Option Agreements: The Importance Of Context And Commercial Common Sense

• Published date: 27 January 2021
• Subject Matter: Real Estate and Construction, Construction & Planning
• Law Firm: Acuity Law
• Author: Ms Abby Stephens and Jennifer Butcher

The recent case of Fishbourne Developments Ltd v Stephens [2020] EWCA Civ 1704 has highlighted the importance of considering factual context and using commercial common sense when interpreting trigger events in option agreements over development land.

Background

A written option agreement, made in 2002 ("the Option Agreement"), related to the purchase of a 117-acre farm in Fishbourne, West Sussex ("the Farm"). The option, due to expire on 31 December 2020, entitled the option holder ("the Claimant") to acquire the Farm at a 30% discount on its open market value.

Under the Option Agreement, the trigger for the option was the obtaining of 'Planning Permission', defined as, "a planning permission granted by the Local Planning...