The Legal Implications of Acquiring a Country House to Convert It into a Hotel Management Company - Term Paper Example

A report outlining the legal implications of undertaking the of acquisition a country house and converting it into a hotel name: Course: Construction Law - Assignment 2 Date: May 28, 2010 Introduction I intend to form a company along with some associates, for the purpose of acquiring a country house and convert it into a hotel which will then be leased to a hotel management company. This report will outline the legal implications of this undertaking and assess the legal implications of construction decisions in particular reference amongst other matters, to tort, land law, company, employment and consumer and planning law. Setting up the company Hotels possess a dual nature as they can be seen both as business and as real estate. It is therefore of great importance to have the advice of professionals who are familiar with the hotel industry. It is important to assemble a team of seven professionals who help to carry out an overall evaluation of the property. This team will include a broker, an appraiser, an accountant, an attorney, an architect, an engineer, a marketing and financial consultant. The broker will assist in the negotiation of the purchase. The appraiser will be a person who has either done appraisal of similar properties or has appraised properties in the hotel construction and leasing market. The accountant will be responsible for reviewing the records kept on the property to determine whether the funds are being applied appropriately, and whether the reporting systems and financial controls are adequate. The attorney will be a legal consultant specializing in hotel works and will assist in the formulation of acquisition strategies. The attorney will assist in the identification and coordination of the members of the acquisition team, and also offer advice on structure and terms of transactions. The attorney will also assist in issues of legal due diligence, including the significance of litigation and regulatory and title issues. In its popular usage the word conveyance signifies the document employed to carry out a purchase of land. But the term conveyance is of much wider import, and comprises the preparation and completion of all kinds of legal instruments. A well-known branch of the conveyancers business is the investigation of title. An important function in the case of purchases or mortgages of real estate. With personal estate (other than leasehold) he has perhaps not so much concern. Chattels are usually transferred by delivery, and stocks or shares by means of printed instruments which can be bought at a law-stationers. The common settlements and wills, however, deal wholly or mainly with personal property; and an interest in settled personality is frequently the subject of a mortgage. Of late years, also, there has been an enormous increase in the volume of conveyancing business in connection. with limited joint-stock companies. In the preparation of legal documents the practitioner is much assisted by the use of precedents. These are outlines or models of instruments of all kinds, exhibiting in. accepted legal phraseology their usual form and contents with additions and variations adapted to particular circumstances. Collections of them have been in use from early times, certainly since printing became common. The modern precedent is, upon the whole, concise and businesslike. The prolixity which formerly characterized most legal documents has largely disappeared, mainly through the operation of statutes which enable many clauses previously inserted at great length to be, in some cases, e.g. covenants for title, incorporated by the use of a few prescribed words, and in others safely omitted altogether. The Solicitors Remuneration Act 1881, has also assisted the process of curtailment, for there is now little or no connection between the length of a deed and the cost of its preparation. So long as the draftsman adheres to recognized legal phraseology and to the well settled methods of carrying out legal operations, there is no reason why modern instruments should not be made as terse and businesslike as possible. It is not usual for land to be sold without a formal agreement in writing being entered into. This precaution is due, partly to the Statute of Frauds which renders a contract for the sale of land unenforceable by action unless the agreement upon. which such action shall be brought, or some memorandum or note thereof, shall be in writing and signed by the party to be charged therewith or some other person thereunto by him lawfully authorized, and partly to the fact that there are few titles which can with prudence be exposed to all the requisitions that a purchaser under an open contract is entitled by law to make. Such a purchaser may, for example, require a forty years title (Vendor and Purchaser Act 1874). Under an. open. contract a vendor is presumed to be selling the fee-simple in possession, free from any encumbrance, or liability, or restriction as to user or otherwise; and if he cannot deduce a title of the statutory length, or procure an encumbrance or restriction to be removed, the purchaser may repudiate the contract. The preparation of an agreement for sale involves accordingly an examination of the vendors title, and the exercise of skill and judgment in deciding how the vendor may be protected against trouble and expense without prejudice to the sale. Upon a sale by auction the agreement is made up of (I) the particulars, which describe the property; (2) the conditions of sale, which state the terms upon which it is offered; and (3) the memorandum or formal contract at the foot of the conditions, which incorporates by reference the particulars and conditions, names or sufficiently refers to the vendor, and is signed by the purchaser after the sale. The object of the agreement whether the sale is by private contract or by auction, is to define accurately what is sold, to provide for the length of title and the evidence in support of or in connection with the title which is to be required except so far as it is intended that the general law shall regulate the rights of the parties, and to fix the times at which the principal steps in. the transaction are to be taken. It is also usual to provide for the payment of interest at a prescribed rate upon the purchase money if the completion shall be delayed beyond the day fixed for any cause other than the vendors willful default, and also that the vendor shall be at liberty to rescind the contract without paying costs or. compensation if the purchaser insists upon any requisition or objection which the vendor is unable or, upon the ground of expense or other reasonable ground, is unwilling to comply with or remove. Upon a sale by auction it is the rule to require a deposit to be paid by way of security to the vendor against default on the part of the purchaser. A Tort is a legal term that means a civil wrong and it is separate from Contract. The definition of Tort is not easy as it covers a broad range of situations; it is mainly to do with a person's responsibility to others. A tort is a breach of duty, which is fixed by law. Someone behaves tortuously if they harm someone's body, property, and legal rights or breach a duty owed under statutory law. The law allows the victim to claim damages (money) if they can prove they have been harmed, when a tort has been committed, (this is to compensate them for harm done) in some tort they only have to prove that the tort has been committed e.g. in Trespass. Tort has developed as a system based on fault liability it is case written and the level of proof needed is 'in all probability'. Proving the fault is a requirement of most torts and can sometimes be very difficult it is based on the principle that that it punishes the wrongdoer but this is in practice does not work well as most damages are paid out by insurance. In business it can have a stronger affect as business can have a highly publicized incidents affecting reputation and prohibition notices served could cause closure until problems are remedied. In contract the parties involved in the contract set them. A contract is an exchange of promises or an agreement between parties. A breach of contract is a breach of duty and therefore a civil wrong. For example, we all have a duty to not trespass onto someone's land, or property. Contract law duties are voluntarily assumed obligations. Both parties agree to contract and the main aim to having a contract is to enforce promises made. This usually has a time limit. Under the Limitations Act 1980, under contract, the time limit for commencing an action is within 6 or 12 years. For tort there are better limitation periods, as the cause of action does not start to accrue until the problem becomes known about, up to 15 Years. One of the big advantages with using Tort over the contract is the latter has restrictions on damages recoverable and under tort you are awarded a sum (with no established formula) to place the claimant in the place they were before the tort had taken place. The court decides on how much they should award, this compensation could be money for the financial loss, pain, emotional distress, loss of enjoyment for life. This could be worth much more money than offered under contract. Therefore in most situations people will use Tort. This is seen in the area of consumer contracts and in product liability, the claim could be for negligence and could be a breach of contract the choice would be made whether to sue the manufacturer in tort or the supplier in contract. Although people can claim huge amounts of money under tort usually purely 'financial' claims tend to do better under contract. The law requires a professional (defined as anyone who gives expert advice and/or services to another person) to execute their skill and knowledge at an appropriate level expected of that profession. But professionals are only human and mistakes do happen. Any financial loss arising from a mistake or failure by that professional to do so may result in an award in favor of your client. A professional may also be held to be liable for a mistake even though there was no negligence in his work. Professional indemnity insurance is to covers liability in both tort and contractual issues arising from normal professional activities either by architect or engineer. The purpose of this insurance is to protect the professional from the financial consequences of any claim brought against it as alleged negligent act in the performance of its professional capacity. This indemnifies the insured (architect or engineer) against claims for compensation for a breach of professional duty by any negligence by way of act, error or omission which include indemnifies professionals for their legal ability to clients & others relying on their advice and services, and also to provides indemnity coverage if a client suffers loss, either materially, financially or physical that is directly attributable to negligent acts of the professional. Generally the insurer is required to provide full information with regards to the types of activities to be carried out to ensure adequate coverage exists. The clerk of work is a person employed by the architect or client to station at construction site. The role is primarily to represent the interests of the client in regard to ensuring the quality of both materials and workmanship are in accordance with the design information such as specification and engineering drawings, in addition to recognized quality standards. To minimize the poor workmanship and inferior products, the architect should engaged an experience or senior clerk of work to supervise entire construction site, construction methods as well as carry out quality test and inspection and report to the architect directly whenever any deviation arise during construction period. The architect-engineer can not defend against the owner's claims by using the excuse that he was relying upon the information or work provided to him by an employee or consultant. The architect or engineer who has relied on a consulting specialist, though, may attempt to pass the liability down the line by invoking the indemnity clause of the consultant's contract with him. Clerk of work which is engaged directly under architect will definitely minimize any defects due to poor quality of materials and poor workmanship to ensure works are carried out in accordance to the drawings and specification. He as an architect should concentrate on the design and planning issues with compliance to statutory requirements. His work and the project must comply with all relevant legislation, codes and requirements of authorities and of utility/service providers, current at the time when the relevant component of the services is being provided by him. Bibliography Adams A. (2006). Law For Business Students. 4th ed. Harlow. Pearson Education Ltd. Birmingham V. (2002). Nutcases. 3rd ed. London. Thomson, Sweet Maxwell. Edexcel, (2004). HNC/HND Business, Mandatory unit 5, Common Law 1, Course Book. London. BPP Professional Education. Elliot C. & Quinn F. (2003). Tort Law. 4th ed. Harlow. Pearson Education Limited. Hodgson J. & Lewthwaite J. (2004). Tort Law. Oxford. Oxford University Press. Samuel G. (2005). Understanding Contractual And Tortious Obligations. Exeter. Law Matters Publishing. Turner, (2003). Tort Law. London. Hodder & Stoughton. Baltin, Bruce, James R. Butler, Jr. and Peter Benudiz (2000).Why are we buying this property Read More