Mr Biden was a developer who had taken an option to purchase a plot of land from Mr Sparks for residential development. Mr Biden was to obtain planning permission and, upon exercising the option, implement the development.
The option agreement included provision for an overage payment which arose upon the sale of the residential units. Following a successful exercise of the option and residential development, rather than sell the units, Mr Biden moved in to one himself and let the rest on short term tenancies. The overage agreement failed to provide for this eventuality as it did not oblige Mr Biden to sell the units once complete thus delaying the trigger for the overage payment. Mr Sparks applied to the court to imply a term in to the option agreement requiring Mr Biden to take steps to sell the units.
The judgment held that it would be fair to imply a clause in the option agreement requiring Mr Biden to actively market and thereafter sell the units on the basis that “such a clause is one that is necessary as a matter of business efficacy and without it the Option Agreement lacks practical or commercial coherence”.
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