Scribd Logo
Upload

Welcome to Scribd!

  • 24 views

    Malldevco Case

    Uploaded by

    Edgar
    This document summarizes risks for Malldevco in a land transaction with FlipIt and recommends contract provisions to manage those risks. The primary risks are: 1) planning permission not being granted, 2) FlipIt selling to another buyer, and 3) environmental issues preventing construction. Key deal breakers are exclusivity, construction liability, and planning permission. The document recommends including conditions precedent and subsequent to manage risks within the contract, as well as an exclusivity clause and good faith negotiations to manage risks outside the contract. It also provides a sample contract clause making planning permission a condition precedent to termination rights for Malldevco.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Malldevco Case

    Uploaded by

    Edgar
    24 views3 pages
    This document summarizes risks for Malldevco in a land transaction with FlipIt and recommends contract provisions to manage those risks. The primary risks are: 1) planning permission not being granted, 2) FlipIt selling to another buyer, and 3) environmental issues preventing construction. Key deal breakers are exclusivity, construction liability, and planning permission. The document recommends including conditions precedent and subsequent to manage risks within the contract, as well as an exclusivity clause and good faith negotiations to manage risks outside the contract. It also provides a sample contract clause making planning permission a condition precedent to termination rights for Malldevco.

    Original Description:

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document summarizes risks for Malldevco in a land transaction with FlipIt and recommends contract provisions to manage those risks. The primary risks are: 1) planning permission not being granted, 2) FlipIt selling to another buyer, and 3) environmental issues preventing construction. Key deal breakers are exclusivity, construction liability, and planning permission. The document recommends including conditions precedent and subsequent to manage risks within the contract, as well as an exclusivity clause and good faith negotiations to manage risks outside the contract. It also provides a sample contract clause making planning permission a condition precedent to termination rights for Malldevco.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    24 views3 pages

    Malldevco Case

    Uploaded by

    Edgar
    This document summarizes risks for Malldevco in a land transaction with FlipIt and recommends contract provisions to manage those risks. The primary risks are: 1) planning permission not being granted, 2) FlipIt selling to another buyer, and 3) environmental issues preventing construction. Key deal breakers are exclusivity, construction liability, and planning permission. The document recommends including conditions precedent and subsequent to manage risks within the contract, as well as an exclusivity clause and good faith negotiations to manage risks outside the contract. It also provides a sample contract clause making planning permission a condition precedent to termination rights for Malldevco.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Facultad Libre de Derecho de Monterrey

    International Contracts
    Felix Lazcano Mayrl 1717
    Jorge Hanun Garza 1703
    Daniel Romero
    30 september 2021

    Short Note: Malldevco Case

    1. Risks in transaction
    The clearest risk that Malldevco faces from this transaction, is the possibility of the
    planning permission not being granted after the transaction takes place. If it were the case,
    Malldevco would be owning a piece of land which it will not be able to develop for the purpose of
    the industry it operates in: shopping and entertainment complexes. This means that Malldevco
    will not be able to perceive the expected profit, given that they wouldn’t be able to build a
    shopping complex.
    Another possible risk would be that FlipIt will “flip” on Malldevco, selling the property to
    another buyer. Because of this probability, it is important for Malldevco to sign an exclusivity
    agreement with FilpIt.
    Also, we believe it is a significant risk for Malldevco that, even if the land ends up being
    reclassified, that the land itself isn’t viable for construction because of environmental factors
    such as the land’s soil characteristics and water percolation, among other considerations like
    connections to city utilities, deed restrictions, etc. 1
    Finally, Malldevco should also consider that FlipIt will realize the negotiating power that
    they have over Malldevco and raise the selling price of the land, after the parcel’s
    reclassification.

    2. Prioritization of risks - deal breakers or no-deal breakers.


    We believe that Malldevco should prioritize on the following deal breakers (in order of
    importance):
    I. Exclusivity.
    II. Liability of construction.
    III. Planning permission.
    Malldevco should also consider, among other things, FlipIt’s negotiating power over
    them.
    1 Anonymous. “How to Find Out If You Can Put a House on Land.” May 13, 2021. Available online: SF Gate
    <https://homeguides.sfgate.com/out-can-put-house-land-58575.html> (Retrieved: September 28, 2021).
    3. Mechanisms inside and outside the contract to manage the risks.

    We believe one of the best ways to manage the risks inside the contract, is to draft a
    series of conditions, whether they are precedent or subsequent. This would be an excellent
    mechanism to protect Malldevco’s interests regarding this transaction.
    The usage of a condition precedent, will protect Malldevco, ensuring that what makes
    this transaction valuable actually happens. Furthermore, we believe that implementing a few
    conditions subsequent in the contract could also manage important risk factors. This type of
    condition will allow the transaction to happen, whilst granting protection to Malldevco. Under
    these conditions, if something that is considered under the contract as a condition subsequent,
    happens, Malldevco would still be protected.
    On the other hand, another mechanism to manage risks is to celebrate a promissory
    estoppel, it is recommended that Malldevco also drafts conditions in said promissory estoppel
    for it to be binding. Moreover, remaining in the topic of the promissory estoppels, another good
    way to manage risk, is to draft a clause that establishes that the negotiations between both
    parties shall be in good faith.
    A final mechanism to manage risks outside of a contract, more from a business point of
    view than a legal standpoint; is to be wary of the other party, as FlipIt could very well be using
    Malldevcojust as a tactic to advance their own interests. It is better to be careful, so drafting an
    exclusivity clause could be highly useful to Malldevco, by mitigating risk significantly. Ultimately,
    when negotiating with FlipIt, Malldevco shouldn’t leave any options out of the table.

    Also, a ver well drafted boilerplate, could be quit useful in mitigating future problems in case of a
    lawsuit, like stating the governing law, applicable jurisdiction, place of fulfillment of the
    obligations, stating that the headings are inserted for reference only and shall not be deemed a
    part hereof or used in its interpretation, etc.

    4. In relation to the second bullet point in the case, please draft one contract clause
    to manage the risk you consider to be the primary risk in the whole deal
    I. Condition precedent: FlipIt must manage and obtain a planning permission from Pioneer
    City Council to reclassify the land as commercial/retail.
    II. Right: If FlipIt does not obtain said planning permission, Malldevco may terminate this
    contract without any responsibility.
    III. Exclusivity: FlipIt shall not negotiate nor perform any act that goes against the purpose
    of this contract, including but not limited to leasing, selling, or donating to a third party.

    You might also like