handling of the complaint”.  It had failed to provide a substantive response within a reasonable timeframe, and it had suggested in correspondence that it could not comment on the newsgathering methods employed by the agency that had supplied the copy.  The preamble to the Code makes it clear that editors must “co-operate swiftly with the PCC in the resolution of complaints” and further that they should take care to ensure that the Code’s terms are “observed rigorously by all editorial staff and external contributors”. The PCC emphasised that this includes agency reporters who supply material to subscribing publications.

Accordingly, the PCC upheld the complaint under Clause 1 and noted that after issuing its decision it would seek confirmation that the newspaper understood its obligation under the Code to assist the PCC’s inquiries promptly and fully.  To read the PCC adjudication on Rebecca Morris v Halesowen News (27 September 2012) in full, click here.

Film & TV

European Commission adopts first report on promotion of European works in EU television and on-demand audiovisual media services for the period 2009 to 2010.

According to the report, almost 65% of TV programmes shown in Member States are of EU origin, meeting the requirements of the Audiovisual Media Services Directive (2010/13/EU) (AVMSD) for both television and on-demand services.  However, the majority of these European works are domestic works, meaning TV stations and video on-demand services overwhelmingly prefer showing local, nationally created programmes, and the proportion of independent productions on television is declining.

The report shows that the average share of European works shown on EU TV channels continued to increase during the reporting period, to achieve 63.8% in 2009 and 64.3% in 2010.  The majority proportion of European works set out in Article 16 of the AVMSD was therefore comfortably met.  However, only 8.1% of these works were non-domestic. 

Ireland, Slovenia and the UK did not manage to attain the required proportion.  The Commission is therefore inviting these Member States to encourage their broadcasters to show more European works. 

With an average of 34.1% in 2009 and 33.8% in 2010 the share of European independent works broadcast in the EU was well above the 10% proportion laid down in Article 17 of the AVMSD.  However, independent works show a moderate but steady downward trend initiated in 2006.  Recent works registered a slight decrease as well with respectively 62.1% in 2009 and 61.8% in 2010 of the total volume of European independent works.  Even though the results posted by EU broadcasters are satisfactory, the Commission invites Member States to reflect upon ways of reversing the declining trend in the broadcast of independent works to help support the European independent production sector.

As for on-demand audiovisual media services, Article 13 of the AVMSD imposes the obligation to promote European works on on-demand services.  Member States have flexibility as to the means of promotion, but the report reveals there is a lack of uniformity in implementing this obligation.  Some Member States have imposed specific promotion measures and some not.  On-demand services are particularly relevant in the context of convergence and connected devices.  The Commission says that it will therefore analyse the best way to promote European works in this context and then engage in discussions with Member States.  According to the information provided by 14 Member States, on-demand services reserved a high share of their programmes for European works (ranging from almost 37% to 100% in 2010).  In addition, five Member States reported financial contributions to European productions and six indicated the use of some tools to give prominence to European works.  For a link to the full report, click here.

EU Audiovisual sector Social Dialogue Committee publishes joint opinion on European Audiovisual Observatory.

Members of the Audiovisual Social Dialogue Committee (AVSDC) highlighted the need of the European audiovisual sector for reliable and frequently updated statistics on the contribution of the sector to the EU economy and employment market.

The AVSDC said that it was aware that the Advisory Committee of the European Audiovisual Observatory had, on 7 June 2012 in Strasbourg, called on the European Audiovisual Observatory to add economic and employment statistics to its range of statistical and data aggregation activities, and expressed support for this call.  The AVSDC called on the European Commission, Member States and other relevant bodies to support and facilitate requests that the European Audiovisual Observatory could submit in order to respond to the call.

The AVSDC said that it recognised the pivotal role of the European Audiovisual Observatory in providing reliable and independent statistics for the benefit of the EU audiovisual sector as well as for public authorities.  The AVSDC also stressed the potential contribution of such statistics to throw light on relevant issues in current and future European political debates affecting the audiovisual sector.

Finally, the AVSDC said that it welcomed the contribution of the European Audiovisual Observatory in the employment area, which would greatly contribute to the future work of the AVSDC.  To read the opinion in full, click here.

Advertising

Committee of Advertising Practice publishes advice on creating “scary” advertisements.

With Halloween and Guy Fawkes Night approaching, CAP has published guidance for advertisers who wish to take part in the seasonal themes. 

When creating potentially scary or frightening content, care should be taken to consider where the ad will appear and whether the imagery is appropriate for the audience.  “Ads that are designed to make people jump may not be appropriate in a medium where some of the people seeing them will be young children”, the guidance states.

CAP gives the example of the ASA upholding complaints against a digital panel poster in the London Underground for the Bloody Mary: Killer Queen attraction at the London Dungeon.  In this case the ad started with a still portrait of Queen Mary of England.  Suddenly and quickly she turned to face the viewer and “morphed” into a zombie, complete with bloody gashes, white flesh, rotting teeth and red eyes.  She then resumed her original passive position and her face returned to normal.  The ASA ruled that the ad seemed to be setting out to scare and had overstepped the limit of acceptability in doing so because, although not frightening for adults, the image was likely to be shocking to young children and to cause them fear or distress without good reason.  

Taking responsible and appropriate measures, such as timing and scheduling restrictions and using “parental guidance flags”, in order to minimise the risk of children seeing a potentially scary ad, will assist in the event that complaints are made to the ASA.  Using humour to dissipate any unease in the ad will also be taken into account, the guidance states.

As for safety campaigns featuring fireworks or bonfires, an appeal to fear to encourage prudent behaviour may be considered justifiable, CAP says.  However, the fear likely to be aroused “should not be excessive”.  CAP reminds advertisers that care needs to be taken when seeking to encourage safe behaviour so that the copy does not “encourage dangerous behaviour by inadvertently glamorising it”.

As the Advertising Codes prevent children being shown in hazardous situations or behaving dangerously, except to promote safety, advertisers must, CAP says, “avoid showing or appearing to show children in dangerous situations when depicting festivities”.  Some activities, however, are unlikely ever to be considered acceptable.  The guidance gives the example of an ad that featured a child pretending to extinguish a real fire.  This was found not to depict “healthy old fashioned play”, but to “imperil children’s safety” because young children who saw it might try to emulate the activity thereby putting themselves at a risk.  To read the advice in full, click here.

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