| Case ID |
1a00364b-2840-42fe-91e8-7a1e5e024daf |
| Body |
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| Case Number |
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| Decision Date |
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| Hearing Date |
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| Decision |
The House of Lords ruled that the computation of profits as per the agreement must include the excess profits tax, leading to a significant impact on the payments due to the appellants. The court emphasized that the agreement's provisions were to be interpreted in line with ordinary commercial practice, which necessitated the deduction of excess profits tax when determining profits for the purpose of the vendors' payment. The judges highlighted the importance of adhering to the terms of the written agreement while acknowledging the unforeseen nature of the excess profits tax, ultimately allowing the appeal based on the interpretation of the contract that governed the sale of goodwill. |
| Summary |
In the case involving L.C. Ltd. versus G.B. Ollivant Ltd., the House of Lords addressed the issue of profit computation under a contract for the sale of goodwill. The critical question was whether excess profits tax should be deducted from the profits before calculating the payments owed to the vendors. The court concluded that the agreement's provisions should be interpreted according to ordinary commercial practices, which dictate that such taxes must be considered. This ruling underscores the necessity for clear terms in contracts, especially regarding unforeseen circumstances like new taxation laws. The decision has implications for future contracts involving profit-sharing agreements, particularly in how profits are computed and what deductions are permissible. The case serves as a significant reference point for legal practitioners and businesses navigating complex contractual agreements in the context of taxation. Key themes include the interpretation of commercial contracts, the impact of tax law on profit-sharing arrangements, and the importance of anticipating potential tax liabilities in business agreements. |
| Court |
House of Lords
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| Entities Involved |
Not available
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| Judges |
Viscount Simon, L.C.,
Lord Thankerton,
Lord Russell of Killowen,
Lord Macmillan,
Lord Wright
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| Lawyers |
D.N. Pritt, K.C.,
J.S. Scrimgeour,
Charles Romer, K.C.,
Frederick Grant K.C.,
W. Gordon Brown
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| Petitioners |
L.C. Ltd.
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| Respondents |
G.B. Ollivant Ltd.
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| Citations |
1945 SLD 70,
(1945) 13 ITR 23
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| Other Citations |
Ashton Gas Co. v. Attorney-General [1906] AC 10,
London County Council v. Attorney-General [1901] AC 26,
Spanish Prospecting Co., Ltd., In re [1911] 1 Ch. 92,
Vulcan Motor & Engineering Co. [1906], Ltd. v. Hampson [1921] 3 KB 597
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| Laws Involved |
Not available
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| Sections |
Not available
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