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Tortuous Contract Fuelled £30 Million Football Stadium Dispute

StadiumA good contract is a simple contract, drafted with clarity. In a case which proved the point, a dispute in respect of the stalled £30 million sale of a football stadium to a supermarket chain was fuelled by the tortuous wording of the agreement.

A football club had agreed to sell its ground to the chain with a view to development of a retail food store. The sale price was to be used by the club to fund its move to a new and larger stadium. It was agreed that the club would remain within its existing ground at a peppercorn rent until its move could be completed.

The contract was subject to five conditions precedent which had to be met before the sale went through. The chain had to obtain an ‘acceptable’ planning permission for its store proposals and the sticking point became the local authority’s refusal to countenance deliveries to the store between 5:00am and 6:00am on weekdays.

The chain had lost its enthusiasm for the project and it plainly wished to pull out of the deal if it could lawfully do so. When it announced its intention to terminate the contract, citing the difficulty over delivery hours, the club launched proceedings, claiming that the agreement remained on foot and that the chain had breached it.

Ruling in the chain’s favour, however, the High Court found that it had exercised due diligence in its bid to obtain an acceptable planning consent. Its attempt to extend the delivery hours had been made at a politically inexpedient time and would have failed in any event. On a true construction of the contract, one of the conditions precedent had not been satisfied and the chain was thus entitled to withdraw from the deal.