Case law: Party whose consent was required under an agreement should ensure it has enough time to decide

Parties whose approval must be obtained under an agreement should ensure the agreement expressly gives them time to decide whether to give approval, and that the time given is sufficient, or risk approval being deemed given after a reasonable time, a recent ruling makes clear.

A seller agreed to sell a building. The buyer acknowledged in the agreement that the seller intended to apply for enhanced planning permission (EPP). The terms provided that the seller would receive an additional overage payment if the EPP increased the floor area which could be developed. The seller also needed the buyer's consent, which could not be unreasonably refused, but the buyer only had ten days to decide whether to consent.

EPP was granted. Although it increased the floor area available for development, it did so by lowering the ceilings on existing floors and reducing the space between them. The buyer was not happy with this and withheld approval.

The seller was able to obtain expert evidence that the changes would not affect the marketability of the development - in fact, there would be a significant increase in the overall value of the development.

The buyer argued that it needed at least four weeks to reconsider the proposal, including time to obtain its own expert opinion. However, the High Court said that the buyer's failure to approve the EPP within the original time limit was, in these circumstances, unreasonable, and awarded compensation to the seller.

Operative date

  • Now

Recommendation

  • Parties whose approval is required under an agreement should ensure the agreement expressly gives them sufficient time to decide whether to give it, or risk approval being deemed given after a reasonable time, a recent ruling makes clear

Case ref: Minerva (Wandsworth) Limited v Greenland Ram (London) Limited [2017] EWHC 1457

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