Development agreement: sale or agency?

Donowa v Donridge Heights Ltd [2024] UKPC 18

The issue in dispute before the Privy Council in Donowa v Donridge Heights Ltd [2024] UKPC 18 was whether an agreement relating to the development of 30 acres of land was a contract of sale or whether the agreement had the effect of constituting the developer the agent of the original owners for the purpose of developing the site. It was held, as a matter of construction or classification of the agreement, that the agreement was a contract of sale. This conclusion was reached by virtue of a careful examination of the "surprisingly brief" contract which had been concluded between the parties. Had the contract been drafted with greater precision the entire dispute might have been avoided but, as the present case demonstrates, a simple form of agreement which does not clearly define the legal nature of the contract that is being entered into can give rise to litigation, the outcome of which can be extremely difficult to predict.