Many of you who are studying the LPC this year are expecting to be examined on the new SRA Code of Conduct; this finally came into force on 25th November 2019. We have updated our LPC guide accordingly. But don’t worry – if you are being taught at an institution which is examining this year under the old rules - we can still let you have a copy of the previous version of our guide. (Do make sure you look at the new rules before you actually start work though!!)
Contract races were covered specifically under the old rules and the new provisions are silent on them. We’ve just read a really useful article about this change, prepared by James Swede and published by Lexis Nexis. It’s well worth a look but we thought we’d flag a few of the points anyway.
Contract races arise where a vendor (seller) issues more than one contract for the sale of property at the same time. Under English conveyancing law the contract for the sale and purchase of property becomes legally binding when both parties declare themselves ready to “exchange contracts”; the sale normally completes on payment of the full price some time later. A number of stages are recommended for purchasers before they exchange contracts, searches into the title to the property and the surrounding area are carried out, and steps have to be taken to put any necessary financing arrangements in place. In a contract race, would be purchasers race against one another to be the first party to complete the preliminary steps and the winner, who is awarded the prize of being able to buy the property, will be the first party to complete the steps and to declare itself ready to exchange.
Under the old SRA rules there was a prescribed procedure for contract races. The new rules have no such prescription and generally operate in a more holistic way. The new rules require solicitors to consider carefully what would be an ethical course of action and then to act in accordance with that ethical pathway. It will be well worth a look at the old prescription if you have to answer a question on contract races (you might want to refer to Outcome 11.3 of the 2011 code – this required a solicitor to inform all parties of the vendor’s intention to run a contract race). You should then consider the principles under the new code, in particular:
Principle 2 (upholding public trust and confidence)
Principle 4 (acting with honesty) and
Principle 5 (acting with integrity).
Broadly make sure you tell everyone what is going on and that you are scrupulous in ensuring that you do nothing to advantage one party over another!