Commercial Law - Company Law - Joint Venture - Contractual Construction of the clause in a joint venture

The case of nearfield Ltd v Lincoln Nominees Ltd and others [2006], addressed the issue of the construction of a contractual clause in an agreement. The first defendant was a nominee company of the second accused. The first defendants in the British Virgin Islands incorporated.

In April 2002 the applicant company in a joint venture agreement (the "JVA") for the rehabilitation of a particular property. Under Clause 4.1 of the JVA, the applicant was under an obligationa loan amounting to EUR 3000000 in advance to the first defendant. According to paragraph 5.1.3 would be the life of the loan for three years from the date of the loan. After three years, would "give the second defendant to" the payment of the loan with all outstanding interest on written request by the plaintiff.

The redevelopment of the property was not successful and so the property was subsequently sold. Although some payments had been critical of the plaintiff's net loss was EUR 2,251,406.23plus interest of £ 1,030,947.35. The plaintiff attempted to enforce Paragraph 5.1.3 of the JVA.

The plaintiff claimed that 'give in Section 5.1.3 are an obligation of the defendant, the second defendant paid the sum of 3,000,000 outstanding, together with interest at the written request of the applicant be guaranteed. They argued that making the case of default by the defendant to pay, it was liable for damages equal to the amount payable to pay, but not reimbursed under the firstDefendant.

The second defendant argued that the extent of its obligation under clause 5.1.3 is to only try to bring about the repayment of the loan by the defendant, and not be further extended to give so that a promise or guarantee that the loan will be repaid would be in full from the defendant.

The request was approved.

The importance which was a document that would give a reasonable man, not the same as the meaning of his own words. The court ruled that theMeaning of the words was a matter of dictionaries and grammars, while the importance of the document in question is to mean what the parties understood these words in conjunction with the relevant background, with reasonably been to.

Acquire the normal meaning of the word was "to see" too. Thus, a person, the agreement to procure that a third party had fulfilled a contractual obligation to carry out the following:

- This would be necessary to try to ensure that the third partycomplied with the obligation and

- In the event that the third party does not comply, they would damage calculated by the amount that ought to be paid and paid by the third party.

There was nothing in the correspondence between the parties in this case, suggesting that "procure" in section 5.1.3 has a different meaning in different parts of the prisons should, nor could it suggests that obtaining meant 'otherwise than as the applicant put it:namely, that it meant to "ensure".

In addition, there was no limit, expressed in terms of the JVA and it could easily have happened. Therefore it was decided that paragraph 5.1.3 was interpreted as the applicant should be submitted. In any case, there were no documents or evidence from the drafts in advance of the JVA, which had a different result.

The court ruled that the second defendant was likely to raise the "" that the defendant repaid the loan,Plaintiff.

Comment: The parties must still limit the extent of their debts to the entry of joint ventures.

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© RT Coopers, 2007. This briefing note provides no comprehensive or complete statement of the law ondiscussion on the issues, and is not legal advice. It will deal only with general issues. Specialist legal advice should always be sought in relation to the particular situation.

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