Real Estate Podcast EP1: Why mark documents “subject to contract” in real estate transactions and joint ventures?

Kate Wilson and Lucy Morton, lawyers in the Real Estate and Planning teams at HSF, provide a summary of the importance of marking documents with the words ‘subject to contract’ when entering a real estate transaction or joint venture arrangement, as discussed in the recent Court of Appeal case of Generator Developments v Lidl UK [2018] EWCA Civ 396. Continue reading

The limits of good faith

Author: Michael Mendelblat, Professional Support Lawyer, Construction and Engineering, London

 

The NEC Form of Contract is now in wide use in construction projects. The first clause says that the parties "shall act as stated in this contract and in a spirit of mutual trust and co-operation", often referred to as "good faith". What this means in practice is a question of importance for the development industry, both in relation to this particular contract and to the numerous other standard form or bespoke arrangements where "good faith" obligations are included.

 

The extent of the good faith obligation was considered in a recent case, Costain v Tarmac. Here the Court was not prepared to allow a contractor to escape the effect of an express time bar clause by relying on the duty of good faith as imposing a positive obligation to point out its effect. The court commented that the express duty in this case said little more than was previously thought to be implied into all construction contracts in terms of a duty to co-operate. So, whilst a good faith obligation prohibits unreasonable conduct which is without regard to the interests of the other party, it does not, it would appear, extend to informing the other party about the adverse effect of a particular term of the contract of which it should already be aware.

 

Good faith clauses, therefore, do not prevent parties from relying on express terms of the contract. The effect is confined to a restraint on unreasonable conduct amounting to improper exploitation of the other party.

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IPF Non-Disclosure & Exclusivity Agreements

Author: Richard Forsdyke, Partner, Real Estate, London

We find this interesting and so thought we would share.

To save unnecessary time and resources drafting bespoke agreements, the Investment Property Forum ("IPF") has published a standard form Non-Disclosure Agreement ("NDA") for parties to a potential property transaction wanting to review marketing material and/or begin due diligence.  They have also published a standard form of Exclusivity Agreement ("EA") and guidance notes for each agreement.

Both agreements and the guidance notes can be found on the IPF website.

For more information please contact:

Richard Forsdyke
Richard Forsdyke
Partner, Real Estate, London
+44 20 7466 2856

 

High Court upholds local authority approach towards securing best value and avoiding the procurement regulations when disposing of land for redevelopment

Author: Adrian Brown, Of Counsel, Competition, Regulation and Trade, Brussels

A recent High Court ruling has clarified the extent of a local authority's obligations to obtain best consideration and to comply with public procurement regulations when it enters into a development agreement with a developer for the regeneration of land.  The case of R (on the application of Faraday Development Ltd) v West Berkshire Council and St Modwen Developments Limited concerned a development agreement entered into between West Berkshire Council and St Modwen to regenerate an area of industrial land in Newbury that was owned mostly by the Council.  St Modwen was chosen as the development partner pursuant to a competitive tender but not one that was conducted under the Public Contracts Regulations 2015. 

An unsuccessful bidder in the tender process, Faraday Development Ltd, brought a challenge against the Council by way of judicial review.  It alleged that the Council had failed in its obligations, first, to obtain best consideration for the disposal of its land under section 123 of the Local Government Act 1972 (LGA) and, second, to comply with the Public Contracts Regulations 2015 (PCR).   In a judgment laid down on 26 August 2016, the High Court found in favour of the Council and dismissed both aspects of Faraday's claim. 

The case provides some reassurance to local authorities and their development partners, with the court taking a pragmatic, flexible approach towards the authority's obligation to secure best value when disposing of land intended for redevelopment.

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Council which agreed to vary a development agreement in order to assist viability is subject to a successful judicial review

On 11 February 2015, pursuant to an application for judicial review by a local resident, the High Court ruled that a redevelopment project in Winchester had to be put out to competitive tender under the EU procurement rules. This obligation arose when the Council agreed to make substantial variations to a development agreement that had originally been entered into 2004. The case illustrates the severe problems which can arise when regeneration projects are awarded, or subsequently amended, without due regard for the procurement rules.

1. The facts

2. The High Court ruling

3. Lessons to be learned

4. Post-script: new procurement regulations are about to enter into force

 

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