Options for the Offside Goals Rule
| Author | Peter Webster |
| Pages | 524-528 |
| Published date | 01 June 2009 |
| Date | 01 June 2009 |
| DOI | 10.3366/E1364980909000705 |
In its core form, the offside goals rule provides that a transfer or grant of a real right by A to C will be voidable if (i) A had already undertaken to transfer or grant a right in the same property to B (ii) that prior right was “capable of being made real” (iii) the grant to C was in breach of the prior obligation to B and (iv) C knew of that prior obligation or acquired gratuitously or at a material undervalue.
[2009] CSOH 14, 2009 SLT 444. It has already attracted comment: R G Anderson and J MacLeod, “Offside goals and interfering with play” 2009 SLT (News) 93 and 118.
considers the exact scope of the offside goals rule. It focuses upon whether, in fact, a right does need to be “capable of being converted into a real right” in order to be protected by the rule and, in particular, how the rule applies to optionsIn February 2005, McAllister granted the pursuers an option to purchase subjects in St Andrews, exercisable within a two-year period. The pursuers exercised the option on 2 March 2005 and the date of completion set was 8 February 2006. In late January 2006, McAllister granted a standard security to the defenders, which they then recorded. The pursuers averred that, prior to taking the security, RBS were aware of the existence of the option but had taken no steps to inquire further. The pursuers sought reduction of the security on the basis of the defenders’ bad faith. At debate, the defenders argued that the claim was irrelevant because, first, unexercised options are not protected by the offside goals rule and, secondly, knowledge of an unexercised option triggers no duty of inquiry so that they were not fixed with knowledge that the option had been exercised.
The defenders also argued that the option agreement was formally defective, but this argument was rejected:
Para 36.
Lord Emslie went on to consider what would have been the position had the validity of the security fallen to be tested by the bank's knowledge of the existence of the option alone (i.e. had no duty of inquiry arisen) or – which comes to the same thing – had the option, in fact, not been exercised.
Paras 42–51.
He therefore considered whether an unexercised option is protected by the offside goals rule. This part of the decision contains a valuable general discussion of the types of right which the rule protectsSince
1960 SC 255 at 260 per Lord President Clyde.
This meant inSee e.g.
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