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Business warned against using confusing language in contracts

Businesses which try to rely on confusing contract wording to push commercial property disputes in their favour risk having courts take the decision out of their hands, according to law firm HBJ Gateley.

Alison Newton, commercial property partner and head of the firm's Glasgow office, said recent cases in Scotland and England suggested courts were taking an increasingly dim view of poorly-drafted legal documents and choosing to base decisions on business common sense instead.

Ms Newton said: "Ambiguous contracts are seldom drafted that way on purpose. However it is entirely possible that one party entering court is looking to rely on a 'lucky' interpretation.

"The fact that English and Scottish Courts are taking a very similar approach to the issue in recent cases signals the near-demise of opportunistic reinterpretation."

She added: "Mediation could mean disagreements can be settled more quickly, at a much lower cost, and don't have to result in a high-stakes … court battle."

In an English High Court case, a buyer lost the chance to develop a property after failing to apply for a planning permission deadline extension. It offered late payment and asked for it to be applied ­restrospectively, but the court said the agreement had ended and the firm forfeited a £50,000 deposit.

Glasgow-based Cape Building Products successfully argued it should not pay the full cost of property repairs at the end of a lease, although it had failed to comply with a dilapidations notice served on it by the landlord.

Ms Newton said contracts need to be carefully drafted, and obligations and terms understood.

"The starting point always has to be to try to avoid a dispute, but where this is impossible, a bad situation is unlikely to be made better by a court's interpretation of what it thinks is business common sense," she said.

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