• November 2016
    Nothing but the truth


    In any legal transaction it is important that the parties trust each other to tell the truth before entering into a binding contract.  This is illustrated in the recent High Court case of Greenridge against Kempton.  It involved a commercial property transaction.  The vendor was asked a number of pre-contract enquiries about various aspects of the property.  One of the questions involved details of arrears, disputes over service charges, unresolved disputes or breaches of covenant.  The vendor’s agent had completed a draft set of answers to the pre-contract enquiries stating that there were no disputes which might be ongoing or cause problems.   Following exchange of contract, the purchaser received documentation which revealed that there was in fact a dispute between a tenant and the vendor, and there were arrears of service charges because of the dispute.  This had not been disclosed in the pre-contract enquiries which had therefore been misleading.  The consequence of this was that the purchaser argued that because of the misrepresentation, it was entitled to rescind the contract and argued for the return of the deposit of £800,000 and damages for deceit.  The Court found in favour of the purchaser and considered there was sufficient evidence in the way of invoices and corroborated evidence to show the costs the purchaser had incurred in their prospective purchase following the rescission of the contract and these costs were assessed at £400,000.

    The moral of this case is that telling the truth is paramount as to do otherwise can have dire consequences.  It is very important that, if pre-contract enquiries are completed by the vendor at an early stage of the sale process, that those pre-contract enquiries are updated and verified by the vendor as being accurate at the date of exchange of contracts to avoid misrepresenting information to the prospective purchaser.

    For further information please contact Paul Stevens at or call 01379 643555.

    This article provides only a general summary and is not intended to be comprehensive.  Special legal advice should be taken in any individual situation.

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