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22nd November 2019

Exiting a purchase agreement

22nd November 2019

Exiting a purchase agreement

David Eminton

Posted: 22nd November 2019

T: 023 8048 2284

E: Email Me

In the recent case of Bella Italia Restaurants v Stane Park, an obligation assumed by Bella to take a lease of a property in 2014 subject to the satisfaction of a number of conditions was considered. The reports of the case indicate that by 2017 Bella had decided it wished to extricate itself from the agreement. Notification was given to the owners of the freehold of the desire to terminate the agreement but the freeholders neverthelss proceeded to serve notice on Bella requiring its completion of the lease of the property (the relevant conditions having been complied with).

Whilst the discussions had been going on between Bella and the landlord, the landlord had, in fact, transferred their interest in the property to a new third party “Ropemaker”.

Bella ultimately declined to complete on the basis that the agreement for the lease had been completed with the original owner and not Ropemaker. The question fell to be determined by the court as to whether the obligation assumed by the original owner was personal (if it was, Bella might not be required to complete with Ropemaker).

The contract itself required interpretation and the rule of construction “expressio unius est exclusio alterius” (the principle is that the expressing of one thing is to the exclusion of another) came to be considered. The fact that some clauses were expressed to be personal to the parties created the implication that other clauses weren’t assumed to be personal in the absence of a statement to that effect. This applied particularly in the context of the obligation to acquire a new lease.

The court held that the obligation to take a grant of the lease was not personal and could therefore be performed by Ropemaker as a transferee of the property. The court therefore held that the contract remained enforceable and Bella was liable to complete the lease.

Bella wasn’t successful in this instance but this case will be of interest to any party considering its options where it has committed to the acquisition of an interest in a property which has for whatever reason ceased to be of interest. Sellers entering into disposal contracts which may subsist for an extended period will equally wish to be sure that the agreements give them the flexibility they need.

If you have any queries concerning the issues raised by this blog please email me.

 

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David Eminton

Posted: 22nd November 2019

T: 023 8048 2284

E: Email Me