Make No Mistake, Misrepresentation Can Be A Problem

Publication Date03 April 2021
SubjectCorporate/Commercial Law, Contracts and Commercial Law
Law FirmWalker Morris
AuthorClaire Acklam

Development contracts and disputes

There are many types of contracts relating to the development of land and property. These commonly include promotion agreements, joint venture arrangements, overage provisions, agreements for sale and options to purchase, amongst others.

It should go without saying that, when negotiating any development or commercial deal, it is important to ensure that the completed contract reflects both parties' intentions and understanding. However, it is unfortunately quite common for parties to discover, after the event, that a contract does not actually say what, or work in the manner, it should.

So, what are the options where contracts do not reflect what the parties intended? Walker Morris' Claire Acklam, a Senior Associate solicitor specialising in the resolution of commercial and development disputes, offers practical advice for correcting contracts following a mistake in the drafting or misrepresentation by one of the parties.

Mistake

At the outset of any commercial arrangement or development deal, parties are keen to get on with doing business together. That can mean that contracts can be prepared and completed too hastily or without due care and attention. Mistakes can arise - whether that be as a result of a last minute rush to complete, misunderstanding, miscommunication, drafting error or oversight, or the like - even in cases where arrangements are meticulously documented in formal, written contracts.

A mistake in a contract can be corrected by consent (that is, by agreement between the parties), by contractual construction (that is, by a court declaration as to the correct meaning of the contractual wording) or by the legal remedy of rectification.

Rectification allows the retrospective correction of a written contractual document because it does not reflect the terms of a true contract at the time it was made. The failure to correctly record the parties' agreement must be as a consequence either of a mistake common to both parties whereby the contract does not record the terms as both intended (known as "common mistake"), or where one party is aware of the mistake and fails to draw attention to it to the other (known as "unilateral mistake").

Rectification claims are notoriously difficult, not least because convincing proof is required to counteract the very strong, primary evidence of the parties' intention as displayed by the written contract itself.

Crucially, a claimant must show that there was an outward...

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