Recent case law has highlighted the risks associated with allowing clauses contained in draft documents to become legally binding without proper consideration and, more importantly, mutual understanding and agreement of their interpretation.

A sometimes innocuous looking provision may, usually when a relationship has turned sour, result in a wide difference of opinion as to its interpretation and, ultimately, the implications of that interpretation (the case in question, Chartbrook Ltd v Persimmon Homes Limited, involved a difference of opinion to the tune of approximately £3.3 million!).

It goes without saying (but we’ll say it anyway) that using the court is an expensive exercise in proof-reading and the conclusions reached are impossibly difficult to predict on the basis that interpretation is inherently subjective and may therefore depend on which side of bed the particular judge got out of on that particular day (among other things of course).

The lesson to be learned is to ensure that: a) you take specialist legal advice on any legally binding agreement, and; b) such advice comes from someone who understands the commercial background to the agreement and works on a “worst case scenario” basis.

Fortunately, DTM have plenty of lawyers who will ensure they do both.