The parties entered into a written contract for the sale of land which, in error, provided for completion on a Sunday. The parties varied the date to the Friday but did not execute a new contract which would comply with section 2(1) of the 1989 Act. Time was not initially of the essence of the contract.
Held: The variation was invalid, but the original contract, as unvaried, remained in force. A variation of a contract for the sale of land under the new Act must itself comply with the formalities of the Act if it is to be applied. Section 2 is an entirely new provision which marks a radical change in the law.
Morritt LJ said that estoppel may be available. The contractual date for completion was a material term, if only because it specified the time from which one or other party was entitled to serve a notice to complete and make time of the essence: ‘the choice lies between permitting a variation, however fundamental, to be made without any formality at all and requiring it to satisfy Section 2. In my view it is evident that Parliament intended the latter. There would be little point in requiring that the original contract comply with Section 2 if it might be varied wholly informally. Further the respect in which the Act differs from the Bill proposed by the Law Commission indicates that Parliament intended more, rather than less, formality than that recommended by the Law Commission.’ and ‘The reasons for the recommendation were to avoid the uncertainties arising from the doctrine of part performance, to ensure mutuality between both parties to the contract and to avoid the continuing uncertainty surrounding the operation of Section 40 Law of Property Act 1925 notwithstanding its long history’
Neill LJ said: ‘It seems to me to be clear that Parliament intended to introduce new and strict requirements as to the formalities to be observed for the creation of a valid disposition of an interest in land. Under Section 2 all the terms of the contract have to be incorporated in the signed document. Counsel for the plaintiffs was correct when he submitted that the formalities prescribed by Section 2 have to be applied to the contract as varied. ‘
Neill LJ, Morritt LJ
Times 18-Jun-1996, Gazette 10-Jul-1996, [1996] 4 All ER 995, [1997] 1 WLR 38
Law of Property (Miscellaneous Provisions) Act 1989 2
England and Wales
Citing:
Applied – Morris v Baron and Co HL 1918
The House drew a distinction between a variation of a contract required to be evidenced in writing, and the rescission (or discharge) of such a contract. The former was itself required to be evidenced in writing; the latter was not.
Lord . .
Cited – Williams v Moss Empires Ltd ChD 1915
The court considered what was necessary to achieve a variation of a contract. Shearman J: ‘The principle . . is that where there is alleged to have been a variation of a written contract by a new parol contract, which incorporates some of the terms . .
Cited by:
Cited – Yaxley v Gotts and Another CA 24-Jun-1999
Oral Agreement Creating Proprietory Estoppel
The defendant offered to give to the Plaintiff, a builder, the ground floor of a property in return for converting the house, and then managing it. They were friends, and the oral offer was accepted. The property was then actually bought in the name . .
Cited – Bankers Trust Company v Namdar and Namdar CA 14-Feb-1997
The bank sought repayment of its loan and possession of the defendants’ property. The second defendant said that the charge had only her forged signature.
Held: Non-compliance with section 2 of the 1989 Act does not make a bargain illegal, and . .
Cited – Jelson Ltd v Derby City Council ChD 30-Jun-1999
Agreements under the planning acts remained subject to the general law requiring formalities for contracts for the sale of land. Where two landowners had an understanding as to the expectations for the division of responsibility for provision of . .
Cited – Nweze and Another v Nwoko CA 29-Mar-2004
The parties had settled their dispute in an oral compromise agreement under which it was agreed that land would be sold at the best price reasonably obtainable. One now argued this was unenforceable as an agreement for the disposal of land requiring . .
Cited – Kilcarne Holdings Ltd v Targetfollow (Birmingham) Ltd, Targetfollow Group Ltd ChD 9-Nov-2004
The defendant entered into an agreement for lease, incurring substantial obligations. When it could not meet them it sought assistance from the claimant, who now claimed to have an interest in a joint venture. The draft documentation originally . .
Cited – Courtney v Corp Ltd CA 1-Mar-2006
The claimants sought to enforce an offer of finance to support a land purchase. The defendants argued that the offer failed to meet the characteristics required under section 2 of the 1989 Act.
Held: The judge had been correct to say that the . .
Cited – Eyestorm Ltd v Hoptonacre Homes Ltd CA 19-Dec-2007
The appellant had agreed to take leases on a development of the defendant, hoping to sell the apartments on at a profit. After difficulties, the appellant refused to complete, and the defendant forfeited the deposits.
Held: Eyestorm’s appeal . .
Cited – Oun v Ahmad ChD 19-Mar-2008
The parties agreed in writing for the sale of leasehold property to the claimant. One document had been signed, but later one said that it had not included an aportionment. Another document then set out the apportionment. When the defendant refused . .
Cited – Rudra v Abbey National Plc and Stickley and Kent (Risk Management Unit) Limited CA 26-Feb-1998
The parties disputed whether a contract had been entered into for the sale of land, and whether new evidence could be entered on an appeal against a strike out. The estate agents had signed a contract as agents for the mortgagee in possession, but . .
Cited – Milebush Properties Ltd v Tameside Metropolitan Borough Council and Others ChD 13-May-2010
The claimant sought a delaration that it had a right of way over an access road. The defendants said that the agreement fell foul of the 1989 Act.
Held: The claimant was not entitled to the declaration. Agreements under the 1990 Act are . .
Cited – H L Estates Limited, Wynford Newman Dore v Parker-Lake Homes Limited ChD 20-Mar-2003
. .
Cited – Graham and others v Mayrick ChD 23-Mar-2006
The claimants sought specific performance of a compromise agreement with the defendant after a dispute over a strip of land. The defendant appealed a finding that the claimants had shown satisfactory title.
Held: ‘It has long been established . .
Cited – Urban Manor Limited v Sadiq CA 20-Feb-1997
Appeal by prospective purchaser of property from order that contract rescinded, and deposit forfeited. . .
Cited – Yaxley v Gotts and Gotts CA 20-Mar-1998
The defendants were granted leave to appeal out of time. . .
Lists of cited by and citing cases may be incomplete.
Land, Contract
Leading Case
Updated: 31 October 2021; Ref: scu.83509