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Writing - s2 of 1989 Act

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Planning obligations

The cases on this page demonstrate the importance of careful drafting in the context of planning provisions in conditional sale agreements and option agreements. Topics dealt with are:
  • Conditional contracts - reasonable endeavours to obtain s106 agreement.
  • Obligation to enter into planning obligation under s106 of 1990 Act - careful detail that can be required.
  • Effect on contract of quashing of planning permission following third party judicial review challenge

Conditional contract

Reasonable endeavours - s106 agreement

Yewbelle Limited v. London Green Developments Limited
[2007] EWCA Civ 475

Facts

This case concerned a sale contract that contained the following clause:
    "The Seller will use all reasonable endeavours by completion to obtain the completed section 106 agreement and the Buyer will not be bound to complete until the section 106 agreement has been obtained by the Seller..."
The seller failed to obtain the s106 agreement, due in part to the fact that third party land was required. It then sought a declaration that the contract had been discharged because the s106 agreement had not been completed (arguing that a term should be implied into the contract that the contract would be discharged automatically if the s106 agreement could not be obtained within a reasonable time, if the seller had used its reasonable endeavours), whilst the buyer counter-claimed for specific performance of the sale contract.

The decision

Both at first instance, and in the Court of Appeal, it was held that the implied term sought by the seller was not required; the only term needing to be implied was that the seller had to inform the buyer at the end of a reasonable period that the s106 agreement had not been obtained, and give the buyer the opportunity to waive satisfaction of the condition.

At first instance, Lewison J held that the seller had not in fact fulfilled its obligation to use reasonable endeavours, and accordingly granted the buyer specific performance of the contract. By a majority, the Court of Appeal disagreed with this decision, holding that the seller had fulfilled its obligations to use reasonable endeavours, and stating that the contract had come to an end by the time the buyer stated that it was ... THIS IS AN EXTRACT OF THE FULL TEXT. TO GET THE FULL TEXT, SEE BELOW

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