The High Court has implied a term in an overage clause to give it ‘business efficacy’- showing us that the courts will look beyond a written agreement.
To understand the case of Sparks v Biden, let’s first remind ourselves with what overage actually is. Overage is the term used to describe an additional payment due to a seller of land which is payable after the sale has completed, and which the seller has reserved for itself upon the trigger (by the purchaser and now landowner) of certain events. The seller will usually negotiate an overage where there is an expectation that the land will later be developed and so enables the seller to have a ‘cut of the slice’ after the seller has parted any ownership interest with the land. [Read more…]