The recent Court of Appeal case of Generator Developments Limited v Lidl concerned a joint venture agreement which was never concluded by the completion of a formal document.
Negotiations took place between the parties as to the basis upon which planning permission would be sought and a site acquired and developed by Lidl.
All of the negotiations were “subject to contract” and although a lock out agreement was circulated, it was never dated. A joint venture agreement was produced and went through a number of drafts but again, wasn’t dated.
Lidl purchased the property in question and whilst the discussions between Generator and Lidl continued for a short time, the negotiation of the relevant document wasn’t concluded.
Generator claimed it had reached an understanding with Lidl that the property would be acquired by Lidl for the joint benefit of both parties and that Generator therefore had an equitable interest in the property under the principle in Pallant v Morgan. The Judge at first instance rejected the claim and held there wasn’t sufficient understanding between the parties of the base upon which joint venture would come into existence.
Generator appealed to the Court of Appeal.
The Court of Appeal concluded there couldn’t be a common intention between the parties as to a joint venture not least because the parties were still in disagreement about some of the terms of the enterprise. The correspondence which had been entered into between the parties were “subject to contract” and it would fly in the face of those express statements if the Court were to imply a joint venture. Finally, the Court emphasised that it was entirely possible Lidl might have decided to do a deal with a different developer (and to enter into a binding contractual agreement with them).
The end result was that Lidl (in the absence of any further appeal to the House of Lords) were deemed to have purchased this property for their own benefit and account and free of any joint venture.
The case emphasises the importance of both clarity in discussions and intentions. Agreements should be committed to writing at the earliest possible opportunity (ideally in a deed) and pending the completion of those documents, any correspondence should be marked expressly “subject to contract”.
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