1617_r_are_ws03_ce01_guide 1 © The University of Law Limited 2016-2017 ADVANCED REAL ESTATE LAW AND PRACTICE Workshop 3 Guide The Contract Context In this Workshop, you will consider the contractual documentation necessary to enable a buyer client to acquire a site for property development. In particular, it is vital to ensure that the client is not committed to buying the site until it is certain that it can carry out the development it envisages. Outcomes By the end of this Workshop you should be able to: 1. Evaluate typical forms of acquisition contract and assess their suitability for your client’s needs. 2. Understand and explain the purpose, structure and content of a typical conditional agreement for sale. 3. Advise your client as to how a typical conditional agreement for sale would operate in the event of problems which may arise before completion. Workshop Tasks In this Workshop you will: 1. Consider the mechanics of a conditional agreement for sale and appreciate the nature and extent of the obligations it imposes on both parties. 2. Assess the different types of acquisition contract which might be available and advise as to the most appropriate one in a given scenario. 3. Explain to the client its obligations under an agreement for sale and how the agreement would operate to protect the client’s position in the event of problems which may arise before completion. © The University of Law Limited 2016-2017 2 1617_r_are_ws03_ce01_guide Preparation To prepare for this Workshop you should: 1. Read and make notes on the chapter entitled “Matters of Contract” in the Commercial Property textbook. 2. Complete Test & Feedback – Workshop 3 (Preparation). 3. Complete the Workshop Preparatory Task. Materials required for the Workshop Please bring with you to the Workshop: 1. Your completed report from the Preparatory Task. 2. The Commercial Property textbook. 3. The Case Study title plan. 4. This Guide. Consolidation after Workshop It is important that you consolidate your learning after the Workshop. In particular you should: 1. Revise your answers to the Preparatory Task and the Workshop Tasks in the light of the feedback you received in the Workshop. 2. Complete Test & Feedback – Workshop 3 (Consolidation). 1617_r_are_ws03_ce01_guide 3 © The University of Law Limited 2016-2017 PREPARATORY TASK Understanding the Conditional Contract In the first two workshops, you considered the due diligence which needs to be undertaken before committing your client, Phoenix Developments Limited (“Phoenix”), to the acquisition of the case study site in Nottingham (“the Site”). You may assume that any environmental remediation necessary on the Site will take place at the demolition stage of the redevelopment, should the purchase proceed to completion. As you know, Phoenix intends to develop the Site into a business and retail park. Your supervisor, Harry Wright, has advised Phoenix that it should not commit to purchasing the Site until it has obtained appropriate planning permission, allowing Phoenix to develop the Site in the way that it envisages. To that end, Harry has negotiated with British Ordnance’s solicitors that the agreement for sale of the Site should be conditional on obtaining such planning permission. Harry is aware that this is the first time you have dealt with an agreement like this, but needs you to get up to speed quickly on how such an agreement works, so that you can address any issues related to it which are specific to Phoenix. He has therefore given you a blank report form, which was devised by a previous Real Estate trainee, and aims to help you to familiarise yourself with the key provisions of a typical conditional agreement for sale. At pages 5 – 30 of this Guide, you will find: • The draft agreement for sale and purchase of the Site (“the Agreement for Sale”); and • A copy of the report form mentioned above. Harry has asked you to read the Agreement for Sale through and then complete the report. You should bring your completed report with you to Workshop 3. © The University of Law Limited 2016-2017 4 1617_r_are_ws03_ce01_guide [INTENTIONALLY BLANK] 1617_r_are_ws03_ce01_guide 5 © The University of Law Limited 2016-2017 DATED ------------ CONTRACT FOR THE SALE OF FREEHOLD LAND WITH VACANT POSSESSION at THE BRITISH ORDNANCE FACTORY, QUEENS DRIVE, NOTTINGHAM between BRITISH ORDNANCE SYSTEMS LIMITED and PHOENIX DEVELOPMENTS LIMITED DISCLAIMER This document is subject to copyright. It should not be copied, reproduced, distributed or passed to any other person in whole or in part. This document is for teaching and learning purposes only. It does not constitute the provision of any advice by the University of Law. It does not purport to be comprehensive or to contain all the information that may be needed for a particular transaction or matter. Furthermore it may contain deliberate errors and/or omissions. It is not a substitute for legal or other advice and must not be used as a precedent in any circumstances. Source: Thomson Reuters [2016]. Reproduced from Practical Law (PLC) with the permission of the publishers. © The University of Law Limited 2016-2017 6 1617_r_are_ws03_ce01_guide CONTENTS CLAUSE 1. INTERPRETATION .................................................................................................................................... 7 2. NON-ASSIGNMENT .................................................................................................................................. 9 3. COMMENCEMENT .................................................................................................................................... 9 4. INITIAL PAYMENT .................................................................................................................................... 9 5. RISK AND INSURANCE BEFORE THE EFFECTIVE DATE.................................................................. 9 6. PLANNING APPLICATION ..................................................................................................................... 10 7. PLANNING APPEAL ............................................................................................................................... 11 8. INDEPENDENT SURVEYOR .................................................................................................................. 12 9. COSTS ..................................................................................................................................................... 13 10. AGREEMENTS AND PLANNING OBLIGATIONS ............................................................................... 13 11. EFFECTIVE DATE ................................................................................................................................ 14 12. TERMINATION ...................................................................................................................................... 14 13. TERMINATION FOR BREACH ............................................................................................................. 15 14. TERMINATION AND JOINT PLANNING APPLICATIONS .................................................................. 16 15. SALE AND PURCHASE ........................................................................................................................ 16 16. THE PURCHASE PRICE ..................................................................................................................... 16 17. STANDARD COMMERCIAL PROPERTY CONDITIONS .................................................................. 17 18. RISK AND INSURANCE AFTER THE EFFECTIVE DATE ................................................................ 17 19. DEPOSIT................................................................................................................................................ 17 20. DEDUCING TITLE ................................................................................................................................. 17 21. VACANT POSSESSION........................................................................................................................ 18 22. TITLE GUARANTEE .............................................................................................................................. 18 23. MATTERS AFFECTING THE PROPERTY.......................................................................................... 18 24. TRANSFER ............................................................................................................................................ 18 25. COMPLETION ....................................................................................................................................... 19 26. VAT ....................................................................................................................................................... 20 27. BUYER'S ACKNOWLEDGEMENT OF CONDITION ........................................................................... 20 28. ENTIRE AGREEMENT .......................................................................................................................... 20 29. JOINT AND SEVERAL LIABILITY ........................................................................................................ 21 30. NOTICES ............................................................................................................................................... 21 31. SEVERANCE ......................................................................................................................................... 22 32. RIGHTS OF THIRD PARTIES .............................................................................................................. 22 33. GOVERNING LAW AND JURISDICTION ............................................................................................ 22 SCHEDULE 1…………………………………………………………………..23 1617_r_are_ws03_ce01_guide 7 © The University of Law Limited 2016-2017 THIS CONTRACT is dated………………………………………………………..……….. PARTIES (1) British Ordnance Systems Limited incorporated and registered in England and Wales with company number 1138229 whose registered office is at Leamington House, BOS Centre, Leamington Spa, Warwickshire CV32 4LY (Seller). (2) Phoenix Developments Limited incorporated and registered in England and Wales with company number 311966 whose registered office is at Phoenix House, Dorridge Business Park, Solihull, West Midlands B92 7HY (Buyer). AGREED TERMS 1. INTERPRETATION 1.1 The definitions and rules of interpretation set out in this clause apply in this contract. Appeal Notice: a notice given under clause 7.4 by the Buyer of its intention to appeal against a planning condition. Appeal Notice Period: the period of ten Working Days following immediately after the date that the Seller has received a copy of the Planning Permission from the Buyer under clause 7.2. Authorised Transferee: any Subsidiary or holding company (as defined by section 1159 of the Companies Act 2006) of the Buyer or any other Subsidiary of that holding company. Buyer's Conveyancer: Gilbraith Saunders LLP of St Martin’s House Edmund Street Birmingham B3 2PT. Clearing Bank: a bank which is a shareholder in CHAPS Clearing Co. Limited. Completion Date: the date defined in clause 25. Contract Rate: 4% per annum above the base lending rate from time to time of Barclays Bank LIMITED. Council: Nottingham City Council. Defined Planning Condition: a condition that the Development must be begun not later than the expiration of three years beginning on the date on which the Planning Permission is granted. Deposit: the sum of £500,000. Development: the development of the Property as a business/retail park together with car parking and access roads in accordance with the Planning Application. Direct Credit: a direct transfer of cleared funds to an account nominated by the Seller's Conveyancer and maintained at a Clearing Bank. Effective Date: is the date defined in clause 11. © The University of Law Limited 2016-2017 8 1617_r_are_ws03_ce01_guide Event of Default: is any of the events set out in clause 13.1. Independent Surveyor: the surveyor appointed under clause 8. Initial Payment: the sum of £150,000, payable under clause 4. Long Stop Date: 2 years from the date of this contract. Part 1 Conditions: the conditions in Part 1 of the Standard Commercial Property Conditions (Second Edition) and Condition means any one of them. Part 2 Conditions: the conditions in Part 2 of the Standard Commercial Property Conditions (Second Edition) and Condition means any one of them. Planning Appeal: an appeal by the Buyer against: (a) the non-determination by the Council of the Planning Application; (b) the refusal of the Council to grant the Planning Permission; or (c) any one or more conditions included in the Planning Permission. Planning Appeal Decision: the written decision of the Secretary of State on the Planning Appeal. Planning Application: the application for full Planning Permission in the form agreed and annexed to the contract and initialled by the parties for the purposes of identification. [NOTE TO STUDENTS: This has not been reproduced]. Planning Obligation: has the meaning ascribed to that expression by section 106 of the Town and Country Planning Act 1990. Planning Permission: planning permission for the Development. President: the President for the time being of the Royal Institution of Chartered Surveyors. Property: the freehold property at the British Ordnance Factory Queens Drive Nottingham and registered at HM Land Registry with title absolute under title number NT165574. Purchase Price: the amount as set out in clause 16. Referred Planning Condition: a planning condition specified in a notice given under clause 7.10. Secretary of State: the Secretary of State of the Department for Communities and Local Government or other appropriate Minister including (where relevant) any inspector appointed to determine any Planning Appeal or the National Assembly for Wales. Seller's Conveyancer: McIntyres of 14 Middle Pavement Nottingham NG1 6TT. Subsidiary: either a subsidiary within the meaning of section 1159 of the Companies Act 2006 or unless the context requires otherwise a subsidiary undertaking within the meaning of section 21 of the Companies Act 1989. Termination Date: a date as defined in clause 12. 1617_r_are_ws03_ce01_guide 9 © The University of Law Limited 2016-2017 Unacceptable Planning Conditions: the planning conditions listed in Schedule 1. VAT: value added tax chargeable under the Value Added Tax Act 1994 and any similar replacement and any additional replacement tax. Working Day: has the same meaning given to the term "working day" in the Part 1 Conditions. 1.2 A person includes a corporate or unincorporated body. 1.3 Unless otherwise specified, a reference to a particular law is a reference to it as it is in force for the time being, taking account of any amendment, extension, application or re-enactment and includes any subordinate legislation for the time being in force made under it. 1.4 A reference to laws in general is to all local, national and directly applicable supra-national laws in force for the time being, taking account of any amendment, extension, application or re-enactment and includes any sub- ordinate laws for the time being in force made under them and all orders, notices, codes of practice and guidance made under them. 1.5 Writing or written includes faxes but not e-mail. 1.6 Except where a contrary intention appears, a reference to a clause or Schedule is a reference to a clause of or Schedule to this contract. 1.7 Clause and Schedule headings do not affect the interpretation of this contract. 2. NON-ASSIGNMENT This contract is personal to the Buyer and the Buyer may not assign, sublet, share or part with the benefit of this contract or any part of it. 3. COMMENCEMENT This contract comes into force on the date that appears first on page 5 except for the clauses from clause 15 (Sale and purchase) to clause 25 (Completion) inclusive, which come into force on the Effective Date. 4. INITIAL PAYMENT In return for the Seller entering into this contract, and at the same time as the contract is exchanged, the Buyer will pay the Seller the Initial Payment by Direct Credit. The Seller will not be obliged to repay this sum to the Buyer under any circumstances. 5. RISK AND INSURANCE BEFORE THE EFFECTIVE DATE 5.1 Between the date of the contract and the Effective Date the Seller will: © The University of Law Limited 2016-2017 10 1617_r_are_ws03_ce01_guide (a) insure the Property against loss or damage to its full reinstatement value; (b) permit the Buyer to inspect the policy or evidence of its terms; and (c) at the Buyer's expense, request the insurer to endorse a note on the policy of the Buyer's interest. 5.2 Insofar as the policy money is not applied by the Seller in repairing or reinstating the Property and provided that the contract is not terminated under clause 12 or clause 13, the Seller will pay to the Buyer the amount of any policy money received in respect of any damage caused to the Property by an insured risk between the date of the contract and the Effective Date on the later of: (a) the Completion Date; and (b) the date when the Seller receives the policy money in respect of the Property. 6. PLANNING APPLICATION 6.1 Within 20 Working Days after the date that appears first on page 5 of this contract, the Buyer will submit the Planning Application to the Council and will use best endeavours to secure that the Council grants the Planning Permission free from Unacceptable Planning Conditions as soon as possible. 6.2 The Buyer will keep the Seller regularly informed as to progress of the Planning Application and will: (a) supply the Seller with copies of all correspondence to or from the Buyer in connection with the Planning Application within 5 Working Days after either: (i) the date of any correspondence sent by the Buyer; or (ii) the date of receipt of any correspondence by the Buyer. (b) give the Seller at least 5 Working Days' notice of any meetings to be held with the Council, highway authority, service undertakers, local residents in connection with the Planning Application and will give the Seller the opportunity to attend and a copy of any minutes. 6.3 The Buyer will not agree to any extension of the period for determination of the Planning Application without the prior written approval of the Seller, which the Seller cannot unreasonably withhold or delay. 6.4 The Seller will give all reasonable assistance to the Buyer in seeking to obtain Planning Permission. 1617_r_are_ws03_ce01_guide 11 © The University of Law Limited 2016-2017 7. PLANNING APPEAL 7.1 If the Council does not determine the Planning Application within the period allowed by law (including any extensions to that period agreed by the Buyer with the approval of the Seller), the Buyer will, within 10 Working Days following that period, appeal in respect of the non-determination. 7.2 If the Council does determine the Planning Application, the Buyer will, within 5 Working Days after receiving a copy of the determination, give a copy of it to the Seller. 7.3 If the Council refuses to grant the Planning Permission the Buyer will, within 40 Working Days after receiving the refusal, lodge an appeal against the refusal with the Secretary of State. 7.4 If the Council grants the Planning Permission, it will be deemed to have been granted free of Unacceptable Planning Conditions unless, before the expiry of the Appeal Notice Period the Buyer gives written notice to the Seller specifying which of the conditions, to which the Planning Permission is subject, the Buyer regards as being Unacceptable Planning Conditions and against which the Buyer intends to appeal. 7.5 Within 30 Working Days immediately following the expiry of the Appeal Notice Period, the Buyer will lodge with the Secretary of State an appeal against each condition identified in an Appeal Notice. 7.6 The Buyer will use best endeavours to secure that on the Planning Appeal, the Secretary of State grants the Planning Permission free from Unacceptable Planning Conditions as soon as possible. 7.7 The Seller will give all reasonable assistance to the Buyer in seeking to obtain Planning Permission. 7.8 The Buyer will keep the Seller regularly informed as to progress of the Planning Appeal and will: (a) supply the Seller with copies of all correspondence to or from the Buyer in connection with the Planning Appeal within 5 Working Days after either: (i) the date of any correspondence sent by the Buyer or the Buyer's Conveyancer; or (ii) the date of receipt of any correspondence by the Buyer. (b) give the Seller at least 5 Working Days' notice of any meetings to be held in connection with the Planning Appeal and will give the Seller and the Seller's representatives, agents, counsel and the Seller's Conveyancer the opportunity to attend and a copy of any minutes. © The University of Law Limited 2016-2017 12 1617_r_are_ws03_ce01_guide 7.9 The Buyer will, within 5 Working Days after receiving it, give a copy of the Planning Appeal Decision to the Seller. 7.10 If the Planning Appeal Decision is to grant Planning Permission, it will be deemed to have been granted free of Unacceptable Planning Conditions unless, before the expiry of 10 Working Days after the date that the Seller has received a copy of the Planning Appeal Decision from the Buyer under clause 7.9 the Buyer gives written notice to the Seller specifying which of the conditions, to which the Planning Appeal Decision is subject, the Buyer considers to be Unacceptable Planning Conditions and requiring the Planning Appeal Decision to be referred to an Independent Surveyor. 7.11 The parties may agree to extend any time limit for giving any notice under this clause but in the absence of prior agreement, time will be of the essence of the contract. 8. INDEPENDENT SURVEYOR 8.1 The Planning Appeal Decision will be referred to an Independent Surveyor to determine whether each Referred Planning Condition is an Unacceptable Planning Condition if a notice has been given by the Buyer under clause 7.10 requiring the Planning Appeal Decision to be referred to the Independent Surveyor. 8.2 An Independent Surveyor will be appointed by agreement between the Buyer and the Seller or, if the parties are unable to agree an appointment, either of them may request the appointment to be made by the President. 8.3 An Independent Surveyor must be a Fellow of the Royal Institution of Chartered Surveyors, with at least ten years experience including experience in development of the same type as the Development. 8.4 The Independent Surveyor will act as an arbitrator and the arbitration will be conducted in accordance with the Arbitration Act 1996. [NOTE TO STUDENTS: in very limited circumstances, it is possible for a third party, such as a pressure group or an aggrieved neighbour, to challenge the validity of an appeal decision by way of judicial review or appeal to the High Court. In practice, this contract would need to contain provisions ensuring that the contract only becomes unconditional once there is no longer a risk of third party challenge to the grant of the planning permission. However, third party challenges are beyond the scope of this course so these provisions, which add extra complexity, have been omitted.] 1617_r_are_ws03_ce01_guide 13 © The University of Law Limited 2016-2017 9. COSTS 9.1 The Buyer will pay the cost of any reference of the Planning Appeal Decision to an Independent Surveyor and will keep the Seller indemnified against all fees and costs of the Independent Surveyor and against all fees and costs of any advisors appointed by the Independent Surveyor including any irrecoverable VAT thereon. 9.2 The Buyer will indemnify the Seller against all legal costs and disbursements and any surveyors' fees and expenses, including any irrecoverable VAT, incurred by the Seller in connection with the process of obtaining or seeking to obtain Planning Permission, including, without limitation, the process of approving, submitting or progressing the Planning Application, any Planning Appeal, any agreement entered into under clause 10 and any referral of a Planning Appeal Decision to the Independent Surveyor. 10. AGREEMENTS AND PLANNING OBLIGATIONS 10.1 At the Buyer's request and subject to the provisions of this clause, the Seller will, and will use its reasonable endeavours to procure that any mortgagee of the Property will, enter into any agreement with any authority as is reasonably required by the Buyer to procure the grant of the Planning Permission, including an agreement to enter into any Planning Obligation. 10.2 Any agreement that the Buyer requires the Seller to enter into under this clause must be in a reasonable form and must contain stipulations that: (a) the agreement will not come into effect until the Planning Permission is granted; and (b) any obligation imposed by the agreement will be conditional upon the commencement of the Development as authorised by the Planning Permission; and (c) the Seller will not be liable for any breach of the agreement unless at the date of the breach the Seller holds an interest in the part of the Property in respect of which the breach occurs; and (d) the Seller will be released from all liability under the agreement if the Seller disposes of its interest in the whole of the Property. 10.3 The Seller will not be required to enter into any agreement unless it can procure that any mortgagee of the Property also consents to being a party to the agreement. 10.4 The Seller will not be required to enter into any agreement that: (a) requires the Seller to dedicate, make available or otherwise provide, transfer or dispose of any land not forming part of the Property; or (b) requires the Seller to grant any right or to enter into any covenant over any land that does not form part of the Property. © The University of Law Limited 2016-2017 14 1617_r_are_ws03_ce01_guide 10.5 The Buyer will keep the Seller indemnified against all liability, proceedings, costs, claims, demands and expenses incurred or arising under each agreement that the Seller enters into under this contract, including any irrecoverable VAT thereon. 11. EFFECTIVE DATE 11.1 Subject to clause 11.2, the Effective Date is the first to occur, if any, of the following dates: (a) if the Council grants Planning Permission free of conditions or subject only to a Defined Planning Condition, the date of the written decision letter; (b) if the Council grants Planning Permission subject to one or more conditions that are not Defined Planning Conditions, and no Appeal Notice is given by the Buyer, the date that is the next Working Day after the expiry of the Appeal Notice Period; (c) if following a Planning Appeal, the Secretary of State grants Planning Permission subject only to a Defined Planning Condition, the date of the Planning Appeal Decision letter; (d) if following a Planning Appeal, the Planning Appeal Decision is to grant the Planning Permission subject to one or more conditions that are not Defined Planning Conditions and no notice is given under clause 7.10 to refer the Planning Appeal Decision to an Independent Surveyor, the date that is the next Working Day after the expiry of the last day for the Buyer to give a notice under clause 7.10. (e) if the Planning Appeal Decision is referred to an Independent Surveyor pursuant to a notice given under clause 7.10, and the Independent Surveyor determines that none of the Referred Planning Conditions imposed in the Planning Permission are Unacceptable Planning Conditions, the date of the Independent Surveyor's written determination. 11.2 The Effective Date cannot occur after the Termination Date. 12. TERMINATION 12.1 The Termination Date is the first to occur, if any, of the following dates: (a) if following a Planning Appeal, the Planning Appeal Decision is to refuse Planning Permission, the date of the Planning Appeal Decision; (b) if an Independent Surveyor has given a written decision under clause 8 that any Referred Planning Condition is an Unacceptable Planning Condition, the date of the Independent Surveyor's written determination; (c) the Long Stop Date. 1617_r_are_ws03_ce01_guide 15 © The University of Law Limited 2016-2017 12.2 In the event of a Termination Date occurring: (a) the contract is terminated with immediate effect as from the Termination Date except that the following clauses will remain in full force notwithstanding termination of the contract: (i) the clauses from clause 1 to clause 4 inclusive; (ii) clause 9; (iii) clause 10; (iv) clause 14; (v) clause 26; and (vi) the clauses from clause 28 to clause 33 inclusive. (b) neither party will have any further rights or obligations under the contract except that the termination of the contract will not affect either of the parties' rights in connection with any breach of this contract that occurred before the Termination Date. 13. TERMINATION FOR BREACH 13.1 An Event of Default is any of the following: (a) where any sum payable under this contract or any part of that sum remains unpaid for 10 or more Working Days after the due date for payment (whether formally demanded or not); or (b) a breach by the Buyer of any of its obligations under this contract if the breach remains unremedied for 15 or more Working Days; or (c) the Buyer being unable to pay its debts within the meaning of section 123(1) of the Insolvency Act 1986 or being unable to pay its debts as they fall due; (d) the Buyer is struck-off from the Register of Companies; or (e) the Buyer otherwise ceases to exist. 13.2 If an Event of Default occurs before the Effective Date, the Seller may determine this contract by written notice to the Buyer. 13.3 If the Seller gives notice to terminate under clause 13.2: (a) the contract will be terminated with immediate effect from the date of the Seller's notice except that the following clauses of the contract will remain in full force notwithstanding termination of the contract: (i) the clauses from clause 1 to clause 4 inclusive; (ii) clause 9; (iii) clause 10; (iv) clause 14; © The University of Law Limited 2016-2017 16 1617_r_are_ws03_ce01_guide (v) clause 26; and (vi) the clauses from clause 28 to clause 33 inclusive. (b) neither party will have any further rights or obligations under this contract except that the termination of the contract will not affect either of the parties' rights in connection with any breach of this contract that occurred before the date of the Seller's notice under clause 13.2. 14. TERMINATION AND JOINT PLANNING APPLICATIONS If the Planning Application is submitted under clause 6 by the Buyer in the joint names of the Buyer and the Seller and the contract is subsequently terminated under either clause 12 or clause 13 then the Buyer agrees that the Seller may proceed with the Planning Application or any Planning Appeal as the Seller considers fit. 15. SALE AND PURCHASE 15.1 The Seller will sell and the Buyer will buy the Property for the Purchase Price on the terms of this contract. 15.2 The Buyer cannot require the Seller to: (a) transfer the Property or any part of it to any person other than the Buyer named in this Agreement or an Authorised Transferee; or (b) transfer the Property in more than one parcel or by more than one transfer; or (c) apportion the Purchase Price between different parts of the Property. 16. THE PURCHASE PRICE 16.1 The Purchase Price of the Property will be the sum of five million pounds (£5,000,000). 16.2 The Purchase Price of the Property has been reduced by the sum of £[ ] to take account of the cost of the remediation of the Property and which includes but is not limited to the removal and/or treatment of all or any matters which may have the result that the Property be determined as contaminated land within the meaning of part IIA of the Environmental Protection Act 1990. 16.3 The Buyer and the Seller acknowledge that the sum stated in clause 16.2 would be sufficient to achieve the result that the Property is not determined as contaminated land if such remediation were to be carried out effectively and the Buyer and the Seller further acknowledge that accordingly the Seller is therefore entitled to be excluded from the categories of person liable to contribute to the cost of any remediation works at on or under the Property and that the Buyer will bear any such liability as would otherwise have attached to the Seller. 1617_r_are_ws03_ce01_guide 17 © The University of Law Limited 2016-2017 16.4 The Buyer shall indemnify and keep indemnified the Seller against any liability which may be incurred by the Seller for the costs of remediation works at on or under the Property occasioned by the failure of any body of competent authority to exclude the Seller from such liability under the terms of the said Part IIA in accordance with this clause 16. 17. STANDARD COMMERCIAL PROPERTY CONDITIONS 17.1 The Part 1 Conditions are incorporated in this contract so far as they: (a) apply to a sale by private treaty; (b) relate to freehold property; (c) are not inconsistent with the other clauses in this contract; and (d) have not been modified or excluded by any of the other clauses in this contract. 17.2 The Part 2 Conditions are not incorporated into this contract. 17.3 Condition 1.1.4(a) does not apply to this contract. 18. RISK AND INSURANCE AFTER THE EFFECTIVE DATE 18.1 With effect from the Effective Date, the Property is at the Buyer's risk and the Seller is under no obligation to the Buyer to insure the Property. 18.2 No damage to or destruction of the Property nor any deterioration in its condition, however caused, will entitle the Buyer either to any reduction of the Purchase Price or to refuse to complete or to delay completion. 18.3 Conditions 7.1.2, 7.1.3 and 7.1.4(b) do not apply to this contract. 19. DEPOSIT 19.1 Within 10 Working Days after the Effective Date the Buyer will pay the Deposit to the Seller's Conveyancer as stakeholder on terms that on completion the Deposit is paid to the Seller with accrued interest. 19.2 The Deposit must be paid by Direct Credit. 19.3 Conditions 2.2.1 and 2.2.2 do not apply to this contract. 20. DEDUCING TITLE 20.1 The Seller's title to the Property has been deduced to the Buyer's Conveyancer before the date of this contract. © The University of Law Limited 2016-2017 18 1617_r_are_ws03_ce01_guide 20.2 The Buyer is deemed to have full knowledge of the title and is not entitled to raise any objection, enquiry or requisition in relation to it. 20.3 Conditions 6.1, 6.2, 6.3.1 and 6.4.2 do not apply to this contract. 21. VACANT POSSESSION 21.1 The Property will be sold with vacant possession on completion. 22. TITLE GUARANTEE 22.1 The Seller will transfer the Property with full title guarantee. 22.2 Condition 6.6.2 does not apply to this contract. 23. MATTERS AFFECTING THE PROPERTY 23.1 The Seller will sell the Property free from encumbrances other than: (a) any matters contained or referred to in the entries or records made in registers maintained by Land Registry under title number NT165574 as at the date of this contract; (b) any matters discoverable by inspection of the Property before the Effective Date; (c) any matters which the Seller does not and could not reasonably know about; (d) any matters disclosed by searches or enquiries made before the Effective Date or which would have been disclosed by the searches and enquiries that a prudent buyer would have made before the Effective Date; (e) public requirements; (f) any matters which are unregistered interests which override first registration under Schedule 1 to the Land Registration Act 2002 and unregistered interests which override registered dispositions under Schedule 3 to the Land Registration Act 2002; and (g) any agreements entered into pursuant to clause 10 of the contract. 23.2 Conditions 3.1.1, 3.1.2, 3.1.3 and 3.3 do not apply to this contract. 23.3 The Buyer is deemed to have full knowledge of the matters referred to in this clause and will not raise any enquiry, objection, requisition or claim in respect of any of them. 24. TRANSFER 24.1 The transfer to the Buyer will contain: 1617_r_are_ws03_ce01_guide 19 © The University of Law Limited 2016-2017 (a) a declaration as to the title guarantee with which the transfer is made as stated in this contract; (b) a provision that lists each of the matters subject to which the disposition effected by the transfer is made, which matters are identified in clause 23; (c) a provision that all matters recorded at the date of the transfer in registers open to public inspection, are deemed to be within the actual knowledge of the Buyer for the purposes of section 6(2)(a) of the Law of Property (Miscellaneous Provisions) Act 1994, notwithstanding section 6(3) of that Act; (d) a provision that the Property will not, by virtue of the transfer, have any rights, easements or the benefit of any other matters over land retained by the Seller other than those (if any) which are expressly mentioned in or granted by the transfer and a provision that section 62 of the Law of Property Act 1925 will not apply to the transfer; (e) a covenant by the Buyer by way of indemnity only, on its own behalf and on behalf of its successors in title, to observe and perform the charges, encumbrances, covenants and restrictions contained or referred to in the property and charges registers of NT165574 in so far as they are subsisting and capable of taking effect and will keep the seller indemnified against all proceedings, costs, claims and expenses arising from any failure to do so; and (f) a covenant by the Buyer by way of indemnity only, on its own behalf and on behalf of its successors in title, to observe and perform the covenants and restrictions contained in or referred to in any agreement entered into by the Seller under clause 10. 24.2 The Buyer and the Seller will execute the transfer in duplicate. 25. COMPLETION 25.1 Completion will take place on the day that is 20 Working Days after the Effective Date. 25.2 Conditions 8.1.2 and 8.1.3 are varied by the deletion of 2.00 pm as the stipulated time and the substitution of 1.00 pm. 25.3 Condition 1.1.3(b) is amended to read: "in the case of the seller, even though a mortgage remains secured on the property, if the amount to be paid on completion enables the property to be transferred freed of all mortgages, (except those to which the sale is expressly subject) or if the seller produces reasonable evidence that this is the case." 25.4 Condition 8.4 is amended to add, "(d) any other sum which the parties agree under the terms of the contract should be paid or allowed on completion". © The University of Law Limited 2016-2017 20 1617_r_are_ws03_ce01_guide 26. VAT 26.1 Each amount stated to be payable by the Buyer to the Seller under or pursuant to this contract is exclusive of VAT (if any). 26.2 If any VAT is chargeable on any supply made by the Seller under or pursuant to this contract, the Buyer will on receipt of a valid VAT invoice, pay the Seller an amount equal to that VAT as additional consideration on completion. 27. BUYER'S ACKNOWLEDGEMENT OF CONDITION The Buyer acknowledges that before the date of this contract, the Seller has given the Buyer and others authorised by the Buyer, permission and the opportunity to inspect, survey and carry out investigations as to the condition of the Property. The Buyer has formed its own view as to the condition of the Property and the suitability of the Property for the Buyer's purposes. 28. ENTIRE AGREEMENT 28.1 This contract constitutes the entire agreement and understanding of the parties and supersedes any previous agreement between them relating to the subject matter of this contract. 28.2 The Buyer acknowledges and agrees that in entering into this contract, it does not rely on and shall have no remedy in respect of any statement, representation, warranty, collateral agreement or other assurance (whether made negligently or innocently) of any person (whether party to this contract or not) other than as expressly set out in this contract or in any written replies which the Seller's Conveyancer has given to any written enquiries raised by the Buyer's Conveyancer before the date of this contract. Nothing in this clause shall, however, operate to limit or exclude any liability for fraud. 28.3 As from the Effective Date when the Conditions are incorporated into this contract in accordance with clause 17, Condition 9.1.1 is varied to read, "If any plan or statement in the contract, or in written replies which the seller's conveyancer has given to any written enquiry raised by the buyer's conveyancer before the date of the contract, is or was misleading or inaccurate due to any error or omission, the remedies available are as follows." 28.4 This contract may be signed in any number of duplicate parts all of which taken together will on exchange constitute one contract. 29. JOINT AND SEVERAL LIABILITY 29.1 If there is more than one seller or more than one buyer, the obligations which they undertake can be enforced against them all jointly or against each individually. 1617_r_are_ws03_ce01_guide 21 © The University of Law Limited 2016-2017 29.2 Where the Buyer is more than one person, the Seller may release or compromise the liability of any of those persons under this contract or grant time or other indulgence without affecting the liability of any other of them. 30. NOTICES 30.1 Any notice given under this contract must be in writing and signed by or on behalf of the party giving it. 30.2 Any notice or document to be given under this contract must be given by delivering it personally or by sending it by pre-paid first class post to the address and for the attention of the relevant party as follows: (a) to the Seller at: Leamington House, BOS Centre, Leamington Spa, Warwickshire CV32 4LY marked for the attention of: The Managing Director or at the Seller's Conveyancer, quoting the reference DGL; (b) to the Buyer at: Phoenix House, Phoenix Business Park, Solihull, West Midlands B92 7HY marked for the attention of: The Managing Director or at the Buyer's Conveyancer, quoting the reference ALR. 30.3 Giving a notice or a document to a party's conveyancer has the same effect as giving it to that party. 30.4 A notice or document given under this contract will not have been given validly if sent by fax DX or e-mail. 30.5 Any notice or document given in accordance with this clause will be deemed to have been received: (a) if delivered personally, at the time of delivery provided that if delivery occurs before 9.00 am on a Working Day, the notice will be deemed to have been received at 9.00 am on that day, and if delivery occurs after 5.00 pm on a Working Day or on a day which is not a Working Day, the notice will be deemed to have been received at 9.00 am on the next Working Day; (b) if sent by pre-paid first class post, at 9.00 am on the second Working Day after posting; © The University of Law Limited 2016-2017 22 1617_r_are_ws03_ce01_guide 30.6 In proving delivery, it will be sufficient to prove that delivery was made or that the envelope containing the notice or document was properly addressed and posted as a prepaid first class as the case may be. 30.7 Condition 1.3 does not apply to this contract. 31. SEVERANCE 31.1 If any provision or part of a provision of this contract is found by any court or administrative body of competent jurisdiction to be invalid, unenforceable or illegal, the other provisions will remain in force. 31.2 If any invalid, unenforceable or illegal provision would be valid, enforceable or legal if some part of it were deleted, the provision will apply with whatever modification is necessary to give effect to the commercial intention of the parties. 32. RIGHTS OF THIRD PARTIES A person who is not a party to this contract will not have any rights under or in connection with it by virtue of the Contracts (Rights of Third Parties) Act 1999. 33. GOVERNING LAW AND JURISDICTION 33.1 This contract will be governed by and construed in accordance with the law of England and Wales. 33.2 Each party irrevocably agrees to submit to the exclusive jurisdiction of the courts of England and Wales over any claim or matter arising under or in connection with this contract or the legal relationships established by this contract. 33.3 Each party irrevocably consents to any process in any legal action or proceedings arising out of or in connection with this contract being served on it in accordance with the provisions of this contract relating to service of notices. Nothing contained in this contract shall affect the right to serve process in any other manner permitted by law. This contract has been entered into on the date stated at the beginning of it. 1617_r_are_ws03_ce01_guide 23 © The University of Law Limited 2016-2017 Schedule 1 Unacceptable Planning Conditions An Unacceptable Planning Condition is one that is not a Defined Planning Condition but which is one that: 1. will or is likely to increase materially the cost of carrying out the Development; 2. will or is likely to reduce materially the profitability of the Development; 3. will or is likely to reduce materially the capital value or the rack rental value of the Development; 4. materially infringes the principles and guidance given by the Secretary of State in the National Planning Policy Framework and the Planning Practice Guidance; 5. limits the occupation and/or use of the whole or any material part of the Property to occupation or use by any designated occupier or class of occupier; 6. limits the time for which the Planning Permission (once implemented) will be operative; 7. specifies requirements in regard to the scale and/or location of any structure to be constructed as part of the Development which are unacceptable to the Buyer; 8. prevents trading at the Property at any time between the hours of 8.00 am and 10.00 pm on Mondays to Saturdays and 10.00 am and 4.00 pm on Sundays; 9. limits the number of car parking spaces at the Property to less than 250; 10. limits the size of the service area in or adjacent to the Property or imposes restrictions on the layout or position of the service area which would be materially detrimental to the servicing of the Property; 11. restricts the type or range of goods which can be sold from the Property; 12. requires the provision of public open space within the Property in excess of 2 hectares (excluding land required for adopted and private roads footways and cycleways); or 13. requires the provision of social housing (and/or land for the provision of the same) within the Property or elsewhere and/or payment of money or other consideration in respect of or as a contribution to the provision of or in connection with any such housing. © The University of Law Limited 2016-2017 24 1617_r_are_ws03_ce01_guide Signed by [NAME OF DIRECTOR] for and on behalf of the Seller ....................................... Director Signed by [NAME OF DIRECTOR] for and on behalf of the Buyer ....................................... Director 1617_r_are_ws03_ce01_guide 25 © The University of Law Limited 2016-2017 GILBRAITH SAUNDERS LLP REPORT ON CONDITIONAL AGREEMENT FOR SALE CLIENT: Phoenix Developments Ltd MATTER: Purchase of the British Ordnance Site, Queen’s Drive, Nottingham 1. KEY DETAILS PROVISION CLAUSE NO(S) DETAILS Seller Buyer Property © The University of Law Limited 2016-2017 26 1617_r_are_ws03_ce01_guide 2. FINANCIAL INFORMATION PROVISION CLAUSE NO(S) DETAILS Purchase Price Is VAT payable on Purchase Price? Preliminary Deposit Amount: Date Payable: Refundable? 1617_r_are_ws03_ce01_guide 27 © The University of Law Limited 2016-2017 PROVISION CLAUSE NO(S) DETAILS Deposit Amount: Date Payable: Held as Agent or Stakeholder? © The University of Law Limited 2016-2017 28 1617_r_are_ws03_ce01_guide 3. CONDITIONALITY PROVISIONS PROVISION CLAUSE NO(S) DETAILS Which clauses render the contract conditional? AND When does the contract become unconditional? What is the contract conditional upon? 1617_r_are_ws03_ce01_guide 29 © The University of Law Limited 2016-2017 PROVISION CLAUSE NO(S) DETAILS How long does the contract give for the condition to be fulfilled? When is the completion date? What will happen if the condition is not met? © The University of Law Limited 2016-2017 30 1617_r_are_ws03_ce01_guide 4. MISCELLANEOUS PROVISION CLAUSE NO(S) DETAILS Where due diligence has revealed any potential issues with contaminated land, how (if at all) does the contract deal with remediation? Title Guarantee Responsibility for insurance between now and completion? Vacant Possession? 1617_r_are_ws03_ce01_guide 31 © The University of Law Limited 2016-2017 NOTE TO STUDENTS: Tasks 1 and 2 below are for completion in accordance with your tutor’s instructions during Workshop 3 and you should not therefore attempt them before you attend the Workshop. TASK 1 Evaluating Different Types of Acquisition Contract Attached to this Task, you will find an email from Harry Wright, your supervisor. Read Harry’s email, then, as directed by your tutor, consider the following types of acquisition contract and be prepared to advise as to which one would be most suitable in the circumstances: 1. Put Option 2. Call Option 3. Pre-emption Agreement 4. Conditional Contract 5. A Contract including Provision for the Payment of Overage © The University of Law Limited 2016-2017 32 1617_r_are_ws03_ce01_guide 1617_r_are_ws03_ce01_guide 33 © The University of Law Limited 2016-2017 EMAIL From: Harry Wright To: Trainee Solicitor Date: [XXXX] Subject: Phoenix: p/o the British Ordnance site (“the Site”) Dear Trainee Yulia Dimov at Phoenix has been in touch this morning. Apparently, she has been talking to the owner of a piece of land to the east of the Site (“King’s Meadow”), shown hatched black on the attached plan. The owner of King’s Meadow (a local landowner called Penelope Gordon) has got wind of Phoenix’s plans to develop the Site and has approached Phoenix to see whether it would like to acquire King’s Meadow in order to incorporate it within the development. Currently, King’s Meadow is undeveloped and rather scruffy, so Yulia can see the potential benefit in buying this land to give the business park a more appealing outlook over that area. It could also maybe be used as an alternative entry point to the Site, but it is not essential, as there are other ways to get in and out. However, Yulia and her fellow directors are keen to ensure that the acquisition of the main Site goes through quickly and smoothly and do not wish to be distracted from this at present. They may be interested in acquiring King’s Meadow in the future though, and have asked us to advise as to how this might be arranged. Please could you look into this for me? By the time I get back from my meeting later this afternoon, I would like you to be ready to talk me through what Phoenix’s options are, what the pros and cons of each are for both parties, and which is likely to be the most acceptable solution all round. Many thanks Harry © The University of Law Limited 2016-2017 34 1617_r_are_ws03_ce01_guide 1617_r_are_ws03_ce01_guide 35 © The University of Law Limited 2016-2017 TASK 2 Operation of the Agreement for Sale Phoenix has agreed to enter into a contract with Penelope Gordon in accordance with your advice relating to King’s Meadow and you may assume that this is all in hand. Your focus must now return to the acquisition of the main Site under the conditional Agreement for Sale with which you familiarised yourself in the Preparatory Task. Harry has asked you to call Yulia to talk her through how the draft contract works. The Real Estate Professional Support Lawyer in your firm has devised a flowchart to help Real Estate trainees to form a clear picture of how typical conditional contracts work. Complete the flowchart (which your tutor will hand out during the Workshop) and, as directed by your tutor, prepare to advise Yulia as to the obligations on Phoenix under the Agreement for Sale in relation to seeking planning permission. You may assume that the Local Planning Authority will require an Environmental Impact Assessment. © The University of Law Limited 2016-2017 36 1617_r_are_ws03_ce01_guide