Performance bonds are a vital component of commerce.
They are used in a wide array of instances offering stability as security for breaching of ones obligations.
As they usually are in place to cover the shortcomings of a certain contractual breach they dispense with the need to initiate costly legal procedure.
However many where the times where performance bonds did more harm that the good which they were supossed to offer.
Below are a number of ways in which performance bonds ended up destroying the agreements including them:

1. Breach did not satisfy seeking out Performance Bond

When one party fails to carry his promise within a contract then the performance bond covers the innocent party’s
damages. But what if the innocent party was not as innocent in the first place? or did not deserve such compensation as
the breach seemingly breach the performance bond but in reality the breach wasn’t as huge as to justify the payment of the bond.

1. Unjus Enrichment.

This could be a scenario where the beneficiary of the performance bond sought it out upon breach of its condition to continue to be extended
got its borrowers account settled and thus the borrower now profiterring at the land vendor’s expense as he’s losing of his share of the
sell price by owing that very share of money to his bank.

1. THE PERFORMANCE BOND IS PRESSING ON THE ISSUING PARTY.

in this situation the performance being there can out a lot of strain to either party to perform the contract
in fear that if it doesn’t it will have to cover its breach through a huge payout by the perfomance bond so that
he is too stressed to overcompensate for the trivial parts of the contract, often with negative consequences as it has to
prioritize that business and failing to look after the other ones, causing harm to his business cycle and the collective in general.

In a series of classic cases of misseling of loans, banks in cyprus made loans to the public denominated in swiss francs. It can be argued that in doing so they convinced masses of people to borrow money whereas they woudn’t have if they borrowed in
their national currency. The reason was that borrowing in swiss francs bore a a reduced interest rate that would be easier to pay off.
Also according to these kind of loans the interest was going to be paid first and the capital after which of course made the loan repayment cheaper.
That was another factor that induced the public into agreeing to these loans making them more attractive.
However what they most famously had not been told was that if the euro took a dive against the franc the their loan would be more expensive to pay off as they would need more euros to pay off the loan which was denominated in swiss francs, making the loan
nonviable, unfolding a miserable state of events when the banks started suing the borrowers for the remaining balance in swiss francs and later foreclosing on their homes.
Simmilarly it is reported that in their desperation to lance these loans to the public, the banks disobeyed certain mandates issued by the Central Bank warning against the indiscriminate making of such loans and this could be a factor working in favor of the borrowers. Something which they failed to complied by. As borrowers struggle to
pull up a defense in misrepresentation at Court, the banks start selling off their houses and the all too bright and ever promising investment plan has turned into another speculation scandal, plaguing our little island.

As a potential aspiring businessman, one may enter into a franchise agreement for reasons such as being able to acquire the trade’s know -how which they are keen on, receiving the training and goodwill of an established enterprise with a consistent customer base and making profit as soon as starting business.

While there are great advantages that come along with buying a franchise there are also potential pitfalls that could befall a potential franchise buyer.

For instance, since a franchise agreement is a contract it usually lasts for a certain time period which unless upheld by the franchisee buyer, it could lead to the payment of damages to the owner of the franchise.

These damages could equal the total amount of fees which would have fallen due upon the natural termination or expiration of the agreement.

Similarly the contract may include hefty damage clauses which could cripple financially the franchise – buyer causing him unnecessary problems before he even finds himself doing business and interfere with his right to conduct business as he pleases currently or in the future.

It also contains multiple obligations that should be primarily be performed by the franchise buyer and the individual owning the franchise. Some franchise agreements contain an insane amount of obligations on the part of the franchise buyer compare to those of the owner’s.

While there are almost always restriction of trade clauses in a franchise agreement during its life, there may also be such clauses post termination of the agreement, which could bar the franchise buyer from setting up his own business under the excuse that the buyer could take advantage of the owner’s trading secrets to build his own.

The above consequences should be carefully considered before entering into a franchisee agreement unless the franchise buyer is ready to abide by these obligations and does not think he could survive on his own in the world of business.

Μεταξύ των ετών  2009 και 2013 οι κυπριακές τράπεζες αποφάσισαν για να προσελκύσουν περισσότερους δανειστές, να προσφέρουν δάνεια τα οποία ήταν παραχωρημένα σε ελβετικό φράγκο. Αυτό σήμαινε ότι θα δάνειζαν στους πελάτες τους το αντίστοιχο ποσό των ελβετικών φράγκων σε ευρώ. Ως εδώ όλα καλά αφού το ποσό που δανείστηκαν οι δανειολήπτες είναι το αντίστοιχο σε ευρώ των ελβετικών φράγκων που όφειλαν. Σε περίπτωση όμως που η ισοτιμία των ελβετικών φράγκων αυξάνονταν έναντι του ευρώ ήτο ευρώ μειωνόταν έναντι των ελβετικών φράγκων τότε θα έπρεπε να αποπληρώσουν τις δόσεις του δανείου τους σε ελβετικά φράγκα, όπως και δυστυχώς έγινε στο τέλος. Το 2015 η ισοτιμία του ελβετικού φράγκου έναντι το ευρώ αυξήθηκε και έτσι τα δάνεια τα οποία παραχωρήθηκαν στους δανειολήπτες έγιναν δυσβάσταχτα. Δυστυχώς οι τραπεζικοί οργανισμοί επέμεναν να γίνει η πληρωμή όχι στην ισοτιμία που είχε συναφθεί το δάνειο αλλά στην ισοτιμία που δανειστήκαν τα ελβετικά φράγκα αλλά στην τρέχουσα ισοτιμία κατά την ημερομηνία που ήταν πληρωτέο το δάνειο. Πολλοί δανειολήπτες βρίσκονταν αντιμέτωποι με το ενδεχόμενο να χάσουν ακόμα και το σπίτι τους αφού οι τράπεζες τους έπεισαν να υποθηκεύσουν τα σπίτια τους. Οι τράπεζες στην προσπάθεια τους να πείσουν τους δανειολήπτες να δανειστούν σε ελβετικά φράγκα, τόνιζαν το γεγονός ότι οι πελάτες θα επωφελούνταν από το φτηνό επιτόκιο  δανεισμού σε ελβετικά φράγκα αντί σε ευρώ, πλασάροντας στους δανειολήπτες ότι θα είχανε ένα φτηνό δάνειο. Οι τράπεζες που επιδίδονταν σε τέτοιου είδους πληροφορίες θα μπορούσε να λεχθεί ότι προβαίναν σε ψευδείς παραστάσεις και εξαπατούσαν το κοινό. Επίσης οι ρήτρες οι οποίες προνοούσαν ότι το δάνειο σε ελβετικά φράγκα θα έπρεπε να πληρωθεί στην τρέχουσα ισοτιμία δύνανται να κριθούν ως καταχρηστικές.

Is it important to have an adequate knowledge of the old common law system of conveyancing before the LPA 1925 Act and the Land registration Act 2002 came into force?

Yes it is very important to understand the basics of the old common law doctrines, principles and the pre 1925 law old mortgage law system since many conveyancing cases calling to be resolved require an understanding of the old system of creation, priority and protection of interests in land legal and equitable for numerous reasons.

1. In developing a better understanding of the peculiar nature of mortgages
2. In enabling one to efficiently investigate and examine proficiently the history and related transactions relating to a certain land.
3. In being able to utilize corner stone judicial precedents that highlight important key concepts of the law relating to land.

INTERESTS AND ESTATES IN LAND.

What is an equitable right?

An equitable right is a right that may be claimed through the principles of Equity. However it is not necessarily and can automatically afford someone an equitable interest in land. (When is an interest in land created?)

What is a legal interest/estate in land?

It is an interest in land acquired in a manner which is consistent with the law or that the law acknowledges eg  created by deed and exists for as long as a legal estate exists (in fee simple and for a term of years absolute). The effect of an interest in land (right in rem) is that it may be enforced against the whole world as opposed to an equitable interest in land which is enforceable against certain persons only.

What is an equitable estate/interest in land.?

It is an interest in land which has been acquired through equity and therefore it may be enforced only against a limited number of persons, eg It may be enforceable against a person who has notice of its existence at the time he acquired the legal estate in Land  However it may not bind a bonda fide purchaser in good faith for value without notice. Furthermore an equitable interest in land is one which falls short of the formalities of the law for various reason. (click here to see by someone would create an equitable interest in land rather than a legal one).

WARNING The following examples illustrate what could have happened in the pre 1925 times (NOT THE LPA 1925 CURRENT LEGISLATION)  when the old equitable principles and majorly the doctrine of notice played a key role in priorities of interests in land. Any equitable interest my apply in place of the estate contract as used below.

EQUITBALE INTEREST/ ESTATE vs LEGAL INTEREST/ESTATE  ( the title indicates the order by which the interests in the examples are acquired.)

When a legal interest comes second in time and the legal interest holder has notice of the previous equitable interest him being a bona fide purchaser for value. (For instance A makes an agreement with B to sell his land. B is has bought the land but the land is not conveyed to him yet (Is it possible to buy land before paying the purchase price and before having it conveyed to you? How a vendor claim his land back if the purchase price has not been paid ? )(he has an estate contract). Nonetheless A dishonestly sells the land to C and conveys his interest in land to the latter as well. To begin with,  B has an equitable interest in the said land as the assignee of the rights in land by A to him so far (by virtue of the estate contract). If C had notice when he acquired the legal estate of A in the land (that is when land was conveyed to him ) he is bound by it even though he holds a legal interest in land.

EQUITBALE INTEREST /ESTATE vs LEGAL INTEREST/ESTATE 

In the following example to be considered the legal holder even by coming second in time will bind the equitable holder since the legal holder was not affected in equity/terms of conscience by the rights which are produced by the equitable interest holder (rights in personam).

In the alternative scenario if C was not affected with notice and he bought the land in good faith and for value then B’s right does not bind him because it’s a right in personam (equitable rights bind certains persons) and C he has a legal right ( by virtue of the conveyance). In this case B will not be able to claim any rights in the land or a right to possession but will be restricted only to a mere right to sue A and claim damages for breach of contract. A right in personam binds only  certain parties ( in the case at hand parties whose conscience is affected by notice)  whereas a right in rem binds the whole world regardless of notice.

EQUITBALE INTEREST /ESTATE vs EQUITBALE INTEREST/ ESTATE PRE 1925 ERA.

In the same scenario if C purchased the land after B had done so but the legal estate was not conveyed to him, even though he had no notice of B’s equitable interest in land, since they both hold equitable estates in land B’s rights bind him and he will not have any right in the land ( Phillips v Phillips ( 1861) 4 De GF & J 208 at 215.).However if B later acquires the legal interest and he still had no notice of B’s equitable interest up until that time when the legal estate was transferred to him, then the  principle of Equity follows the law applies ( Pilcher v Rawlins ( 1872) 7 Ch App 259). Though if he is affected with notice just before the legal estate is transferred to him then B’s interest binds him.

What is a legal interest/estate in land?

It is an interest in land acquired in a manner which is consistent with the law or that the law acknowledges eg  created by deed and exists for as long as a legal estate exists (in fee simple and for a term of years absolute). The effect of an interest in land (right in rem) is that it may be enforced against the whole world as opposed to an equitable interest in land which is enforceable against certain persons only.

What is an equitable estate/interest in land.?

It is an interest in land which has been acquired through equity and therefore it may be enforced only against a limited number of persons, eg It may be enforceable against a person who has notice of its existence at the time he acquired the legal estate in Land  However it may not bind a bonda fide purchaser in good faith for value without notice. Furthermore an equitable interest in land is one which falls short of the formalities of the law for various reason. (click here to see by someone would create an equitable interest in land rather than a legal one).

The following examples illustrate what could have happened in the pre 1925 ERA when the old equitable principles and majorly the doctrine of notice played a key role in the ranking of interests in land. Any equitable interest my apply in place of the estate contract as used below.

EQUITBALE INTEREST ESTATE vs LEGAL INTEREST/ESTATE  ( the title signifies the order in which came the interests acquired in the examples)

When legal interest comes second in matters of time and legal interest holder has no notice of previous equitable interest him being a bona fide purchaser for value. (For instance A makes an agreement with B to sell his land. B is has bought the land but the land is not conveyed to him yet (Is it possible to buy land before paying the purchase price and before having it conveyed to you? How a vendor claim his land back if the purchase price has not been paid ? )(he has an estate contract). Nonetheless A in dishonestly sells the land to C and conveys his interest in land to the latter as well. For a start B has an equitable interest in the said land as the assignee of the rights in land by B to him so far (by virtue of the estate contract). If C had notice when he acquired the legal estate of A in the land (that is when land was conveyed to him ) he is bound by it even though he holds a legal interest in land. Click here to see what would happen applying today’s law to the example given above.

EQUITBALE INTEREST ESTATE vs LEGAL INTEREST/ESTATE  

In the following example the legal holder even second in time will bind the equitable holder becomes the legal holder was not affected in equity/terms of conscience by the rights which are produced by the equitable interest holder (rights in personam).

In the alternative scenario if C was not affected with notice and he bought the land in good faith and for value then C’s right does not bind him because it’s a right in personam (equitable rights bind certains persons) and C he has a legal right ( by virtue of the conveyance). In this case B will not be able to claim any rights in the land or a right to possession but will be restricted only to a mere right to sue A and claim damages for breach of contract. A right in personam binds only  certain parties ( who are the certain parties? whereas a right in rem binds the whole world.

EQUITBALE INTEREST ESTATE vs EQUITBALE INTEREST ESTATE PRE 1925 ERA.

In the same scenario if C purchased the land after B had done so but the legal estate was not conveyed to him, even though he had no notice of B’s equitable interest in land, since they both hold equitable estates in land B’s rights bind him and he will not have any right in the land ( Phillips v Phillips ( 1861) 4 De GF & J 208 at 215.).However if B later acquires the legal interest and he still had no notice of B’s equitable interest up until that time when the legal estate was transferred to him, then the  principle of Equity follows the law applies ( Pilcher v Rawlins ( 1872) 7 Ch App 259). Though if he is affected with notice just before the legal estate is transferred to him then B’s interest binds him.