How clean is your contract?

You may have seen the TV programme where two formidable ladies sniff and sneer at suburban squalor. The contestants they criticise seem happy with the way they live or at least they protest as much. What they show us is that there is a different way of looking at the world. One person's messy is another person's tidy. Likewise, one solicitor's version of a fair contract is another solicitor's unfair and one-sided maze of unnecessary wording.

Here, I focus on the contracts for the sale and purchase of land, but the arguments may be equally valid in other areas.

The standard conditions of sale have a great and glorious history. Formed by an amalgamation of the Law Society's conditions and the national conditions, they have stood the test of time. The fact that litigation on them has been so infrequent is a testament to the draftsman's skills. On the rare occasions that trainees have dared to enter my lair, I have entreated them to read those hallowed words. I entreat you do the same. You may be amazed at what you find. The reason I am so sure of that proposition is found in the verbiage of most firms' special conditions. They spread like weeds on a lawn, gently creeping along the ground and then suddenly springing into flower.

Hidden gems

When the conveyancing protocol 'TransAction' was launched, the idea was to simplify matters for the benefit of the public and the profession. Contracts had perhaps half a dozen special conditions. Most contracts now have several pages of them.

Who takes the time and trouble to read them? Well, if you're doing your job properly, then you must. Who knows what little gems may be hidden?

If you know the standard conditions well enough, you'll see that many are repetitious; for example, excluding the rights to assign the contract '“ see special condition 1.5.

Provisions requiring payment of an unpaid deposit where a notice to complete has been served '“ see special condition 6.8.3(b). One of my favourites '“ which sometimes leads me to fall out with a seller's solicitor who is prepared to fight to the death to protect their pride and joy '“ relates to the title guarantee. Many firms now impose complicated special conditions designed to amend the seller's rights and duties.

Few may now remember that before full and limited title guarantee, we had beneficial ownership, trustee, mortgagee in possession and settlor. Covenants for title were well known and understood. They were comprehensively set out in the Law of Property Act 1925, section 76. Contracts did not seek to affect what solicitors knew to work well. They were tried and tested, which is for the most part why full title guarantee should remain unaltered, but, for many, alter it they must.

Another is the potentially pernicious clause threatening to withhold the transfer if the buyer doesn't pay all the compensation. Acceptance of that would probably put the buyer's solicitor in breach of their duty to a mortgagee as the purchase money including the mortgage advance would have been handed over without any guarantee of receiving the transfer. Anyway, that's a one-sided obligation. What compensation can the buyer get when they discover the seller has taken the light bulbs as they only get access after possession following payment of all the cash?

The clients' best interests

Is all this proportionate? Is it focused on the outcome required by clients that is to buy and sell property in a fair and reasonable manner? Sometimes I think it is to protect the ego ofthe draftsman. I receive a frequent response, to the tune of 'this is our standard form of contract'. It sounds a little pompous to remind the respondent that their core duty is to act in the best interests of their client, not of their own firm or the draftsman, but it is nonetheless true.

I would not argue that all the special conditions be cut. I think there are some of the general conditions which need amendment and which may be for the protection of clients. For example, to be clearer about the limitation of contractual warranties only to statements made in writing between the buyer and seller.

To exclude the property information questionnaire drawn by the seller for the HIP without understanding the nature of contractual warranties. To prevent the risk to insure passing on exchange of contracts by exclusion of standard condition 5.1 unless the insurance is the responsibility of a landlord or some other third party.

Perhaps the wider picture is one of professional philosophy. Are we properly advising our clients and acting in their best interests? Are we seeking to uphold the administration of justice and the rule of law? Or are we with some false pride sticking to what we know?

If we protest our unique professionalism, we must be willing to let it run into every nook and cranny or our practice which must include a thought process about the contract rather than slavishly doing something just because we have always done it like that.

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