GUEST COLUMN: The NHC ‘debate’: Contract issue
Your inside Front Page (Page 3) of August 23 confidently declared that a “Contract exists”.This is misleading in relation to the ongoing debate concerning the existence and nature of any agreement between National Housing Corporation (NHC), CLICO International General Insurance Ltd. (NHC’s financiers) and CLICO Property Development Inc. (the building contractor).The letter of April 7, 2009, that was partially reproduced in the article states clearly in its first paragraph that it is an “offer” of loan arrangements that is subject to the terms set out in that letter. The letter is in essence a conditional offer of finance, sometimes referred to as a term sheet.This offer was apparently accepted by NHC.An offer letter, or term sheet, is a precursor to the detailed loan financing agreement that will embody the terms of the offer but will, additionally, contain the very detailed provisions governing the loan and set out the respective obligations of the parties. Such detailed contractual provisions are inappropriate for a term sheet which is intended merely to be a summary of key financing provisions. It is thus incorrect to describe the offer letter or term sheet as a “finance contract”. While such a contract may exist between NHC and CLICO International General Insurance Ltd., no such contract was displayed in your article.You attribute to Mr Hal Gollop, attorney-at-law, the explanation that a “finance contract” is “a contract for the execution of a project”. That statement is plainly incorrect. As its description suggests a “finance contract” is, in this context, a contract for the provision of finance. This should not be confused with a “construction” or “works” contract which governs, in this case, the construction of the housing units that are the subject of this debate.Presumably the construction contract is or will be agreed between NHC and CLICO Property Development Inc. That construction contract, if it exists, was not exhibited in your article.Your readers will appreciate any light that can be shed on the status of the financing or loan agreement and on the construction contract. • Anthony Audain is an attorney-at-law.