Bella Italia Restaurants entered into an agreement for lease for a retail property to be constructed in Colchester. During construction and before the lease was completed the reversionary interest was transferred from the original contracting parties to Ropemaker Properties limited. Bella purported to rescind the agreement on the grounds that it was entitled to refuse to accept a lease, since Ropemaker was not the original contracting party under the agreement.
The court looked at the detailed drafting of the agreement. Some of the contractual provisions were expressed as being personal to the original parties but the obligation to grant the lease was not. Conversely nowhere in the agreement did it say that references to the "landlord" should include successors in title. The court however, concluded that it could not have been the intention that all the obligations in the lease were intended to be personal otherwise there would have been no need for specific clauses stating that other obligations were personal. Accordingly, Bella had not successfully rescinded the agreement and were contractually obliged to take a new lease from Ropemaker.
The case is a reminder that contractual obligations need to be clear. If it is intended that contractual obligations are personal then the contract should say so expressly
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
