Contractual Law Small Print

Disclaimer: The editor is currently studying law and this article is prepared as a brief reference guide. It is intended for informational purposes only and does not constitute legal, financial, or professional advice. Readers should seek qualified legal counsel before making contractual or business decisions. The information contained herein is general in nature and may not apply to individual circumstances. “The editor emphasises that readers should refrain from acting as judge, jury, and executioner when they have no specialist knowledge of the law or politics. With respect to both the editor and the individuals mentioned in this article, it is important to avoid derogatory remarks, as such comments can have a detrimental impact on mental health. This article is for informational purposes only and should be read with objectivity and respect.”

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Understanding Contractual Law: A Comprehensive Guide

“Start-ups, Disabled Entrepreneurs, and SMEs should recognise the importance of being fully prepared when drafting contracts. Contracts are not just about formalising a deal but about safeguarding rights and preventing disputes. Consulting with law firms that specialise in contractual law is vital, as they can guide entrepreneurs in drafting watertight agreements that account for risks, clarify obligations, and protect against unforeseen circumstances. For small businesses with limited resources, the cost of legal oversight is an investment that can prevent significant financial and reputational loss later on.”

Contractual law is the backbone of all commercial transactions, setting out the rights and obligations of parties when entering into an agreement. Whether you are a buyer, supplier, service provider, or consumer, contracts provide legal certainty, enforceability, and protection in case of disputes.

This guide explores what contractual law is, why small print and specificity matter, and how disputes like the Michelle Mone PPE scandal raise important legal questions. It also considers how such issues could have been avoided through proper contract clauses and legal foresight.

What is Contractual Law?

Contractual law governs agreements between two or more parties, ensuring promises are legally binding when certain conditions are met. For a contract to be valid, it typically requires:

1. Offer: One party makes a proposal.
2. Acceptance: The other party agrees to the proposal.
3. Consideration: Something of value (money, goods, services) must be exchanged.
4. Intention to Create Legal Relations: Both parties must intend the agreement to be enforceable.
5. Capacity: The parties must have the legal ability to contract.
6. Legality: The contract’s purpose must not be unlawful.

If these elements are satisfied, contractual obligations can be enforced by the courts.

The Importance of Specificity and the “Small Print”

A common pitfall in contract disputes arises from a lack of specificity in the agreement. If a buyer requests “PPE equipment” without defining standards, specifications, or quantities, suppliers may deliver items that do not meet expectations.

This highlights the critical role of small print clauses, including:

• Quality and Specification Clauses: Clearly outline the grade, certification, and intended use of goods.
• Inspection Clauses: Allow buyers to inspect samples before full delivery.
• Sale or Return Clauses: Enable the return of unsuitable products.
• Force Majeure Clauses: Cover unforeseen global disruptions such as pandemics.

Without such clauses, disputes over responsibility become inevitable.

The Michelle Mone PPE Case: A Contractual Law Perspective

Baroness Michelle Mone’s involvement in supplying PPE to the UK government through a fast-track “VIP lane” during the COVID-19 pandemic highlights how poorly structured agreements can backfire.

• The Issue: PPE supplied from China was alleged to be unusable or substandard. The government claimed suppliers bore responsibility, while suppliers argued that the government had not been specific enough in its requests.
• The Legal Gap: If contracts lacked detailed specification clauses, both parties could argue that the other failed in due diligence. Import-export businesses, which regularly deal with such logistics, were largely overlooked in favour of “VIP lane” companies.

Could This Have Been Avoided?

Yes. Several contractual measures could have prevented the dispute:

1. Expedited Sample Delivery: A clause requiring suppliers to send a small quantity for inspection before mass production.
2. Sale or Return Clause: Allowing the buyer (UK government) to reject goods that did not meet standards.
3. Detailed Specification Requirements: Defining certification, testing procedures, and delivery conditions.
4. Equal Opportunity Tendering: Opening procurement to established import-export businesses, not just politically connected suppliers.

These measures would have ensured greater accountability and clarity.

Could Michelle Mone Have Challenged in Court?

From a legal standpoint, Baroness Mone and her solicitors could have argued that:

• The Government Failed to Specify Requirements: Making it difficult for suppliers to guarantee quality.
• Reliance on Government Assurances: If the government’s own procurement guidance was vague, responsibility could shift.
• Counter-Claim Against Chinese Suppliers: If contracts with manufacturers included warranties or compliance guarantees, she could pursue damages.

However, the government could counter-argue that due diligence lies with the supplier; it was up to Mone’s team to ensure PPE met UK standards before delivery.

The case raises questions about whether failure to specify is negligence by the buyer or failure to verify is negligence by the supplier.

Example Protective Clauses

Here are some sample clauses that suppliers or buyers could have inserted to avoid the pitfalls seen in cases like the PPE scandal:

1. Specification Clause

“The Supplier shall ensure that all goods delivered conform strictly to the specifications set out in Schedule A, including but not limited to certification standards, testing requirements, dimensions, and intended use. Any deviation from the agreed specification shall entitle the Buyer to reject the goods without liability.”

2. Sale or Return Clause

“The Buyer shall have the right to inspect and test the goods upon delivery. Any goods deemed unsuitable or failing to meet the agreed specifications may be returned to the Supplier within [30 days] at the Supplier’s expense, and the Buyer shall not be liable for payment of such goods.”

3. Expedited Sample Delivery Clause

“The Supplier agrees to provide a representative sample of the goods for approval within [7 days] of the contract date. Full-scale production and shipment shall not commence until the Buyer confirms written acceptance of the sample.”

4. Due Diligence Clause

“The Supplier warrants that it has undertaken all reasonable due diligence to ensure that the goods supplied are fit for the Buyer’s intended purpose, comply with applicable laws and standards, and are sourced from reputable and reliable manufacturers.”

Common Mistakes SMEs Make in Contracts

No Review by a Legal Professional
Perhaps the most common mistake is skipping legal review to “save money.” In reality, this can expose the business to serious risks that outweigh the initial cost of professional advice.

Not Reading the Small Print
Many businesses sign contracts quickly without carefully reviewing hidden clauses. The “small print” often contains crucial terms on liability, delivery timelines, and dispute resolution.

Failing to Define Terms Clearly
Ambiguity over words like “delivery,” “quality,” or “satisfactory” creates room for disputes. Every technical or commercial term should be defined precisely.

No Exit or Termination Clause
Without a termination clause, businesses may remain locked into unfavourable terms. Clauses should specify how either party can exit if obligations are breached.

Overlooking Payment Terms
Some contracts fail to specify when payments are due, interest on late payments, or whether deposits are refundable. Clear terms protect cash flow.

Not Including Dispute Resolution Mechanisms
SMEs often forget to insert clauses covering arbitration, mediation, or choice of jurisdiction. This omission can make disputes more expensive and time-consuming.

Relying on Verbal Agreements
Informal promises made in meetings or over the phone may not be enforceable. Contracts should always be in writing, signed, and stored securely.

Ignoring Intellectual Property (IP) Rights
For businesses developing products, software, or creative work, failing to establish ownership of IP can lead to costly battles later.

How the NHS determined the PPE was non-sterile

The gowns supplied by PPE Medpro were meant to be Class I sterile medical devices, which under EU law require:

• Validated sterilisation process: A documented, certified method proving the product has been sterilised effectively.
• Notified Body number: A unique identifier from an accredited EU body confirming compliance with medical device regulations.

The High Court found that the gowns lacked both. Specifically:

• There was no validated sterilisation process presented.
• The gowns did not carry the required Notified Body number, making them non-compliant with EU standards.

This meant the NHS couldn’t use them as sterile surgical gowns, and there was no viable market for them as non-sterile alternatives.

🤔 Why wasn’t there a “try before you buy” clause?

This touches on the broader issue of pandemic-era procurement:

• The contract was awarded via the VIP lane, a fast-track system set up during COVID-19 to expedite PPE deals.
• In the rush to secure supplies, standard procurement safeguards were often bypassed, including:
  • Product trials or sample testing before full delivery
  • Due diligence on supplier capabilities
  • Clear fallback clauses for non-compliance

PPE Medpro argued that the government should have advised them on compliance, but the court rejected this, stating the contract clearly required sterility and Medpro failed to meet it.

🧾 Standard NHS Procurement Clauses: What Should Be There

In normal circumstances, NHS supply contracts, especially for medical devices, include clauses like:

1. Specification Compliance

• Clear technical and regulatory standards (e.g., CE marking, sterility, ISO certification).
• The supplier must warrant that the goods meet these standards.

2. Inspection and Testing Rights

• The NHS can inspect goods before acceptance.
• Right to test samples or batches for compliance.

3. Rejection and Remedies

• If goods don’t meet spec, NHS can:
  • Reject delivery
  • Demand replacements
  • Claim damages or terminate the contract

4. Due Diligence and Vetting

• Supplier must disclose manufacturing capacity, quality assurance processes, and regulatory history.

5. “Try Before You Buy” or Sampling

• Not always explicit, but often implied via:
  • Pilot orders
  • Sample testing clauses
  • Staged delivery with quality checks

⚠️ What Went Wrong in the PPE Medpro Case

The court found that:

• The contract did require sterile gowns, but PPE Medpro failed to meet that.
• There was no clause requiring the NHS to advise or guide the supplier: the burden was on Medpro to comply. (This could have been argued in court).
• The procurement was rushed via the VIP lane, bypassing normal vetting and sampling safeguards.

In short: the contract did have a sterility requirement, but lacked the usual layers of protection, like staged testing, fallback remedies, or pre-delivery inspection, that would have flagged the issue earlier.

🔍 Implications for Future Reform

This case may push for:

• Restoration of full due diligence in emergency procurement
• Mandatory sampling or pilot testing for high-risk goods
• Stronger enforcement clauses for non-compliance
• Transparency in supplier selection, especially for VIP referrals

Why did Lady Mone or her husband not countersue the supplier?

1. Contract Structure – Who Was in Privity?

• It appears that Mone and her husband’s company acted as a middleman between the UK government and overseas manufacturers.
• The government’s contracts were with their intermediary company (not directly with the Chinese supplier).
• Unless the company had a direct, watertight contract with the Chinese supplier, including warranties and indemnities, they may not have had the legal standing (or sufficient grounds) to sue the supplier.

2. Specification and Due Diligence Issues

• Reports suggest the PPE provided was deemed “unfit for purpose.”
• If the specifications from the UK government were vague, the supplier could argue they delivered in good faith according to the information provided.
• Without clear written specifications, suing the supplier would likely fail, because the responsibility shifts to the middleman to ensure goods meet buyer standards.

3. Cost of Litigation Abroad

• Suing a Chinese supplier is complex, time-consuming, and expensive.
• Jurisdiction is an obstacle: unless the contract included a clause requiring disputes to be settled in UK courts (or through international arbitration), any claim would likely have to be pursued in China.
• Enforcing judgments across borders is difficult, particularly if the supplier dissolved, changed names, or operated through shell companies (a common practice in fast-moving international trade).

4. Risk Lies With the Middleman

• In most import–export contracts, the intermediary (middleman) takes on the risk.
• Their role is to verify supplier reliability, carry out due diligence, and ensure compliance with buyer needs.
• From a contractual law perspective, “buyer beware” (caveat emptor) applies heavily here: the government dealt with Mone’s company, not the Chinese manufacturer.

5. Reputational and Political Risk

• A counter-suit might have backfired politically, drawing more attention to the fact that Mone and Barrowman profited significantly from the deal.
• A legal battle against the supplier could be seen as an admission that due diligence wasn’t carried out properly.
• Instead, silence may have been a calculated risk to avoid further scrutiny.

6. Could They Have Sued the Government Instead?

In theory, they could have argued that:

• The UK government failed to provide precise specifications.
• The VIP lane procurement process disadvantaged other experienced import–export firms, pushing them into deals with higher risk.

But again, politically, suing the government would have been even more damaging to their position and credibility.

What If Michelle Mone Had Sued the Supplier?

For Mone and her husband to successfully counter-sue the Chinese supplier, their contract would have needed to contain specific clauses that transferred some of the risk back onto the supplier. Let’s look at how that could have worked.

1. Warranties and Representations

If the supplier had warranted that:

• The PPE met UK/EU safety standards,
• Products were fit for the intended purpose (i.e., medical-grade use), and
• Goods would pass independent testing,

…then a breach of these warranties would have given Mone’s company a clear basis to sue.

2. Jurisdiction Clause

Many international contracts include a governing law and jurisdiction clause, e.g.:
“This agreement shall be governed by and construed in accordance with the laws of England and Wales. Any disputes shall be submitted to the exclusive jurisdiction of the courts of England and Wales.”

Without such a clause, disputes fall under local (Chinese) law, making litigation far more difficult.

3. Arbitration Clause

An international arbitration clause could have provided a neutral forum, e.g.:
“Any dispute arising under this agreement shall be referred to binding arbitration under the Rules of the International Chamber of Commerce (ICC), with proceedings to take place in London.”

This would have avoided the need to sue in Chinese courts and made enforcement more realistic.

4. Indemnity Clause

A protective clause might have said:
“The Supplier indemnifies and holds harmless the Buyer against all losses, liabilities, costs, or damages arising from defective or non-compliant goods supplied under this agreement.”

This shifts responsibility for failures back onto the supplier.

5. Inspection and Testing Clause

Had the contract required pre-shipment inspections, with authority for Mone’s company to reject goods that did not meet agreed standards, the Chinese supplier could not argue ignorance later.

6. Force Majeure Clarification

Since COVID-19 caused global chaos, a tightly drafted clause excluding “defective manufacture” from force majeure would have blocked the supplier from using the pandemic as an excuse.

Why They Didn’t Use These Clauses

• Rushed procurement: The “VIP lane” contracts were awarded quickly under emergency powers, leaving little time for robust legal frameworks.
• Political confidence: Suppliers may have assumed the government would bear ultimate responsibility.
• Inexperience: As middlemen, Mone and her husband were not seasoned import–export professionals, unlike established firms that routinely insert such clauses.

If the contracts with Chinese suppliers had included warranties, jurisdiction clauses, indemnities, and inspection rights, Mone’s company would have had grounds to counter-sue. Instead, the risk allocation fell on them as intermediaries, leaving them politically and legally exposed.

Michelle Mone and her husband likely did not counter-sue the Chinese supplier because:

• The contracts were structured so that their company, not the government, bore the risk.
• Proving liability abroad would be extremely difficult.
• Litigation costs and jurisdiction issues would outweigh potential recovery.
• Admitting supplier fault could also expose their own lack of due diligence.

🧩 Who Was Supplying Whom?

• PPE Medpro was the supplier of the gowns.
• The Department of Health and Social Care (DHSC) was the buyer.
• Lady Mone and Doug Barrowman were financially and operationally linked to PPE Medpro, despite initially denying involvement.

PPE Medpro were the supplier in law to the Governement/NHS (since the government contracted with their company), but only a middleman in practice (since they outsourced manufacturing). This left them exposed, they could not shift blame onto the Chinese supplier unless they had strong contracts with them, which apparently they didn’t.

Lesson, secure watertight contracts to safeguard yourself.

⚖️ Did PPE Medpro Try to Defend Itself?

Yes, they did, but not by suing another party. Instead, they:

• Denied wrongdoing and claimed the gowns were sterile.
• Argued that any contamination happened during government storage, not manufacturing.
• Claimed the DHSC should have advised them on compliance, which the court rejected.
• Offered no-fault settlements, including a remake of the gowns or a £23 million refund, all refused by the DHSC.

Ultimately, the High Court ruled that PPE Medpro breached the contract and must repay nearly £122 million.

🧵 The Supply Chain in the PPE Medpro Case

1. Manufacturer

• The gowns were produced by a third-party manufacturer, reportedly based in China.
• PPE Medpro did not own or operate the factory.

2. PPE Medpro (Supplier)

• This company was set up during the pandemic and won contracts worth over £200 million.
• Doug Barrowman was financially linked to it, and Lady Mone was involved in lobbying for the deal.
• PPE Medpro sourced the gowns from the manufacturer and sold them to the UK government.

3. UK Government (Buyer)

• The Department of Health and Social Care (DHSC) paid PPE Medpro for the gowns.
• The gowns were later deemed unusable due to non-compliance with sterility standards.

💸 What Did Lady Mone and Barrowman Gain?

• They reportedly received £65 million in profits, routed through offshore trusts.
• These profits came from the margin between manufacturing cost and contract price, not from manufacturing itself.

🧨 Why Didn’t They Blame the Manufacturer?

They tried, in part. PPE Medpro argued that:

• The gowns were sterile when shipped.
• Any contamination occurred during government storage.

But the High Court rejected this, stating the gowns never met the required standards, and the supplier (PPE Medpro) was responsible for ensuring compliance.

⚖️ Could the Manufacturer Be Forced to Prove Sterility?

✅ Yes, but only under certain conditions:

1. Contractual Link
   • If the UK government or PPE Medpro had a direct contract with the manufacturer, they could demand:
     • Sterilisation certificates
     • Batch testing records
     • Regulatory compliance documents
2. Legal Action by PPE Medpro
   • PPE Medpro could sue the manufacturer for breach of contract if:
     • The manufacturer guaranteed sterility
     • PPE Medpro relied on those guarantees
     • Losses (like the £122m refund) were caused by manufacturer failure
3. International Enforcement
   • If the manufacturer is overseas, enforcement depends on:
     • Jurisdiction clauses in the contract
     • Whether the manufacturer is subject to UK or EU law
     • Cooperation from local courts or arbitration bodies

❌ Why It Didn’t Happen

• PPE Medpro did not sue the manufacturer, possibly because:
  • They lacked a strong contractual basis to do so.
  • They may have accepted the gowns without verifying sterility.
  • Suing would expose internal failures or risk further scrutiny.
• The High Court held PPE Medpro fully liable, stating it was their job to ensure compliance, not the government’s job to verify or advise.

Could Insurance Have Covered Litigation and Breach of Contract?

“Another angle to consider is whether Michelle Mone and her husband’s company held business insurance that covered litigation or breach of contract. Many commercial insurance policies, particularly those covering trade and supply, include legal expenses protection or indemnity against claims arising from contractual disputes. If such a policy was in place, it could have helped cover the costs of defending government action or even pursuing the Chinese supplier for damages. However, the effectiveness of insurance depends heavily on the terms and exclusions, for instance, some policies exclude liability for international disputes, defective goods, or deliberate misconduct. Therefore, while insurance may have provided a financial cushion, it would not necessarily have absolved them of liability.”

Types of Insurance That May Apply:

1. Professional Indemnity Insurance – Covers negligence, errors, or failure to meet contractual obligations.
2. Product Liability Insurance – Protects against claims of supplying defective or unsafe goods.
3. Legal Expenses Insurance – Helps cover the costs of litigation or defending claims.
4. Trade Credit Insurance – Provides protection against unpaid invoices or defaults, useful if a counterparty refuses to pay.
5. Business Interruption Insurance – Covers losses from disruptions, though often limited and unlikely to extend to defective contracts.

How These Insurances Might Interact

1. Product Liability Insurance – First Line of Defence
   • If the PPE supplied was defective, this would usually be the first policy triggered.
   • However, many insurers exclude cover if the product is imported from suppliers not properly vetted or fails mandatory certification standards.
2. Professional Indemnity Insurance – Errors and Due Diligence
   • This could step in if the claim was framed as negligence (e.g., failure to carry out due diligence on suppliers).
   • Yet, if the government argued fraud, misrepresentation, or deliberate misconduct, the insurer would almost certainly refuse cover.
3. Legal Expenses Insurance – Covering Litigation Costs
   • Could help with the cost of defending claims or bringing counterclaims against the Chinese supplier.
   • But again, the scope is limited — international disputes are often excluded, meaning suing a Chinese manufacturer might not be covered.
4. Trade Credit Insurance – Financial Losses
   • More relevant if the government had refused to pay invoices.
   • In this case, since the issue was defective PPE, it would likely not apply.
5. Business Interruption Insurance – Unlikely to Apply
   • Designed for losses caused by fire, flood, or unexpected disruption.
   • It wouldn’t normally cover contractual liability for defective goods.

Even if PPE Medpro had comprehensive insurance, the likely exclusions (fraud, deliberate misconduct, international supplier risk, lack of due diligence) mean the cover would probably not have extended far enough to protect them fully. Insurance could have helped with litigation costs, but not with the core liability to the UK government.

Sustainability and Waste Angle

“Beyond the financial and contractual issues, there is also a serious environmental concern. Millions of units of PPE are sitting in warehouses, with many destined for incineration or landfill if they are not used. This not only represents wasted taxpayer money but also contributes to environmental harm through carbon emissions and non-biodegradable waste. Redirecting these products to non-clinical settings, such as charities, care workers, or individuals who need protective equipment for everyday use, would not only reduce waste but also promote sustainability and social benefit.”

Conclusion

Contractual law underscores the need for clarity, fairness, and enforceability. The Michelle Mone PPE scandal demonstrates the dangers of rushing agreements without precise terms, leaving room for dispute over liability. For suppliers and buyers alike, the lesson is clear: never underestimate the small print. Clauses for inspection, sale or return, and specification requirements are not optional, they are essential safeguards.

“It is also worth considering whether the vast stockpiles of unused PPE currently in storage could be redirected to charities, care workers, or even sold through established suppliers such as Gloveman.co.uk, rather than left to expire. Not all protective garments or gloves need to be sterile for effective everyday use, as demonstrated by the many vinyl gloves and general protective items already sold on platforms like Amazon. For individuals living with conditions such as OCD, particularly those with germ-contamination triggers, access to affordable PPE could be life-changing. Even if the government maintains that these products cannot be resold for medical use, alternative redistribution at a fraction of the cost could provide both practical benefits and reduce waste.“

Further Reading & Resources

• Baroness Michelle Mone-linked company loses £122m High Court battle with government over faulty PPE
• Company linked to Michelle Mone ordered to repay government £122m over Covid PPE
• Contract Law in the UK: A Comprehensive Guide to the Legal Framework – Contract Law Mastery | SQE Prep in UK
• Firm linked to Baroness Michelle Mone must pay £122m after breaching Covid PPE contract, judge rules – BBC News
• Tories urge Michelle Mone to hand back peerage after PPE contract breach
• Michelle Mone ‘should be kicked out of the House of Lords’ for ‘ripping off taxpayers’…as firm she is linked to is given two weeks to pay back £122m | Daily Mail Online
• What is an Outsource Agreement? (Key Terms + Sample)
• https://disabledentrepreneur.uk/category/contractual-law/

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