SQE2 Legal Drafting — Questions and Answers
Question 1: When drafting a commercial lease, which of the following clauses is essential to protect the landlord's interest?
- A clause allowing the tenant to sublet without consent
- A rent review clause specifying the mechanism and frequency of rent adjustments (Correct answer)
- A clause removing the landlord's obligation to maintain the structure
- A clause allowing the tenant to terminate at any time without notice
Correct answer: A rent review clause specifying the mechanism and frequency of rent adjustments
A rent review clause is essential in a commercial lease as it protects the landlord's income against inflation and market changes. It should specify the review frequency (typically every 3-5 years), the review mechanism (open market, RPI, or fixed increases), and the procedure for resolving disputes.
Question 2: In contract drafting, what is the purpose of a force majeure clause?
- To allow either party to terminate at will
- To allocate risk for events beyond the parties' control that prevent performance, such as natural disasters, pandemics, or war (Correct answer)
- To set out the payment terms
- To define the governing law
Correct answer: To allocate risk for events beyond the parties' control that prevent performance, such as natural disasters, pandemics, or war
A force majeure clause addresses events beyond the parties' reasonable control that prevent or delay performance. It typically lists qualifying events, specifies the consequences (suspension or termination), and sets out notification requirements. English law does not imply force majeure — it must be expressly drafted.
Question 3: When drafting a will, what is the attestation clause and why is it important?
- It lists the testator's assets
- It confirms that the will was signed by the testator in the presence of two witnesses who also signed in the testator's presence, satisfying section 9 of the Wills Act 1837 (Correct answer)
- It appoints the executors
- It revokes all previous wills
Correct answer: It confirms that the will was signed by the testator in the presence of two witnesses who also signed in the testator's presence, satisfying section 9 of the Wills Act 1837
The attestation clause confirms compliance with the formalities of section 9 of the Wills Act 1837: that the testator signed (or acknowledged their signature) in the presence of two witnesses, who then signed in the testator's presence. It creates a presumption of due execution.
Question 4: What is the purpose of a definitions clause at the beginning of a legal document?
- To make the document longer and more impressive
- To assign specific meanings to key terms used throughout the document, ensuring consistency and avoiding ambiguity (Correct answer)
- To list the parties' addresses
- To set out the recitals
Correct answer: To assign specific meanings to key terms used throughout the document, ensuring consistency and avoiding ambiguity
A definitions clause assigns precise meanings to key terms used throughout the document. This ensures consistency, reduces ambiguity, avoids repetition of lengthy descriptions, and helps all parties understand exactly what each defined term encompasses.
Question 5: When drafting an indemnity clause, what key distinction should the drafter understand?
- There is no difference between an indemnity and a guarantee
- An indemnity is a primary obligation to compensate for loss, while a limitation of liability clause caps the amount recoverable — the drafter must balance protection for both parties (Correct answer)
- Indemnity clauses are not enforceable in English law
- An indemnity only applies to physical damage
Correct answer: An indemnity is a primary obligation to compensate for loss, while a limitation of liability clause caps the amount recoverable — the drafter must balance protection for both parties
An indemnity creates a primary obligation to compensate for specified losses, operating independently of a claim for damages. The drafter must carefully consider the scope (what triggers the indemnity), any caps or exclusions, the relationship with limitation of liability clauses, and fairness under UCTA 1977.
Question 6: In drafting a shareholders' agreement, what is the purpose of a drag-along clause?
- To prevent any shareholder from selling their shares
- To enable majority shareholders to compel minority shareholders to sell their shares on the same terms if a buyer offers to purchase the entire company (Correct answer)
- To allow minority shareholders to block any sale
- To set the dividend policy
Correct answer: To enable majority shareholders to compel minority shareholders to sell their shares on the same terms if a buyer offers to purchase the entire company
A drag-along clause allows majority shareholders (typically holding a specified percentage) to force minority shareholders to sell their shares on the same terms and conditions if a buyer wishes to acquire 100% of the company. This prevents minorities from blocking beneficial sales.
SQE2 Legal Drafting
When drafting a commercial lease, which of the following clauses is essential to protect the landlord's interest?