Summary: Relying on general endeavours obligations (or good faith obligations) in a contract to secure an outcome which is not expressly set out in the drafting may well not achieve the desired result. If a specific outcome is desired, the contract must expressly set out what is required.
The Court of Appeal recently handed down judgement in the case of Bristol Rovers (1183) Limited v Sainsbury’s Supermarkets Limited. This was a dispute over whether or not Sainsbury’s were entitled to terminate a conditional contract to acquire land owned by Bristol for a new retail led development, including a new superstore.
The contract exchanged on 28 March 2011, however, by mid-2013 onwards Sainsbury’s were concerned about the economic viability of the proposed store and looked for a way out. The contract has a number of conditions, including a planning condition in favour of Sainsbury’s. As usual in contracts of this nature, the planning condition provided (in basic terms) that Sainsbury’s obtained an unchallengeable planning permission for its proposed development free from onerous planning conditions.
Although there were various areas of dispute between the parties, the point of general interest was whether Sainsbury’s obligations in the contract to act with good faith and to use all reasonable endeavours to obtain a satisfactory planning consent, obliged Sainsbury’s to go above and beyond its obligations to obtain a planning consent contained elsewhere in the contract.
The court held not. The court pointed out that there were detailed obligations elsewhere in the contract which dealt with planning and in general terms commented that if the parties had intended to agree specific points then the court would have expected to see those in the detailed drafting.
This case follows on from other recent cases relating to the meaning of “reasonable endeavours”, “all reasonable endeavours”, “best endeavours” and the like when used in contracts. Although these cases are all different based on their facts, the general principle which can be extracted is that if the parties intend for certain steps to be taken then these should be expressly provided for in the drafting. Relying on general endeavours obligations or good faith obligations may not be sufficient to achieve the result the parties (or one of them) actually wants.
if you are a landowner seeking to ensure that a developer obtains planning permission over your land, it would be prudent to ensure that the contract expressly provides for wide-ranging changes in circumstance, over what can be a number of years between exchange of contracts and the resolution of any planning process.
Finally, the case contains a reminder that applications to vary conditions in an existing planning permission are technically not planning appeals within the meaning of s78 of TCPA but rather an application for a new planning permission, not an appeal against the offending condition. Again this is a point that should be dealt with expressly in drafting from the outset, particularly when defining what a planning appeal is or is not.