All or none? Make sure you choose the right words.

23 January, 2017

The question before the High Court judge in the case of Dooba Developments Limited v McLagan Investments Limited was one of construction (interpretation). An agreement between the parties to sell a piece of land for development of, amongst other buildings, a retail superstore, was subject to four conditions. A clause in the agreement gave either party the power to rescind (effectively cancel) the agreement “if all of the Conditions have not been discharged in accordance with this Schedule by the Longstop Date”.

 

One of the conditions was not discharged by the longstop date and McLagan subsequently served notice on Dooba to rescind the agreement. Therefore, the dispute was on the interpretation of “all” in the above clause. Did it mean, as McLagan argued, that either party could rescind if any one of the four conditions remained unsatisfied by the longstop date. Or did it mean, as Dooba argued, that the contract could only be rescinded if none of the four conditions had been discharged?

 

It is an interesting decision, particularly because the clause in dispute contrasted with a similar clause in the agreement. The similar clause entitled a party to rescind the agreement “if any of the Conditions have not been discharged by satisfaction by the date they are stipulated in this Agreement to be discharged by”. Clearly, if “all” was changed to “any” in the clause in dispute, McLagan would have validly executed their right to rescind and Dooba would have had no basis of claim. Therefore, the judge used this as evidence that the draftsman knew the correct formula which would have avoided any ambiguity.

 

Although this was a real estate dispute, the take home message applies to all documentation – agreeing on clear and unambiguous language has, and will always be, vital in assisting parties avoid future disputes.

 

If you would like nay more information please contact Harry Partridge on harry.partridge@cripps.co.uk or +44 (0)1732 224 092.