The Zurich has closed its Zurich Building Guarantee business, covering new home warranties and building control.

The Remedies Directive came into force on 20 December 2009, with a view to encouraging greater transparency in the procurement process (in particular, to reduce the number of ‘direct awards’, where contracts are awarded without an OJEU advert). This has been done by giving greater remedies to aggrieved bidders and encouraging them to litigate in the case of a breach. In particular there are:

enhanced notice requirements: the old ‘two-stage’ approach where bidders could ask for more information within two working days has been scrapped. Now, all information has to be given up-front by the issue of an ‘award-decision notice’ to everyone who submitted a bid. This will include the award criteria, the reasons for the decision, and the score of the winner (and of the person sent the notice);

If the seller goes bankrupt, then you need to distinguish between a sole proprietor and joint proprietors:

the legal estate passes to the trustee in bankruptcy, and therefore the buyer must deal with the trustee (and not the seller). If necessary, the trustee could be forced to complete the sale by an action for specific performance, although he would have a right to disclaim (s315 Insolvency Act 1986) if the contract is ‘onerous’ or at an undervalue.

Your clients want to exchange contracts subject to getting planning permission. Accordingly, you negotiate an exchange on the basis that completion will be 21 days after the grant of planning permission, so that if the planning application is refused (after appeal), then the sale contract is to lapse. What can possibly go wrong?

The courts have no power to imply a term so as to ‘improve’ a contract, or to make it fairer or more reasonable. The task of the courts is simply to discover what the contract means, not to alter the agreement to the parties. The classic approach adopted by the court is the ‘business efficacy’ test (ie that the proposed term is necessary to give business efficacy to the contract). There is also the ‘officious bystander’ test (ie that the proposed term must be so obvious that it goes without saying).

It is well established that for an estate agent to recover commission, he has to be the ‘effective cause’ of a sale. Thus, the estate agent has to be able to show that he introduced the buyer to the purchase – and not merely to the property.

It is not unusual for a commercial contract to require the parties to conduct negotiations in good faith, generally to settle matters that had not been sorted out at the time of drafting. In the US, such agreements are largely enforceable, since they have been held to be similar to agreements to use best endeavours, and are thus binding. In the UK, however, there has long been concern that an agreement to negotiate is unenforceable, because it lacks the necessary certainty.

There has been much concern about sale and rent back schemes. Typically, the owner will sell the property, usually at a discount, and then be allowed to remain in the property as a T. While the scheme does release equity (so the owner can repay debts) it does mean that the owner will be losing security of accommodation, and merely acquiring the uncertain security of tenure of a T (typically, as an assured T).

A new (third) edition of the Common Auction Conditions has been published. It is important to note the following differences from earlier editions:

All tenancies must be disclosed in the special conditions. The CAC say that the property is sold subject only to those tenancies that have been disclosed (ie otherwise it is vacant possession). Details of any rent arrears must also be set out in the special conditions.

The property slump has seen many new build developments grind to a halt. This has led to arguments as to whether buyers who had exchanged contracts are then locked into open-ended contracts, and are unable to force the seller to complete the project.

How should the courts interpret a contract with ambiguous wording?The answer is that the courts will prefer an interpretation that makes ‘commercial sense’.

When buying a property in a development, the buyer’s solicitors will expect an undertaking from the developer’s solicitors to supply a DS3, under which the chargees release their charges in respect of the particular plot.

In Roanne [2007] the ECJ held that a property development agreement between a council and a development company was covered by the Public Contract Regs, and accordingly should have been tendered and awarded in accordance with them.

The normal rule is that a contract will merge with the transfer on completion. In theory, therefore, this means that after completion it will not be possible to bring an action that arises from one of the contractual terms – unless that provision has been expressed in the contract to survive and not to merge with the transfer.