- Project plans
- Project activities
- Legislation and standards
- Industry context
Last edited 02 Mar 2017
Poor drafting of agreements
Large sums of money can hinge on the interpretation of a very few words, which is why professional drafting of agreements is so important. That point was powerfully made in a High Court case concerning an option to purchase a commercial property.
In Helix 3D Limited v Dunedin Industrial Property Nominee Limited & Anr, the tenant of the property had paid £25,000 for the five-year option. It enabled the tenant to purchase the freehold for a fixed price of £1.5 million at any time during the first two years of the agreement.
In the fifth year of the option, shortly before it expired, the tenant purported to exercise it by offering £1.5 million and paying a £90,000 deposit. The landlord denied that the option had been validly exercised on the basis that there had been no agreement or determination of the open market value.
In ruling on the dispute, the Court noted that it was rooted in the poor drafting of the agreement. The landlord’s interpretation of the option was divorced from reality in that it would require the tenant to guess the open market value before seeking to exercise it. A reasonable person would not have expected the option to be modelled on a lottery. In finding that the option had been validly exercised, the Court concluded that the tenant’s interpretation made greater commercial sense.
 Find out more
 Related articles on Designing Buildings Wiki
Featured articles and news
Smart mapping approaches for building better infrastructure.
The importance of emergency planning.
Eight forms of resource optimisation.
CIOB responds to Chancellor Sunak's announcement on jobs and the economy.
Revised guide to competition rules available.
Brick slip soffit systems and intricate brick features.
An innovative engineering approach could have had tragic consequence for NYC.
Some secrets behind how canals work.
Breaking down possible steps of pre-contract management.
ICE event includes comments from Welsh Government Minister Julie James.
Designing Buildings Wiki becomes the world's first website to adopt the new knowledge standard.