- 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 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.
 Find out more
 Related articles on Designing Buildings Wiki
Featured articles and news
The phrase ‘time at large’ describes the situation where there is no date for completion, or it has become invalid.
The Maldives is under threat from climate change. Read this report from BRE on their potential involvement in the region.
MHCLG update states there are still 124 private high-rise buildings with unsafe cladding and no remediation plan.
Starting a new built environment degree? We have a wide range of resources aimed at students.
Former railway chief James Blake says trust and control are key to successful infrastructure projects.
Do you know your Rococo from your De Stijl, your Gothic from your Post-modernist?
May outlines a new funding strategy for housing associations and says the 'stigma' of social housing needs to end.
RIBA launches a consultation on a new Plan of Work for Fire Safety.
This article offers some basic rules to follow when writing your next specification.
The iconic Mackintosh Building will definitely be rebuilt, board chairwoman confirms.
The machinery used to fashion stone has changed dramatically - and so have the products.