Appendix 3
S.I. 2009/2331: memorandum from the Department
for Business, Innovation and Skills
Financial Transparency (EC Directive) Regulations
2009 (S.I. 2009/2331)
1. This Memorandum has been prepared by the Department
for Business, Innovation and Skills and contains information for
the Joint Committee on Statutory Instruments.
Issue 1
2. In its letter to the Department of 11 November
2009, the Committee requested a memorandum on the following point:
Are regulations 11 and 12 intended to be mutually
exclusive? If so, why is this not stated? If not, how can the
same obligations be the subject of both express and implied contractual
terms?
3. Regulations 11 and 12 are intended to be mutually
exclusive. The failure to set this out in the regulations is
an over-sight for which the Department apologises. The Department
will make an amending instrument to remedy this error.
Issue 2
4. In its letter to the Department of 11 November
2009, the Committee requested a memorandum on the following point:
In regulation 12…what is the phrase "undertakings
to the contract" intended to cover and how is the intention
given effect?
5. This phrase is intended to cover any undertaking
which is a party to a contract (as defined in regulation 2).
On reflection, the Department considers that this could have been
expressed more clearly in the drafting. The Department will make
an amending instrument to improve the drafting.
Issues 3 and 4
6. In its letter to the Department of 11 November
2009, the Committee requested a memorandum on the following two
points:
In regulation 12…given the general obligation
on undertakings required to maintain separate accounts, to retain
them and supply information to the Secretary of State about them
(regulations 6 to 8, for breach of which there is no direct sanction,
and Articles 4 and 6 of Commission Directive 2006/111/EC why -
(i) is the compliance duty expressed as an
implied contractual term and thus apparently overridden by an
express contractual term;
(ii) does the implicit sanction for breach
of contract only apply in the case of "contracts" (see
definition in regulation 2) in which case there is a link between
a "public authority" and a "public undertaking"
in respect of "compensation" (as defined in regulation
2), and not apply to other agreements within the scope of that
Directive to which undertakings required to maintain separate
accounts are parties?
7. With regard to issue 3, the Department notes
that the "rule that a term will not be implied which is
inconsistent with an express term does not apply in the case of
a statutory implied term: any conflict must be resolved as a matter
of construction"[1],
so it would be a matter of construction whether any express term
affected the applicability of the implied term in regulation 12.
The Department recognises that such uncertainty is undesirable.
The Department will make an amending instrument to improve the
drafting to provide that this statutory implied term cannot be
excluded by any contrary agreement.
8. The fourth issue which the Committee raises
is correct, the implicit sanction for breach of contract will
only apply in the case of contracts (as defined in regulation
2), and this has brought to light an unfortunate error in the
application of the Regulations. As a result of the current definition
of "contract", where the undertaking concerned is not
a public undertaking (as defined in regulation 2), they will fall
outside the scope of regulations 11 and 12. The Department will
make an amending instrument to remedy this error.
9. The Department apologies for the presence
of the errors in the Financial Transparency (EC Directive) Regulations
2009 and will make an amending instrument to remedy these errors
as soon as possible. Copies of the amending instrument will be
issued free of charge to purchasers of the defective instrument.
Department for Business, Innovation and Skills.
18 November 2009
1 Chitty on Contracts (13th ed., 2008) Vol.1,
para.13-029 Back
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