The recent case of HHR Pascal BV v W2005 Puppet II BV  EWHC 2771 serves as a reminder of the importance of strict adherence to conditions for completion as set out in the contract. This case concerned the completion conditions of a share purchase agreement, which conditions had to be satisfied prior to a stipulated longstop date. The conditions included the substantial completion, by the Seller, of hotel refurbishment works.
The provisions in the SPA in respect of the satisfaction of the substantial completion conditions were detailed and included precise notification obligations. It was held that the seller did not comply with the notification obligations and although substantial completion may in fact have occurred prior to the longstop date, the failure by the seller to serve notice in accordance with the deadlines set out in the SPA, resulted in the substantial completion condition not being met by the longstop date. This resulted in the buyer being entitled to terminate the SPA and for his 25m euro deposit to be returned to him.
This is a reminder to comply strictly with the contractual provisions for completion. In particular, it highlights that although practical completion of works may have occurred in practice, if the contractual notice provisions regarding practical completion have not been complied with, then this is not necessarily something that can be rectified retrospectively. Situations where this could be of particular relevance include an agreement for lease with landlord's works obligations or a forward purchase agreement with seller's development obligations. In any situation where completion of the transaction is contingent upon completion of works, parties should think ahead and diarise critical deadlines, and should get in touch with us early to discuss such timetabling by reference to the legal drafting. The case also highlights the importance of drafting the legal documentation to fit within, and be consistent with, the entire suite of the contract documentation which the seller is entering into.