Real Estate Tip of the Week - Unilateral mistakes - Change for the better?

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Real Estate Tip of the Week - Unilateral mistakes - Change for the better?

Published 29 April 2019

Heads of Terms serve a purpose: outlining the main terms of any deal.

Those key terms often change during the course of negotiation, and it is not unusual for commercial terms agreed in final documents to materially differ from those set out in the Heads of Terms. There may not always be a written record of how the agreed terms have evolved over the course of a transaction and it may be tempting to let a mistake go uncorrected in the expectation that it may be commercially beneficial. However, at best this could create a risk of litigation. At worst, it may result in a successful claim for rectification by unilateral mistake.

Unilateral changes to significant terms that find their way in to final documents may well be susceptible to challenge if they have not:

  • been agreed between both sides; and
  • reviewed (so it is possible that one party is unaware of them).

Although the court cannot usually consider the surrounding negotiations of a deal to assist a construction and interpretation exercise, this is not the case in rectification where evidence of negotiations is admissible.

Authors

Julitta Yates

Julitta Yates

Bristol

+44 (0)117 918 2741

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