Commercial Law - Construction of Contract - Loan Repayment - Banking - Joint Venture - Guarantee

The lawsuit of Wosley Securities Ltd volt Abbeygate Management Services (Hampton) Ltd [2007], concerned an action which was brought as a consequence of the claimant, the suspect and a company ("ASL") entering into a joint venture understanding ("JVA") to build a block of flats.

It transpired that the development was unprofitable and American sign language went into liquidation. American sign language was incorporated for the intent of carrying out the development and had no assets of its own. The finances to transport out the development were provided by:

§ Type Type A depository financial institution loan to ASL; and

§ A loan from a loan installation granted by the claimant under the footing of a installation missive from the claimant to ASL. This missive was annexed to the JVA.

According to clause 10.3 of the JVA, the suspect guaranteed that American sign language would execute its duties under the agreement. In improver to this, clause 2.12 of the JVA duty-bound American sign language to refund to the claimant all monies that the claimant had advanced in pursuit of its loan facility. Furthermore, clause 4.3 of the installation missive entitled the claimant to debit entry to ASL's loan business relationship 'any direction charge'.

The claimant alleged that a sum of money of £97,762, which included interest, was owed to be paid by the suspect in conformity with the guarantee. Although the claim included only a little portion of the outstanding loan, it was substantially made for 'management charges'. Those complaints were divided into:

§ Charges relating to the installation letter; and

§ Charges provided for in the hard cash flowing appraisal.

The claimant applied for a summary judgment under cardiopulmonary resuscitation 24. As the direction complaints were owed pursuant to the installation letter, the issue before the justice was whether the JVA and the installation missive constituted one understanding or two separate agreements.

If they were one agreement, the suspect accepted (subject to any other defense mechanism it might have) that it would be apt for the direction charges. If they were two separate agreements, the claimant accepted that the suspect would not be liable.

The justice held that there were two separate agreements, and therefore made a declaration that the suspect was not apt for the direction charges. The claimant appealed against this decision.

The entreaty was allowed. The inquiry as to whether there was one understanding or two understandings was irrelevant. Whether there was one understanding or two agreements, there could be no uncertainty that since the installation missive was, at the very least, referred to in the JVA, both the JVA and the installation missive had to be interpreted in each other's context.

Considering clause 2.12 of the JVA and clause 4.3 of the installation letter, it was impossible to defy the decision that as and when the claimant did in fact debit entry any direction complaint to ASL's loan account, the amount in the loan business relationship (including any direction charge) was portion of the advance. According to clause 2.12 of the JVA, it was ASL's duty to pay that sum. As the refund had not been made, the suspect had to be apt as they were the guarantor.

Please contact us for more than information on assessing amends owed under expiration of a contract at enquiries@rtcoopers.com

Visit http://www.rtcoopers.com/practice_corporatecommercial.php

© RT COOPERS, 2007. This Briefing Note makes not supply a comprehensive or complete statement of the law relating to the issues discussed nor makes it represent legal advice. It is intended only to foreground general issues. Specialist legal advice should always be sought in relation to peculiar circumstances.