Keep calm and carry on: Five legal developments for your contract negotiation checklist

The law rarely stands still, and 2025 is proving no exception.

From WhatsApp messages that accidentally create binding obligations, commonly used phrases having more meaning than may be appreciated and legislative changes affecting NDAs and compliance duties, the year has brought those who deal with commercial contracts many things to consider. 

Whether you're negotiating with suppliers, managing franchise relationships, or simply trying to ensure your procurement team doesn't inadvertently commit the business via a casual text message, keeping pace with these legal developments isn't about the wholesale reinvention of your contracting practices. 

Keep reading for some practical guidance on what you can do to keep your contracting processes current and your business better protected in the face of the changing legal landscape.

1. Contract formation: When a WhatsApp message becomes a binding contract

While headlines about politicians being brought down by ill-considered WhatsApp messages may now be par for the course, the recent cases of Jaevee Homes Ltd v Fincham and Coupang Corp v DAZN Limited demonstrate that informal digital communications can create equally serious problems in commercial contexts. 

These cases bring contract formation firmly into the 21st century – posing fewer challenges for a finding that a contract has been formed than the more traditional assertion a gentleman’s agreement exists – they are a reminder that a clear offer, acceptance and intention to create legal relations will form a contract regardless of the mechanism or platform used. 

The DAZN case is particularly informative: what began as casual email and WhatsApp exchanges about FIFA World Cup broadcasting rights ended with the Court of Appeal finding a binding contract had been formed, despite one party's assertion that they only had a "non-binding agreement in principle."

In its ruling the Court of Appeal emphasised that the entire course of negotiations must be considered objectively. A single email stating "deal is confirmed... I will follow up... to coordinate the draft agreement" was sufficient to create binding obligations, even though formal documentation was anticipated.

Practical steps for retail and supply chain businesses

• Implement a clear digital communications policy: Covering email, WhatsApp, LinkedIn, and other platforms used by your team.
• Train staff on contract formation risks: Ensure everyone understands that casual messages can create legal obligations.
• Review "subject to contract" wording: Use consistently in all preliminary discussions.
• Designate specific individuals with authority: Ensure only these individuals are able to negotiate and enter contracts.
• Separate informal and formal business communications: Consider using separate devices or accounts for informal versus formal business communications.
• Review your current practices: Are sales staff using WhatsApp to discuss terms with suppliers or customers? If so consider putting a ban on such communications. 

If you remember nothing else from this article, remember that every digital communication is a potential contract. Treat them accordingly. 

2. Legislative changes: New fraud prevention obligations

On 1 September 2025, the new “failure to prevent fraud” offence set out in sections 199-206, Economic Crime and Corporate Transparency Act 2023 came into effect. 

Large organisations can now be held criminally liable and face unlimited fines if an “associated person” (e.g. employees, agents, subsidiaries, service providers) commits a fraud offence and the organisation has failed to take active steps to prevent them from committing fraud for the organisation’s benefit.

A large organisation is any business that meets two of three criteria: more than 250 employees, a balance sheet total of more than £18m and turnover of more than £36m. 

The fraud must be committed by the associated person with the intention of benefitting the organisation or its subsidiary undertaking, although the benefit need not be the sole motivation of the act or in fact actually received.

In the retail sector, such fraudulent activity can occur in various business activities and unexpected guises, including by making false ESG claims and greenwashing or problematic sales practices of rogue agents. An example provided in the Home Office's guidance is a salesperson mis-sells products to increase their own commission. While the primary motivation may be personal financial gain, their actions benefit the organisation by increasing sales revenue and therefore may trigger the offence.

It is not just UK businesses that need to take steps to ensure compliance with this offence as it can apply to non-UK companies where there is a “UK nexus”. This will arise where part of the offence occurs in the UK or there are victims or gains in the UK. 

Reminiscent of comparable offences under anti-bribery and anti-tax evasion legislation, an organisation will have a defence if it can demonstrate that it has reasonable fraud prevention procedures in place. 

Compliance should, however, never be a box ticking exercise – and simply having a policy in isolation is unlikely to meet the defence requirement of demonstrating reasonable fraud prevention procedures. An organisation must also back it up with top level commitment and robust procedures which are appropriately monitored and enforced. 

Practical steps for retail and supply chain businesses

• Audit your current processes for preventing fraud by third parties.
• Review and update contracts with your agents and any providers of services: From consultants to IT suppliers and facility management providers, include the following appropriate fraud prevention clauses: 
  • prohibitions on fraudulent activities; 
  • requirements to implement adequate fraud prevention procedures; 
  • audit rights and regular reporting to enable monitoring of compliance; and 
  • termination rights for fraud-related breaches. 
• Training: Implement training programmes for staff on fraud risks and prevention.
• Reporting: Establish clear reporting mechanisms for suspected fraudulent activity.
• Recording: Document your fraud prevention procedures to demonstrate compliance.
• Consider insurance implications: Does your coverage extend to this new offence?

3. Good faith obligations: No longer a toothless tiger

Good faith clauses are often agreed to with limited consideration in a bid to appear reasonable and conciliatory in negotiations. The cases of Matière SAS v ABM Precast Solutions Ltd and Ellis v John Benson Ltd, however, serve as a stark reminder that such obligations carry real teeth. 

Matière SAS v ABM Precast Solutions Ltd

Matière centred around a joint bid for a major subcontract under the HS2 “Green Tunnels Project” which involved the parties entering into, amongst other contracts, a consortium agreement and a collaboration agreement.

Each agreement included a duty on the parties to act in good faith toward the other and use reasonable endeavours to forward the interests of the co-operative enterprise. ABM alleged that Matière breached this duty of good faith by engaging with the main contractor independently to discuss possible alternatives to the plans ABM had proposed which could have reduced or eliminated ABM’s involvement.

The court found such behaviour to breach this duty as it had the potential to render the bargain made significantly less valuable and concluded that good faith extends beyond mere honesty to prohibiting conduct that would be "commercially unacceptable to reasonable and honest people."

Ellis v John Benson Ltd

The Ellis case, while reaffirming that a duty of good faith will not ordinarily be implied into an English law commercial contract, establishes that a court may do so in a limited class of “relational contracts” involving a degree of co-operation over a long term.

The case concerned a driving school franchise which was operated under very restrictive franchise terms that gave the franchisees very little control over their customer base or how they operated their business.

Deeming that the inequality of bargaining power, long-term duration and level of control meant the arrangement was more akin to an employment relationship than an arm’s length commercial agreement, the High Court held that the franchise agreements contained implied terms of good faith and fair dealing which due to the way the franchisor behaved had been breached giving rise to a right for the franchisee to terminate for repudiatory breach.

While the judge in the Ellis case was keen to stress that the decision was very fact-specific and should not be viewed as opening the floodgates to imply a duty of good faith into all franchise agreements, it would be prudent – particularly where a franchisor exerts a high degree of control over the franchisee’s activities or there is a material imbalance of power – for a brand to operate as if such a duty exists when dealing with its franchisees.  

Practical steps for retail and supply chain businesses

• Consider the scope: Carefully consider the scope of any good faith clause before agreeing to it.
• Assess the potential exposure: Good faith obligations can significantly limit your commercial flexibility.
• Review existing agreements containing good faith clauses: Understand your current obligations.
• For franchise or similar arrangements: Consider whether your agreements might be vulnerable to implied good faith terms and ensure that you act fairly, openly and honestly in your dealings with franchisees. Aside from helping to avoid the potential risk of time consuming and costly litigation, it will also help a brand from limiting the reputational harm that may arise from claims that you treat your franchisees poorly! 
• Record your decisions: Document your decision-making processes to demonstrate commercial reasonableness.
• Avoid contractual discretions: Avoid arbitrary or capricious exercise of contractual discretions.

4. Non-disclosure agreements and victims of crime: New limitations to permitted restrictions from 1 October 2025

The last few years have seen a surge of high-profile cases where non-disclosure agreements (NDAs) have been used to stop victims from talking about crimes as part of a settlement deal. While such behaviour has been condemned by both politicians and the public, the use of NDAs as a reputation management tool to sweep a problem under the rug is not isolated to those in the public eye but pervasive in businesses in all sectors from retailers to universities. 

On 1 October 2025 section 17 of the Victims and Prisoners Act 2024 (the VPA 2024) came into force in England and Wales. Over six years in the making, it stops an NDA from being enforced to the extent that it seeks to prevent a victim of crime from disclosing information about that crime to certain individuals who investigate, prosecute, advice or provide support in respect of the crime . 

The term “victim of crime” is defined broadly and has no requirement for formal reporting, investigation, or conviction for the prohibition to be triggered. Any individual who has suffered harm from conduct constituting a criminal offence in England and Wales, or who reasonably believes they are a victim, is covered by the legislation. 

Section 17 of the VPA 2024 applies across all sectors, relationships and activities from theft or fraud to harassment or health and safety breaches. For those in the retail industry this means any type of agreement which includes confidentiality obligations from employment contracts or settlement agreements to commercial NDAs and confidentiality clauses in supplier contracts will be caught. 

Although NDAs have long been unable to prevent crime reporting under common law, it is hoped that by codifying these rights, victims of crime will have a greater understanding of their rights, feel better protected and be able to access the advice and support they need without fear of being subject to a law suit for breaching a confidentiality agreement they have signed.

The VPA 2024 works alongside existing whistleblowing protections under the Employment Rights Act 1996. Workers can still make "protected disclosures" about wrongdoing in the public interest, and any NDA clause attempting to prevent this remains invalid and unenforceable.

While the legislation only applies prospectively, any NDAs signed before 1 October 2025 remain subject to the common law protections which seek to stop the abuse of an NDA to prevent the reporting of crimes.

Furthermore, for those with NDAs which predate 1 October 2025, in the court of public opinion, any attempt to discourage a victim of crime from reporting an offence or seeking support in relation to it is likely to receive little sympathy. For retailers, in an industry where reputation is king and can make or break a business, the likely backlash from such sharp practices is not a risk worth taking. 

While NDAs remain a legitimate tool for protecting legitimate business interests such as trade secrets and commercial confidentiality, businesses must recognise their limitations.

Practical steps for retail and supply chain businesses

• Review your NDA templates: Audit all standard NDA templates and confidentiality clauses used in employment contracts, settlement agreements, supplier agreements and other commercial contracts to ensure they do not deliberately or inadvertently prevent disclosures. 
• Update contract language: Best practice is to explicitly state on the face of your NDAs what parties are permitted to disclose and in what circumstances. Consider expressly listing the permitted disclosures required by the VPA 2024 to enhance transparency, provide clarity and help demonstrate compliance.
• Train relevant staff: Ensure HR teams, legal departments, procurement teams, and managers who negotiate settlements or use NDAs understand the new restrictions and can explain them to counterparties.
• Revise internal policies: Update internal guidance on when and how NDAs should be used, ensuring policies reflect that NDAs cannot prevent victims from accessing support, advice, or reporting crimes.

5. Payment terms: The end of negotiation?

It will not be news to any that late payments remain a critical issue for many businesses – they can hinder growth and take significant time and energy which could be better used elsewhere to resolve. Small businesses are often particularly hard hit, having less resources to absorb and mitigate the impact of late payments, sometimes being forced to forfeit payments as the cost of chasing them may outweigh what they will recover.

It is now established practice for those working in the public sector that public sector entities must pay its contractors – and in turn those contractors must pay any sub-contractors - within 30 days. Business-to-business arrangements are more reminiscent of the Wild West however with those in a position of strength able to command favourable terms, often to the detriment of smaller businesses. 

The Government is now turning its attention to this problem and has recently been consulting on measures to help tackle the impact of late payments in business-to business contracts, with the “Late payments consultation: tackling poor payment practices” having closed on 23 October 2025. 

Proposed solutions include introducing maximum 60-day payment terms between all UK businesses and mandatory statutory interest rates that cannot be negotiated down.

All businesses – as both consumers and suppliers of goods and services – will be affected to some degree if these proposals are implemented. While for many, shorter payments terms will undoubtedly deliver financial benefits, there are wider implications for a business – including the potential impact on its working capital requirements, invoice review and credit control procedures, as well as the potential to use earlier payment terms as a negotiating tool. 

Practical steps for retail and supply chain businesses

• Review your current payment terms: Are they longer than 60 days? Consider planning for 30-day terms to become the norm rather than 60 days.
• Assess cash flow: What are the implications of shorter payment periods?
• Review credit control procedures: Enable faster payment cycles.
• Review typical payment terms: Identify the ideal if the new rules were to come into effect, and consider updating standard business terms to reflect this. 
• Consider renegotiating supplier terms: Before any new rules take effect, proactively review your supplier terms to maximise potential commercial advantage (e.g. early payment discounts). 

Conclusion: Adapting your approach

It is easy in the everyday bustle for mistakes to be made. The legal landscape is evolving rapidly, but businesses that adapt their contracting practices proactively will find themselves better positioned to navigate these changes whilst maintaining competitive advantage.

The key is not just understanding these developments, but embedding the practical lessons into your day-to-day commercial operations.

Your action plan

1. Immediate: Review and update your digital communications policy.
2. Short-term: Audit existing contracts for good faith clauses and fraud prevention gaps.
3. Medium-term: Prepare for payment term changes and update standard documentation.
4. Ongoing: Train staff on these developments and monitor further legal changes.

Remember: when in doubt, seek specific legal advice tailored to your circumstances. These developments affect different businesses in different ways, and early professional guidance can prevent costly mistakes down the line.