A property developer borrowed money to fund the purchase of 26 properties. When it was time to repay the lending bank, the parties entered into an agreement. The bank was to arrange a sale of the properties and retain the proceeds and, after the sale, the debt was to be extinguished. Until then the developer had to manage the properties and send the rental income, after deducting maintenance costs, to the bank. Some years later the properties had not been sold and the assignee of the bank’s rights in the agreement purported to terminate the agreement because the developer had not accounted for the rent. The key issue for the Scottish court to decide was whether there was an implied term that the properties would be marketed and sold in a reasonable time.
It ruled that such a term was implied. Following the House of Lords’ comments in Hick v Raymond & Reid the court noted that, if a contract does not expressly, or by implication, fix a time for performance, a term is implied, as a matter of law, that performance is to be within a reasonable time. It is then a matter of construction as to what is a reasonable time, which will depend on all the circumstances. Exclusion of such a term is possible but the entire agreement clause in the contract did not exclude the implied term, which formed part of the contract.
William John Burnside v Promontoria (Chestnut) Limited 2017 CSOH 157 at: http://www.scotcourts.gov. uk/docs/default-source/cos-general-docs/pdf-docs-foropinions/2017csoh157.pdf?sfvrsn=0