Solicitors not liable for failed pub venture
Posted: 28th July 2015
It is in the nature of businesspeople that they usually have faith in their own abilities – but that does not mean that they should dispense with expert advice before entering into important transactions. In one case, a couple agreed to pay £130,000 for a pub but were left regretting their failure to consult an independent valuer.
The couple had much experience in the hospitality trade and thought they were onto a winner when they bought the pub. They agreed the price without recourse to professional advice and subsequently put pressure on their solicitors to complete the sale as quickly as possible so that they could commence trading.
The venture was not successful and the couple sold the pub less than two years later for little more than half the price they had paid for it. Part of the reason for that failure was that the pub’s former owners had taken over another hostelry three miles away and many of their loyal customers had moved with them.
The couple sued their solicitors, arguing that they negligently failed to advise them that the sale contract should include a covenant which would have prevented the sellers from operating a competing pub within a five mile radius for two years.
In dismissing the claim, however, a judge ruled that the solicitors were under no duty to advise the couple on the commercial risks inherent in the transaction. He also found that, even had their attention been drawn to the absence of a covenant in the sale contract, they would have proceeded with the purchase at the same pace. The underlying reason for the venture’s failure was that customers liked neither the more up-market food the couple offered at the pub nor the prices.