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Prettys Solicitors Ipswich
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Do You Understand What I Am Saying?

January 2020

Whilst this ought to go without saying, time and again cases crop up which reinforce the need to ensure contractual drafting is as clear and unambiguous as possible.

Parties to a transaction do frequently (perhaps, invariably) wish them to be concluded as swiftly as possible, which is completely understandable; a deal has been struck, so let’s get on with it – but obviously this doesn’t diminish the need to make sure the transaction terms are accurately documented, especially when working to challenging deadlines.

Whilst no one likes to be an arbiter of doom, as lawyers it is our job to point out the pitfalls and risks inherent in accepting suspect drafting – and quite often the response we receive to this may be along the lines “but everyone knows what it means, it’s obvious – we wouldn’t be agreeing to do ‘x’ if it wasn’t for ‘z’, so let’s get on with it”.

Where this becomes dangerous, of course, is when one party is placed under such pressure by the other that he feels he has no choice but to accept the wording and terms put forward – because ultimately, in the event of a subsequent falling out, it is the Court that will have the final say as to what the agreed wording actually means.

Where both agree they have made a mistake in their document, this can likely be rectified between them. But where it is only one party that feels a document was concluded in error and it is necessary to head to Court to seek a declaration as to what it was truly intended to mean, the parties will find themselves with a high evidential bar to meet before the Court will be persuaded to intervene.

Before making any decisions, the Court will look carefully at the disputed wording and seek to give it its ‘natural and ordinary’ meaning, but then also look at the surrounding circumstances of the transaction, the relevant facts and circumstances, and (increasingly importantly) the overall purpose of the transaction.

One recent case where the importance of this latter element (the overall purpose of a transaction) was pushed home particularly strongly was in Lionel Jeffrey Cozens-Smith v. Bellway Homes Limited [2019] EWHC 3222. In that case, the claimant sought to put a very specific, rigid, interpretation on the wording of a transfer deed, so as (presumably) to try and preserve the viability of a ransom strip – and on a very literal, ‘black and white’ (read: obscure) interpretation of the document, it is almost possible to see the angle from which he was looking at things.

Happily, the trial judge in that case took a reassuringly pragmatic ‘broad commercial view’ of the situation and concluded that the claimant didn’t have a leg to stand on, as if his interpretation was allowed to stand it would have flown in the face of common sense and entirely defeated the whole purpose of the transaction - as part of which the claimant had (with others) already received payment of £9.65m!

But the point here, is that the claimant must have (at least semi-genuinely) believed his document meant one thing, whereas the defendant and the Court took an entirely different view – which only emphasises the need to make sure things are stated properly in the first place.

To do this, of course, you need lawyers who fully understand the background and context of your transaction, so as to be able to advise on ‘what a document needs to say’, rather than what someone may be telling you to ‘take or leave’.

Obviously there are occasions when commercial views need to be taken, but before taking them, please make sure you have first obtained competent advice as to what you are signing up to (etc.).

For more information on this topic or for advice on ambiguities in property transactions please contact gburslem@prettys.co.uk.

Graeme Burslem

Associate

e gburslem@prettys.co.uk

t 01473 298220

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