Precision in contractual drafting is fundamental to the success of any commercial property transaction. The recent High Court decision in Henley Developments 211 Ltd & Anor v Weston Homes PLC serves as a clear reminder that the express terms of an agreement will win over general principles of interpretation, and that termination rights must be addressed with absolute clarity.
The dispute concerned a £14.5 million land acquisition in Ebbsfleet, Essex. Weston Homes paid a deposit of £870,000 under a conditional contract which required, among other matters, approval of reserved matters pursuant to an existing planning consent. The agreement provided that if all conditions were not satisfied by 4 June 2023, either party could terminate and the deposit would be refunded.
When planning approval was not secured by the relevant date, Weston Homes exercised its contractual right to terminate and sought repayment of its deposit. Henley Developments refused, alleging that Weston Homes had failed to use “all reasonably and commercially prudent endeavours” to obtain approval and had not “diligently pursued” the application.
The Court did not determine whether Weston Homes had breached its obligations. Instead, it considered whether such a breach would prevent Weston Homes from terminating under clause 23.2. The clause did not expressly prohibit termination by a party in breach.
Should such a restriction be implied? The Court held that it should not. The principle that a party cannot rely on its own breach to obtain a benefit is not a rule of law but a principle of construction, which may be displaced by the contract’s wording. Here, the agreement provided an alternative remedy for the seller under clause 23.1, permitting termination and retention of the deposit in the event of buyer default. That remedy was deemed exhaustive. Accordingly, Weston Homes was entitled to terminate under clause 23.2, even if in breach.
This judgment underscores a critical point for developers, investors, and commercial property professionals: termination rights can operate independently of performance obligations unless expressly linked. Failure to address this interaction may result in significant financial exposure, including the loss of deposits or unexpected contract termination.
The key takeaway is clear. If parties intend that a right to terminate should not be available to a party in breach, that limitation must be expressly stated within the agreement. Reliance on general principles is insufficient.
For clients, this case illustrates why engaging a specialist law firm is essential. Commercial property transactions often involve complex conditional agreements where the drafting of termination provisions can determine the outcome of multi-million-pound investments. Expert legal advice ensures that your contracts are robust, your interests are protected, and costly disputes are avoided.
If you are negotiating or reviewing a commercial property contract, our specialist team can provide the clarity and precision required to safeguard your position. Contact us today for tailored advice on 01603 677077 or email info@spiresolicitors.co.uk.
