Formality Flashcards
Firstpost Homes v Johnson
- A director of the plaintiff company reached an oral agreement with a vendor for the sale of land. A letter was prepared stating that she would agree to sell. A copy of the plan was attached. The director was present when the vendor signed and dated the letter that he prepared, and the vendor also signed and dated the plan. The director did not sign the letter but signed the plan.
- The vendor died and the director sought enforcement of the contract. And the representatives of the vendor said the contract did not satisfy s 2 of the LPA (Miscellaneous Provisions) Act 1989.
- Held
- Appeal by the plaintiff company dismissed.
- LPA s 2(1)(3) required one document to be incorporated with all the terms of the contract and to be signed by all parties.
- Although Peter Gibson LJ does not accept that the signature of the purchaser appears on the letter, his judgment leaves the matter open to discussion. [1575-6] ‘The courts were prepared to interpret the statutory requirements generously to enable contracts to be enforced…’
J Pereira Fernandes SA v Mehta
- The claimant company supplied products to D’s company. D failed to make payments and C presented a petition to wind up the company. One of D’s staff sent an email to C’s solicitor requesting an adjournment of the winding-up petition/note or memorandum of agreement in writing. The email was not signed. The email was received and accepted the proposal to adjourn the hearing of the petition.
- Whether email signed by inclusion of email address valid? It included part of his name and surname.
- Held
- The email did not constituted constituted sufficient signature.
- (1) there was an offer made in writing and the offer had been accepted unconditionally, there was sufficient note/memorandum to satisfy the requirements of the agreement.
- (2) The automatic insertion of the email was not sufficient and did not constitute signature for the purposes of s 4 of the Statute of Frauds (1677) [25] [28] [31].
McLaughlin v Duffill
- The appellant vendor engaged an agent to sell a house. The respondent made various offers at open market for the house which the agent discussed with the appellant. Contracts were exchanged on the sale of the property to the respondent. The agent acted on behalf of the appellant when signing and executing the contract.
- The sale was not completed on the contractual date and the respondent served a notice to complete of which the appellant argued that she had not authorised the agent to sign any contract on her behalf.
- Held
- On dismissal of her appeal, it was contended that
- (1) there was clear evidence of her giving clear verbal authority, hence the burden of proof will not apply/ be decisive.
- (2) Agency may be conferred orally as well as in writing; therefore, the law applies to transactions within section 2. And the absence of written authority did not preclude specific performance of the contract signed by the agent.
Commission for the New Towns v Cooper
- The defendant’s predecessor (EHL), made four agreements by deed with the underlessor (under lease – an alienation by a tenant of a part of his lease, reserving to himself a reversion; it differs from an assignment, which is a transfer of all the tenant’s interest in the lease).
- The parties met and the defendant did not mention the ‘put option’ it would try to obtain from the plaintiff without revealing its intention to use the option to enable it to reduce its liquidation costs by avoiding the penalty payment for termination of the lease. A provisional agreement was reached. As soon as agreement had been reached, the defendant wrote a letter to the plaintiff with its intention to exercise the ‘put option’ so as to require the plaintiff to take an assignment of the under lease.
- This took place by phone.
- The plaintiff denied that it had granted a ‘put option’ and sought rectification of the agreement.
- Held
- The court found in favour of the plaintiff.
- (1) From the meetings it was clear that the ‘put option’ was not included.
- (2) Rectification could be granted on the basis of unconscionable conduct when a party to a contract was diverted from discovering the mistake in the contract and was induced to adopt certain conduct.
AJ Oakley
- ‘since the enactment of the Law of Property (Miscellaneous Provisions Act 1989, s. 2,… it has been unclear whether it is still possible for a valid contract for the sale of land to be created by an exchange of letter.’ Which was perfectly possible before s 2 of the LPA was enacted. This question was raised in the case of Commission for New Towns. 502.
- In the above case at first instance it was held ‘although the plaintiff had granted the option to the defendant and was not entitled to rectification, there was no valid contract because the exchanges of letters did not satisfy the 1989 Act. However, the CA did not deny that as a matter of construction the ‘put option’ was included, but plaintiff should be entitled to rectification because the party was mistaken with regard to the terms of the contract. Slade LJ in Agip S.p.A v Navigazione.
- ‘the intention of the parties [must be assessed] in order to determine the validity of such a contract. It is submitted that the statements of the Court of Appeal to this effect should be reconsidered when a case of this type arises.’ Hopper v Sherman. So the CA’s statements with regard to the exchange of oral agreements and the construction of contracts.
McCausland v Duncan Lawrie
- It was held that s 2 of the LP(MP)A 1989 applies to the variation of an existing contract. If the variation does not comply with s 2 the terms of the contract as originally agreed will remain enforceable. In this case an attempt to vary the completion date in a contract, failed for non-compliance with s 2.
- Bear in mind that the previous Act applies to all contracts for the creation or transfer of an interest in land. We are mainly concerned with the acquisition of legal rights, note that s 2 also applies to the variation of an existing contract.
- An option to purchase land consists of two stages: In the first stage, the option is granted; in the second state, the option is exercised by the grantee.
- The case quotes the Law of Property (MISC P)A s 2 (1) providing that a contract for the sale of an interest in land can only be made in writing and only by incorporating all the terms which the parties have agreed in one document or, where contracts are exchanged, in each. Section 2(2) provides that the terms may be incorporated in a document either by being set out in it or by reference to some other document.
- Facts
- A contract for the sale of property provided of a deposit, with payment of the remainder on completion. Subsequent to the parties signing the contract, the seller wrote to the buyer suggesting an earlier completion date (the revised completion date) which the buyer confirmed in writing as acceptable. The buyer was unable to pay the balance of the purchase price on the revised completion date. The seller rescinded the contract. The buyer argued that the revised completion was invalid because it was not recorded in the contract.
- On the buyer’s appeal it was held that the 1989 Act s 2 introduced strict requirements regarding formalities which applied to the revised completion date and which should therefore had been incorporated in the contract. As that had not occurred, the variation of the contract was invalid, and the appeal was allowed.
Record v Bell
- The legal principle is that where contracts are exchanged, reference to documents must be referred to in each of the parts of the contract which were exchanged.
- The solicitors of the vendor and purchaser signed a contract in two parts for the sale of a house alongside supplemental chattels contracts were entered into at the same time. However, copy entries of the vendor’s title at the Land Registry had not yet been supplied. A further agreement was made under which the defendant would not purchase the house until the claimant produced evidence that he was the registered proprietor. This agreement was not included in the final written sale contract between the parties and the defendant claimed that it was void for non-compliance with the LP(MP)A 1989.
- The court held that the defendant’s agreement not to purchase the land until the claimant produced the relevant evidence was a collateral contract. A collateral contract designed to induce the party into the main contract does not need to comply with the LP(MP)A s 2 unless it is itself a contract of land. Both contracts were valid.
Grosmont v Hooper
- The case imposed the idea of a collateral contract.
- An agreement by a purchaser to pay a debt was a collateral agreement to a contract for the sale of property as it was not evidenced in writing. Accordingly, the sale of the property was not dependent on discharging the debt (it was a collateral agreement to the contract) hence, the purchaser was entitled to specific performance of that contract.
- The parties lived together as a couple. Later on a property was purchased in the sole name of the appellant with the assistance of a mortgage loan. The respondent was jointly liable, as a borrower and made some contribution to the purchase price. Moreover, the relationship ended and they both signed a written agreement, whereby the appellant agreed to transfer his interest to the respondent. The respondent brought proceedings against the appellant seeking to enforce the agreement. The appellant pleaded that as the agreement did not incorporate all the terms expressly agreed (he is talking about their verbal agreement in green above) by the parties, as required by s 2 LP(MIS P)A, it was unenforceable.
- The judge decided that the additional term was a collateral transaction, and ordered the transfer of the property – the appeal was dismissed.
George v Wimpey UK v VI Construction
• The case involves: Mistake, rectification, contract, unconscionable bargain, judge finding dishonest conduct by defendant, rectification of contract, correctness of decision.
• Facts
• D was the vendor of a site for residential development. It retained a charter surveyor to act for it in negotiating a sale (CH). He reported to D, a director shareholder of the defendant, who also took part in the negotiations. The claimant company expressed an interest in purchasing the site, and its regional direct K handed negotiations on its behalf.
• At first instance
• The judge found that a reasonable man would have asked the claimant whether it had notice the elimination of the notation they described as +E, and that suspecting that the claimant was making a mistake should have said something. Therefore, the judge found that the claimant was intended to be mistaken and ordered rectification of the contract. The defendant appealed and the appeal was allowed.
• CA
1. Mistake was not alleged to its full capacity by the claimant
2. A person who entered a contract intended to be bound by all its terms
Keay v Morris Homes Ltd
• The case concerns: sale of land, contract, variation, Law of Property MSP, written supplemental agreement varying purchase price, vendors claiming existence of collateral oral agreement in respect of building works, whether works obligation void for non-compliance with formality requirements of s 2 1989 Act, whether an express term of supplemental agreement or forming subject of separate collateral contract, whether completion of land transaction rendering other elements of bargain enforceable
• Facts
• The Keays had transferred development land to Morris Homes pursuant to a contract for sale. After the contract had been made, the parties entered a written supplemental agreement to reduce the purchase price and vary instalment payments. The Keays alleged that on the same day the parties had entered an oral ‘works obligation’ requiring Morris Homes to make prompt progress on the construction of a medical centre which was to be leased back to the Keays on a 125-year lease. The transfer of land to Morris Home had been completed, but prompt payment was not made on the medical centre.
• The Keays claimed breach of the works obligation.
• Morris Homes argued that the supplemental agreement was void for non-compliance with s 2. In response the Keays contended – relying on Tootal Clothing, that the question of compatibility could not be raised as the land had already been transferred.
• By a written sale agreement, the respondents agreed to sell six parcels of land to the appellant and to take a leaseback of part on completion. The sale was completed and the leaseback was effected.
• The respondent alleged the appellant was in breach of an oral agreement imposing an obligation on the appellant to carry out certain building works.
• The appellant denied that any oral agreement had been made, and contended that any such agreement would be void for non-compliance with s2(1) LPA MISP for all terms of a contract for the sale of land to be incorporated in a single document.
• Held
♣ An agreement to a contract is a new contract; this new agreement will only be valid if the document contains all the expressly agreed terms so as to comply with s 2. It was not possible to determine whether the oral agreement was a collateral agreement to which s 2 did not apply.
♣ Hence, the effect of Tootal Clothing is that once the land has been transferred, the court will not permit the validity of the transfer to be challenged for non-compliance of the contract with s 2.
♣ If in doubt see CORE 218 for brief outline of this case.
Yaxley v Gotts
• The case deals with whether s 2 of the LP(MP)A 1989 which requires that contracts be in writing prevents an oral contract from taking effect where otherwise an interest would arise by proprietary estoppel.
• Facts
♣ Yaxley was a self-employed builder who attempted to pursue Gotts to lend him money for the purchase of a building. Gotts instead bought the building but agreed Yaxley could have the bottom floor in return for renovating the other flats and managing the building. After performing the work at his own cost and time Yaxley agreed that an oral agreement between himself and Mr Gotts was to reward him with ownership of the ground floor of the building. Gotts failed to convey they title deeds in the name of Yaxley. When the two fell out Yaxley brought legal proceedings as a plaintiff in court.
• Judgment
♣ The judge found that an oral contract between the plaintiff and defendant existed. This entitled the plaintiff to ownership in the form of a 99-year lease on the portion of the structure per the agreement.
♣ The CA dismissed Gott’s appeal that the claimant was entitled only to a portion of interest in the lease.
Yeoman’s Row Management v Cobbe - HL
• The case relates to proprietary estoppel in land law
• Facts
• Mr Cobbe claimed that Yeoman’s Row Ltd had sat by and encouraged him to go to great expense in obtaining permission for a development, and should not be able to resile from an originally agreed oral contract price for development work. Mr Cobbe was deliberately given the impression that the oral contract would continue.
• The CA upheld the decision that found proprietary estoppel in favour of Mr Cobbe.
• Judgment
♣ The HL held that Mr Cobbe had no proprietary estoppel claim, nor had he acquired an interest under a constructive trust. However, he did have a claim for unjust enrichment, because Yeoman’s Row had received the benefit of his services without paying for him. Mr Cobbe was awarded a sum of money which reflected the application expenses, and a reasonable fee for professional services.
♣ Lord Hoffmann agreed with Lord Scott.
Lord Scott
• 14. An estoppel would be proprietary estoppel, if the right claimed is a proprietary right. However, in fact Mr Cobbe does not appear to be claiming a property right.
• 15.
