Commentary on Sections Overview Overview Section 643: Contracts relating to land or certain tangible movable property
1770.This section sets out the type of derivative contract it applies to (so that section 641 may then apply to credits and debits in respect of the contract). It is based on paragraph 45C(1) and (4) of Schedule 26 to FA 2002.
1771.As with a number of similar sections in this Chapter which define the derivative contracts to which they apply, condition B in subsection (3) is that the company does not hold the derivative contract for the purposes of a trade it carries on. This subsection does not rewrite the disapplication of the condition to life assurance and mutual trading companies that is provided by paragraph 45C(2) of Schedule 26 to FA 2002. That disapplication is obsolete by virtue of the rules in sections 633 and 634.
1772.Condition C, in subsection (4), an equally common element in such sections, is that the company in question is not an “excluded body”. That term is defined in section 706 for the purposes of this Part and refers to various types of collective investment scheme.
1773.Condition A, in subsection (2), is the distinguishing characteristic of this type of derivative contract. The underlying subject matter of the contract is either or both of land and certain tangible movable property. Subsection (5) contains a signpost to an additional rule in section 644 that modifies what the underlying subject matter of the contract is taken to consist of.