Law v Jones

JurisdictionEngland & Wales
JudgeLORD JUSTICE RUSSELL,LORD JUSTICE BUCKLEY,LORD JUSTICE ORR
Judgment Date10 April 1973
Judgment citation (vLex)[1973] EWCA Civ J0410-4
CourtCourt of Appeal (Civil Division)
Date10 April 1973
Between:-
Joseph Law
Plaintiff,
-and-
Stuart Martin Jones
Defendant.

[1973] EWCA Civ J0410-4

Before:-

Lord Justice Russell,

Lord Justice Buckley and

Lord Justice Orr

In The Supreme Court of Judicature

Court of Appeal

Civil Division

On appeal from Order of Mr Justice Ungoed-Thomas.

Mr A.J. BALCOMBE, Q.C. and Mr P. GIDLEY SCOTT (instructed by Messrs Tuck & Mann & Geffen, T.D. Jones & Co., Agents for Messrs Lyon Clark & Co., West Bromwich) appeared on behalf of the Appellant (Defendant).

Mr D.J. NICHOLLS (instructed by Messrs Kingsford, Dorman & Co., Agents for Messrs Glaisyer, Porter & Mason, Birmingham) appeared on behalf of the Respondent (Plaintiff).

LORD JUSTICE RUSSELL
1

We are concerned in this appeal from the late Mr Justice Ungoed-Thomas with the question whether there is a sufficient note or memorandum under Section 40 of the Law of Property Act, 1925, of an oral contract for the sale by the defendant appellant to the plaintiff of a freehold property, Dingleberry Cottage. The Judge found on the evidence that there was an open oral contract for sale and purchase at a price of £7,000 made on the 13th March, 1972, and would, had it been relevant, have been prepared to hold that this was an agreed variation of price under an earlier oral open contract for £6,500 in February, 1972. Those findings are not challenged in this Court.

2

Section 40 provides that no action such as the present one, which is a purchaser's action for specific performance of an oral contract for the sale of land, shall be brought unless there is a note or memorandum in writing of the contract (the word used is "thereof") signed by the defendant or his agent thereunto authorised.

3

Following upon the oral contract of February, 1972, Solicitors for the defendant on the 18th February, 1972, wrote to Solicitors for the plaintiff in these terms: "Dear Sirs, Dingleberry Cottage, Claverdon. We understand you act for Mr J. Law of Westgrove House, Stratford Road, Alcester, in connection with his proposed purchase of the above property for £6,500 subject to contract. We have been instructed on behalf of the vendor and we are obtaining his title deeds and shall submit a contract to you as soon as possible. Yours faithfully". It is to be particularly noted that this letter refers to a "proposed purchase", states that it is "subject tocontract", and states that a contract will be submitted, meaning of course a proposed form or draft of a contract for the sale and purchase of the property. We know as a fact that there was, in the Judge's view, already in existence an oral contract, subject to the impact of Section 40. But the language of this letter that I have stressed plainly negatives the existence of a contract. It is as if it had said "Our clients are in negotiation for the purchase", etc etc.

4

On the 25th February the defendant's Solicitors wrote further in the following terms to the plaintiff's Solicitors: "Dear Sirs, Dingleberry Cottage. Further to our letter of the 18th February we herewith enclose contract in this matter in duplicate for your approval. Please also find two copies of a rough plan which, you may find useful when making your Local Searches. We now look forward to hearing from you at your earliest convenience". The draft contract enclosed of course named the parties and the property and stated the price of £6,500. It incorporated, certain general conditions of sale and made some provision for title. The plaintiff's Solicitors on the 7th March wrote acknowledging the two letters and the draft contract and sent what were described as "preliminary enquiries", appropriate of course to a situation in which no contract had been reached. On the 10th March the defendants Solicitors acknowledged the letter of the 7th March, and on the 17th March wrote as follows: "Dear Sirs, Dingleberry Cottage, Claverdon. Further to our letter of the 10th March we herewith enclose our replies to your preliminary enquiries. We understand that an increase in the consideration has been mutually agreed and we shall therefore be obliged if you would amend the contractin your possession to read a purchase price of £7,000".

5

In my judgment, the language of the writings prior to the letter dated 17th March could not constitute a sufficient memorandum of the oral contract of February at the price of £6,500 because of the language of the first letter in the chain dated 18th February. I am unable to conclude that the language of the letter dated 17th March, written as part of a chain of writings dependent upon the first letter dated 18th February, and recording that the parties have agreed on a variation in price which is to be inserted in the draft contract, can be taken as indicating anything more than an agreed variation of a term in a contract still in the course of negotiation.

6

There are many phrases in Judgments which, taken by themselves, suggest that all that is needed for a memorandum under the section is a signed document which contains all the terms that were in fact comprised in the oral contract: and of course the writings in this case do that. For myself, I think there is much to be said for the proposition that the memorandum after an oral contract should positively point in some way to the pre-existence of an agreement or concluded bargain. Section 40 says that the memorandum must be of the contract ("thereof"). Against this it is pointed out that it is well recognised that a written offer before any contract can suffice for the section if orally accepted: this shows, it is said, that a memorandum need not point to a contract. This well-recognised legal proposition is I think to be explained on the ground that the writing in terms envisages a contract, is a proposal of an agreement, is regarded as continuously inexistence, and is ultimately simultaneous with the formation of the contract: see Warner v. Willington (1856) 3 Drewry, at page 532, and Reuss v. Picksley, (1866)Law Reports 1 Exchequer, at page 350. I cannot think that in such cases the Court would find a memorandum if the letter had not been in form a firm offer or proposal, but for example "I might consider selling Blackacre to you for £10,000", an oral contract following being constituted by a firm oral offer and acceptance. Accordingly, I do not think that it follows that a post-oral-contract memorandum need not point positively in some way to the preexistence of a contract: and I note that Lord Justice Fry in Re New Eberhart Co. (43 Chancery Division, 118) thought that this use of a written offer as a memorandum of the contract constituted by the acceptance rather stretched the section.

7

But assuming that it is not necessary that a post-oral-contract memorandum should point positively in some way to the existence of a contract, we are here concerned with documents of which, the language negatives such a pre-existing contract. Now it is quite clear in law that a denial of the alleged contract, though coupled with a rehearsal of the terms that in fact were comprised in it, is not a memorandum under Section 40. Suppose a letter, from one party to an oral contract to the other, asserting that an oral contract had been made between them for sale and purchase of Blackacre for £10,000: suppose the letter in answer to be "I agree that in the course of negotiation we had arrived at a figure of £10,000, but the whole matter is still in the course of negotiation; we have not finally agreed". That would not be a sufficient memorandum. Why? Because, although the answerstates what were in fact the terms of the oral contract, it points away from any contract, even though it does so falsely.

8

What then of this case? I cannot see that it can be said that the documents to which I have referred point any less away from the existence of any contract. I conclude that for this reason the documents do not constitute a memorandum under the section.

9

As I have indicated already, it may be that such a memorandum should point positively in some way to an existing contract: but it is not necessary to decide that point.

10

I should mention a particular point put in argument which I find of persuasive force, namely the possible outcome of a decision in favour of the plaintiff. A vendor's Solicitor, on receiving his instructions, must look out for the risk that it would be held that his client has incautiously entered into an open contract. If he in those circumstances acts in the perfectly normal way, as did the defendant's Solicitor, then if the argument for the plaintiff is right, he commits his client by signing a sufficient memorandum. If this were so, he must communicate with, the other Solicitor by telephone in the first instance, and subsequently by forwarding documents containing and accompanied by nothing which could be construed as a signature, warning in each case by telephone that when he receives by post, for example, a draft contract for the proposed sale from an undisclosed source it will be from him. If a decision in favour of the plaintiff would lead to this kind of farcical conduct, there would be in my view something wrong with the decision.

11

I add that argument for the plaintiff was based upon the decision of this Court in Griffiths v. Young (1970 Chancery, 675). In that case the plaintiff purchaser's Solicitor wrote on the 2nd May to the defendant's Solicitor setting out terms agreed between the clients, stating them to be subject to contract and seeking a draft contract. On the 3rd May it was proved that it was orally agreed by the clients and Solicitors that the contract should be absolute. On the 3rd May the defendant's Solicitor thereafter wrote referring to the letter of the 2nd May and confirming his instructions to sell. The letter of the 3rd May incorporating by reference the letter of the 2nd May was held to be a sufficient memorandum by the defendant notwithstanding the words "subject to...

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1 books & journal articles
  • RELEVANCE OF SUBJECT TO CONTRACT
    • Nigeria
    • DSC Publications Online Sasegbon’s Judicial Dictionary of Nigerian Law. First edition R
    • 6 February 2019
    ..."In Law v. Jones (1973) 2 All E.R. 437, it was decided by the Court of Appeal that the unilateral insertion of the words ‘subject to contract’ into correspondence between the solicitors acting for the parties did not negative the effect of any existing binding agreement, whether oral or wri......

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