Daulia Ltd v Four Millbank Nominees Ltd

JurisdictionEngland & Wales
Judgment Date24 November 1977
Judgment citation (vLex)[1977] EWCA Civ J1124-1
Docket Number1977.D. NO. 132
CourtCourt of Appeal (Civil Division)
Date24 November 1977

[1977] EWCA Civ J1124-1

In The Supreme Court of Judicature

Court of Appeal

On Appeal from the High Court of Justice

Chancery Division

Group A

(Mr. Justice Brightman)


Lord Justice Buckley

Lord Justice Orr


Lord Justice Goff

1977.D. NO. 132
Daulia Limited
Four Millbank Nominees Limited
1st Defendants
Slaughter & May (Sued as a Firm)
2nd Defendants

MR.G.M. GODFREY Q. C. and MR. N. B. PRIMOST (instructed by Messrs. Kaufmann, Karmer & Shebson, Solicitors, London) appeared on behalf of the Plaintiffs (Appellants).

MR. LEONARD HOFFMAN Q. C. and MR.M. J. DRISCCLL (instructed by Messrs. Clifford-Turner, Solicitors, London) appeared on behalf of the 1st Defendants (Respondents).


I have asked Lord Justice Goff to deliver the first judgment.


This is an appeal from an order dated 3lst March 1977 of Mr. Justice Brightman made on a Motion under 0. 18 r.19 whereby he directed that as against the first defendants the statement of claim should be struck out and the action dismissed with costs.


The appellant plaintiffs were keen to buy certain commercial and residential properties from the first defendants who were in a position to sell those properties as mortgagees.


The appellants never in fact succeeded in obtaining an exchange of contracts or any other written agreement for sale and purchase, but they claim they did obtain a unilateral contract by the first defendants that they would enter into a written contract of sale on certain agreed terms and the appellants claim damages for breach of that unilateral contract.


The facts on which they base that claim are extensively set forth in the re-amended statement of claim but I need only refer to them quite briefly.


I take them from the following paragraphs of the re-amended statement of claim: "7. On Tuesday, 21st December, 1976 the terms of the proposed sale between the plaintiffs and the first defendants were finally agreed between one Shebson acting on behalf of the plaintiffs and the said Langley" - who was a partner in the second defendants and acting on behalf of the first defendants -"whereby the plaintiffs were to purchase the said properties from the first defendants for a price of £825,000 payable by a deposit of £41,250 which said deposit was to be payable by a Bankers Draft and the balance of £783,750 was to be payable on completion. The said terms were partly oral and partly in writing. Insofar as theywere in writing they were contained in the draft contracts which the plaintiffs and the first defendants already had. Insofar as they were oral, they had been agreed on the telephone between the said Shebson and the said Langley, and the said oral terms were evidenced by riders to the said contract sent by the said Shebson to the said Langley on Tuesday, 21st December, 1976".


"8. On the afternoon of Tuesday, 21st December, 1976 ono Osgoodby acting on behalf of the first defendants promised the said Shebson acting on behalf of the plaintiffs that the first defendants would enter into a contract for the sale of the said properties with the plaintiffs if the plaintiffs procured a Bankers Draft for the said deposit, attended at the first defendants offices before 10.00 a.m. on Wednesday, 22nd December 1976, at 4, Millbank and tendered to the first defendants the plaintiffs' part of the contract in the terms already agreed and the said Bankers Draft".


"In reliance on the said promise the plaintiffs procured the Bankers Draft for the said deposit, executed and signed their part of the said contract for sale in the therms already agreed".


"9. The plaintiffs duly attended at the first defendants' said offices before 10.00 a.m. on Wednesday, 22nd December, 1976 with their said deposit and their said part of the contract for sale ready for tender to the first defendants. But the first defendants refused to exchange their part of the said contract for sale with the plaintiffs".


Mr. Justice Brightman held that those facts disclosed no cause of action, and the appellants now appeal to this court.


Under this procedure the facts so pleaded must be taken as admitted, and they give rise to three questions of law: (a) Do they establish a valid unilateral contract? If they do, thenthere is no question but that they disclose a breach. (b) If the answer to (a) is Yes then is that contract unenforceable for want of a written note or memorandum to satisfy Section 40 of the Law of Property Act 1925, unless there be sufficient acts of part performance to take the case out of the statute? (c) If Section 40 applies are there such acts?


It is well settled that it is only in plain and obvious cases that the court should exercise its powers under the summary process provided by 0. 18 r.19 and it was suggested that those questions should not be resolved by us but should in any event ro to trial.


I am satisfied, however, that so far as the facts are concerned the appellants' position cannot be improved by evidence beyond that in which they stand on the facts pleaded which for the purposes of this motion and appeal are taken to be admitted, Further the points of law have been very fully argued before us, and I have no doubt that we ought to determine them now.


I therefore turn to the first question. Was there a coneluded unilateral contract by the first defendants to enter into a contract for sale on the agreed terms?


The concept of sunilateral or "if contract" is somewhat anomalous, because it is clear that, at all events until the offeree starts to perform the condition, there is no contract at all, but merely an offer which the offeror is free to revoke.


Doubts have been expressed whether the offeror becomes bound so soon as the offeree starts to perform or satisfy the condition, or only when he has fully done so.


In my judgment, however, we are not concerned in this case with any such problem, because in my view the appellants had fully performed or satisfied the condition when they presented themselves at the time and place appointed with a banker's draftfor the deposit, and their part of the written contract for saleduly engrossed and signed and there tendered the same, which I understand to mean proferred it for exchange. Actual exchange, which never took place, would not in my view have been part of the satisfaction of the condition but something additional which was inherently necessary to be done by the appellants to enable, not to bind, the first defendants to perform the unilateral contract.


Accordingly in my judgment, the answer to the first question must be in the affirmative.


Even if my reasoning so far be wrong the conclusion in my view is still the same for the following reasons.


Whilst I think the true view of a unilateral contract must in general be that the offeror is entitled to require full performance of the condition which he has imposed and short of that he is not bound, that must be subject to one important qualification, which stems from the fact that there must be an implied obligation on the part of the offeror not to prevent the condition becoming satisfied, which obligation it seems to me must arise as soon as the offeree starts to perform. Until then the offeror can revoke the whole thing, but once the offeree has embarked on performance it is too late for the offeror to revoke his offer.


This brings me to the second question.


There are certain English cases touching this matter, but none precisely in point.


In the former an auctioneer knocked down as sold for 61 guineas, which was bid by the owner, a pony which according to the particulars was to be sold without reserve, and the auctioneer,not the vendor, was sued for damages by the plaintiff who was the highest independent bidder at 60 guineas.


In the Court of queen's 'Bench, see page 308, Lord Campbell held that there was no contract because the vendor had revoked the auctioneer's authority to accept the plaintiff's bid, and therefore no question of the impact of Section 17 of the statute of Frauds arose.


The Exchequer Chamber agreed with this conclusion on the pleadings as they stood, but. allowed an amendment, and held the defendant liable; per. Baron Martin as upon a contract that the sale should be without reserve, and per Mr. Justice Willes and Mr. Justice Bramwell upon a breach of warranty of authority to sell without reserve, and at page 316 Baron Martin said: "Upon the same principle, it seems to us that the highest bona fide bidder at an auction may sue the auctioneer as upon a contract that the sale shall be without reserve. We think the auctioneer who puts the property up for sale upon such a condition pledges himself that the sale shall be without; reserve; or, in other words, contracts that it shall be so; and that this contract is made with the highest bona fide bidder; and in case of breach of it, that he has a right of action against the auctioneer. The case is not at all affected by the 17th Section of the statute of Frauds, which relates only to direct sales, and not to contracts relating to or connected with them".


This case affords support for the appellants' contention as far as it goes, but it is distinguishable, since there the action was against the auctioneer, not the vendor, and it was not upon a contract by the auctioneer that he himself would sell to the highest bidder but that his principal would do so.


Warlow v. Harrison was approved by Mr, Justice Cozens Hardyin Johnson v. Royes (1899) 2 Chancery at page 77, where he related it to the vendor himself, saying "A vendor who offers property for sale by auction on the terms of printed conditions can be made liable to a member of the public...

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1 books & journal articles
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    • Irwin Books The Law of Contracts. Third Edition Formation
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    ...Diocesan Council , above note 84; Nieckar v Sliwa (1976), 67 DLR (3d) 378 (Sask QB). 90 Daulia Ltd v Four Millbank Nominees Ltd , [1978] Ch 231, [1978] 2 All ER 557 (CA) [ Daulia ]. Compare with Petterson v Pattberg , 161 NE 428 (NYCA 1928); Beer v Lea (1912), 7 DLR 434 (Ont HC), aff’d (191......

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