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 following three years, the price payable was £1.5 million or the open market value, whichever was the greater.
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.
[edit] Find out more
[edit] Related articles on Designing Buildings Wiki
Featured articles and news
RTPI leader to become new CIOB Chief Executive Officer
Dr Victoria Hills MRTPI, FICE to take over after Caroline Gumble’s departure.
Social and affordable housing, a long term plan for delivery
The “Delivering a Decade of Renewal for Social and Affordable Housing” strategy sets out future path.
A change to adoptive architecture
Effects of global weather warming on architectural detailing, material choice and human interaction.
The proposed publicly owned and backed subsidiary of Homes England, to facilitate new homes.
How big is the problem and what can we do to mitigate the effects?
Overheating guidance and tools for building designers
A number of cool guides to help with the heat.
The UK's Modern Industrial Strategy: A 10 year plan
Previous consultation criticism, current key elements and general support with some persisting reservations.
Building Safety Regulator reforms
New roles, new staff and a new fast track service pave the way for a single construction regulator.
Architectural Technologist CPDs and Communications
CIAT CPD… and how you can do it!
Cooling centres and cool spaces
Managing extreme heat in cities by directing the public to places for heat stress relief and water sources.
Winter gardens: A brief history and warm variations
Extending the season with glass in different forms and terms.
Restoring Great Yarmouth's Winter Gardens
Transforming one of the least sustainable constructions imaginable.
Construction Skills Mission Board launch sector drive
Newly formed government and industry collaboration set strategy for recruiting an additional 100,000 construction workers a year.
New Architects Code comes into effect in September 2025
ARB Architects Code of Conduct and Practice available with ongoing consultation regarding guidance.
Welsh Skills Body (Medr) launches ambitious plan
The new skills body brings together funding and regulation of tertiary education and research for the devolved nation.
Paul Gandy FCIOB announced as next CIOB President
Former Tilbury Douglas CEO takes helm.
UK Infrastructure: A 10 Year Strategy. In brief with reactions
With the National Infrastructure and Service Transformation Authority (NISTA).