Stobo Ltd v Morrisons (Gowns) Ltd
| Jurisdiction | Scotland |
| Judgment Date | 27 January 1949 |
| Date | 27 January 1949 |
| Docket Number | No. 22. |
| Court | Court of Session (Inner House - First Division) |
1ST DIVISION.
Heritable PropertySale of heritageConstitution of contractMissivesOffer accepted "subject to contract"Whether a concluded agreement.
S. and M., tenants respectively of two shops which the landlord desired to sell, came to an arrangement whereby M. was to offer to buy both shops and, if M.'s offer was accepted, S. would then buy from M. the shop which S. presently occupied as tenant. The arrangement between S. and M. was embodied in two letters, viz., (1) a probative offer by S., which specified the subjects, price, term of entry, and a proportionate allocation of burdens, and (2) an acceptance by M., which was improbative and was expressed as being "subject to contract." M.'s offer having been accepted by the landlord, and M. having subsequently refused to implement his arrangement with S., S. brought an action against M. for specific implement of the contract set forth in the two letters, and made relevant averments to the effect that the contract, although defective in execution, had been set up byrei interventus.
Held that, where the words "subject to contract" appear in missives, they have no technical meaning but are open to construction, and that in the present case, more especially as they were used in an improbative document, they were suspensive of obligation; and that, accordingly, there was no concluded agreement which could be set up by rei interventus.
Per Lord President Cooper:"The only rules of Scots law which it appears to me to be possible to extract from past decisions and general principles are that it is perfectly possible for the parties to an apparent contract to provide that there shall be locus pnitenti until the terms of their agreement have been reduced to a formal contract; but that the bare fact that the parties to a completed agreement stipulate that it shall be embodied in a formal contract does not necessarily import that they are still in the stage of negotiation. In each instance it is a matter of the construction of the correspondence in the light of the facts, proved or averred, on which side of the border line the case lies."
Stobo, Limited, brought an action in the Sheriff Court at Glasgow against Morrisons (Gowns), Limited, in which they craved of the Court "to grant a decree ordaining the defenders to deliver to the pursuers a valid disposition in their favour of that shop, forming number 66 Renfield Street, Glasgow, presently occupied by the pursuers; and, on such delivery having been made, to grant warrant to the defenders to uplift the sum of 7500 sterling consigned by the pursuers in the hands of the Sheriff Clerk. "
The parties averred, inter alia:(Cond. 1) "The pursuers are a limited company duly incorporated, and carry on business as retail tobacconists at, among other places, 66 Renfield Street, Glasgow, of which shop they are now and have for some years been the tenants. The defenders are a limited company duly incorporated and carry on business through associated companies as retailers of ladies' clothing at, among other places, 66A Renfield Street, Glasgow, of which shop they were formerly tenants and are now proprietors. " (Cond. 2) "On or about 12th February 1947 Mr Birrell, pursuers' managing director, ascertained that the two shops 66 and 66A Renfield Street, Glasgow, then tenanted by the pursuers and by defenders or by a subsidiary company of the defenders respectively, had been offered for sale by the owners of them to defenders, and, on taking steps to verify this, pursuers were informed by the solicitors acting for the owners that this was so and that the price of the shops was 16,000." (Cond. 3) "Thereafter on or about 13th February 1947 Messrs Archibald Sharp & Son, solicitors, Partick, on the instructions of the pursuers got in touch by telephone with Mr Easterman, one of the defenders' directors, and informed him that in the event of defenders purchasing the two shops pursuers would be interested in buying the shop occupied by them at a price based on the relative size of the two shops, and it was arranged that Mr Birrell as representing pursuers should meet Mr Easterman that afternoon to discuss the position more fully. The meeting duly took place, the pursuers being represented by Mr Birrell and the defenders by Mr Easterman and Mr Morrison, and after discussion it was agreed that an offer should be made for the two shops, and that, in the event of the purchase being made, the pursuers would buy the shop number 66 at a price proportionate to the size of that shop, number 66A being the bigger shop of the two. It was further agreed that an effort should be made to buy the shops at a less figure than the 16,000 asked by the sellers, and that 14,000 should be offered. With reference to the defenders' averments in answer it is admitted that the pursuers relied upon the defenders to conduct the negotiations for the purchase of the property. Quoad ultra the defenders' averments in answer are denied in so far as not coinciding herewith. Explained that from the outset and in particular at the said meeting it was clearly known to the defenders that the said basement was being retained by the sellers and was not included in the offer made by the proprietors to the defenders. At no time was there any question of the basement being included in the transaction." (Ans. 3) "Admitted that a meeting between a representative of the pursuers and a Mr Easterman and a Mr Morrison took place on or about 13th February 1947. This was an informal meeting at the time of which the price of said shop had not been ascertained nor was it known whether the basement of said premises was included in the tentative and exploratory discussion on the possibility of sale of said shop. The position regarding said basement was a matter of importance to the defenders as influencing the space available to them for the purposes of their use of said premises in the event of their purchasing them. At said meeting the said Mr Birrell indicated pursuers were interested in offering for said shop number 66 Renfield Street, and there was some discussion on its potential value. Neither at this time nor at any other time did the pursuers take any part in the negotiations regarding the sale and purchase of said premises, such negotiations being conducted solely between the defenders and the agents for the sellers. No agreement was reached as to the pursuers purchasing said shop number 66 Renfield Street in the event of it being purchased by defenders, nor was it agreed that the pursuers, who were free to offer on their own behalf, should be represented in the negotiations by the defenders. At this time the defenders were without knowledge as to whether or not the basements were included in the subjects for sale, but were contemplating at that stage that they would acquire them in the event of a sale being completed. It was not until a considerable time afterwards that the defenders were finally and definitely...
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