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Practice points

1 October 03

Late offers and cohabitation agreements are two problem areas recently considered by the Professional Practice Committee

by Bruce Ritchie

Guideline on closing dates

The Professional Practice Committee have again considered the Guideline on Closing Dates which was last updated in the issue of February 1999 (page 42) and have decided that no change in the Guideline is necessary or appropriate. The Guideline can also be found on the Society’s website www.lawscot.org.uk in the “Commonly Used Rules” section. Search for “Closing Dates” in the Law Society Guidelines part of that section.

The Professional Practice Department have received an increasing number of calls in recent months where a late offer has been made after a closing date has taken place. Whether or not the solicitor requires to withdraw from acting to comply with the Guideline, the client is entitled to take advantage of a later offer if missives have not yet been concluded, and neither solicitors nor the Law Society can be the guardians of their clients’ moral obligations. It is therefore important that solicitors acting for a prospective purchaser submitting an offer at a closing date should advise their clients that their offer may not be accepted even if it is the highest offer received at the closing date, as the seller is free to withdraw a verbal or written acceptance until a bargain is concluded.

Contracts between cohabiting partners

The Professional Practice Committee have considered the question of conflict of interest in relation to contractual arrangements between parties who do, or who are about to cohabit, particularly in the light of recent proposals in England and Wales for civil registered partnerships. In the Committee’s view there is a clear conflict of interest between unmarried persons entering into such contractual arrangements – whether in contemplation of marriage or some other relationship. The same firm of solicitors should not act for both, although they can act for one even where the other declines to take separate legal advice. In that latter situation the solicitors would be entitled to prepare a document on their own client’s instructions and forward it to the other unrepresented party, but it must be accompanied by a notice in writing confirming that the firm are not acting for that unrepresented party; advising that signature of the document will have legal consequences – without spelling out what those consequences might be – and stating that the person in question should seek independent legal advice before signing the document. Such a written notice must be sent to the unrepresented party even if the solicitors’ own client arranges to have the document signed by the other party.

If the other party does not take independent legal advice but signs the document, the solicitors are entitled to treat it as delivered on behalf of their own client and to deal with it accordingly – for example by registration in the Books of Council and Session. If such a contract contains an agreement to transfer heritable property or a share of heritable property, it may be possible to seek a waiver from the prohibition in the conflict of interest rules if the parties are not both established clients and are not married to each other. Such a waiver could be granted where a conveyance is in implement of a separate agreement in respect of which the parties have had independent legal advice.

Bruce A. Ritchie, Director, Professional Practice, Law Society of Scotland