Enquiries Before Contract – Why Your Answers Must be Accurate!

July 10, 2018

“A new commercial premises for your business is a huge financial commitment but can be an exciting step in further developing your business. As a Landlord, a good long term tenant can provide you security of income for many years. However, when things go wrong the costs of resolving a dispute can be substantial. So it’s always best to ensure you get dedicated commercial property advice from an experienced practitioner.”

“However, even with the best advice you need to ensure your responses to any enquiries must be accurate or the consequences can be even harsher.” Our Trainee Solicitor, James Melvin-Bath looks at a recent Court of Appeal case, where a Landlord who failed to disclose that commercial premises were contaminated by asbestos ended up with a seven figure compensation bill.

The case concerned the lease of three warehouse units and an agreement to lease a fourth. In enquiries before contract, the tenant asked if the Landlord was aware of an hazardous materials, including asbestos, affecting the premises. The Landlord replied with the all-too-familiar words, ‘the buyer must satisfy itself’. they also replied that they had not received notice of any environmental problems affecting the premises, but reiterated that the tenant must satisfy itself.

Prior to making those replied, the Landlord’s agents had received an email from a health and safety firm that had been instructed to inspect the premises. The email reported that the units were so contaminated with asbestos that they were dangerous to enter. In ignorance of the email, the tenant entered into the relevant lease and agreement. After the tenant launched proceedings, a Judge found the Landlord liable to pay £1.4 million in damages under the Misrepresentation Act 1967.

In dismissing the Landlord’s challenge to that ruling, the Court agreed with the first instance Judge that the failure to disclose the asbestos contamination amounted to a clear misrepresentation and that the tenant was entitled to be compensated for the costs of remedial work and of arranging alternative premises during the period of almost nine months that it took to complete them.

The lease contained a clause by which the tenant acknowledged that it had not entered into the agreement in reliance on any statement or representation made by or on behalf of the Landlord. However, the Judge had rightly found that the provision amounted to an attempt to exclude liability for misrepresentation and was thus unreasonable, within the meaning of the Unfair Contract Terms Act 1977.

James comments that “accordingly, if involved in a commercial property transaction you must ensure that your replied to any enquiries are clear, honest and accurate to avoid potential future litigation costs”.

If you require assistance with a commercial or private property dispute then our experienced team at Tayntons are here to help. alternatively, our commercial property team are here to advise and assist on any commercial property enquiry or transaction. For more information or advice on your matter, please contact us on 0800 158 4147 or email us at info@tayntons.co.uk.