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Courts look for ‘common sense’ in commercial property

Alison Newton warned that poor contracts are bad for business

Alison Newton warned that poor contracts are bad for business

  • by DOMINIC JEFF
 

Recent court cases on both sides of the Border mean that businesses can no longer rely on complicated clauses to enforce commercial property agreements, according to law firm HBJ Gateley.

Alison Newton, commercial property partner and head of the firm’s Glasgow office, said a number of recent cases suggested courts were taking an
increasingly dim view of “poorly-drafted legal documents” and choosing to base decisions on “business common sense”.

She said mediation in these circumstances – where a professional helps both parties reach a mutually-acceptable settlement – could ultimately provide a better outcome than relying on a judge’s view of business.

Newton said: “Ambiguous contracts are seldom drafted that way on purpose, however it is entirely possible that one party entering court is looking to rely on a ‘lucky’ interpretation.”

But she added: “The fact that English and Scottish courts are taking a very similar approach to the issue in recent cases – a common sense interpretation – signals the near demise of opportunistic reinterpretation.”

Earlier this year, Glasgow-based construction firm Cape Building Products successfully argued it should not have to pay the full cost of property repairs at the end of its lease, even though it had failed to comply with a dilapidations notice served on it by the landlord. On the basis of an ambiguous clause of the lease, the court agreed Cape should only pay the landlord for its actual loss as a result of Cape having failed to carry out the dilapidation works – a sum much less than the full estimated cost of repairs.

 

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