Smith v Morgan: ChD 1971

The plaintiff sold property to the defendant, covenanting not to sell a piece of adjoining land without giving the defendant: ‘the first option of purchasing . . at a price to be agreed upon provided that any such offer for sale shall only remain open for a period of three months from the date on which the said offer for sale is made open by the vendor’. The plaintiff wished to sell the land to someone else. She issued an originating summons seeking to escape her obligations under this provision, suggesting that the provision was not legally binding, since it did not state a price or a method of determining a price, and that it was merely an agreement to agree.
Held: There was no uncertainty as there was agreement that there would be an offer to sell the land should the vendor decide that they wanted to sell. There was no need for the price to be agreed upon, or for a mechanism for determining the price to be agreed upon, because the agreement was simply that an offer for sale would be made.
Brightman J rejected the argument that the provision was a mere agreement to agree: ‘[the] obligation on the vendor, should she wish to sell, is an obligation to make an offer to the purchaser at the price and at no more than the price at which she is, as a matter of fact, willing to sell.’ In putting forward a price, the vendor was obliged to act in good faith: ‘The plaintiff must, of course, act bona fide in defining the price to be included in the offer. It is a matter of fact. If the plaintiff is proposing to sell by auction, the price to be specified in the offer to the defendant would be the intended auction reserve. If she is proposing to sell by private treaty the price to be specified in the offer would be the price intended to be named in the estate agent’s particulars, or the lower price, if any, to which the plaintiff is, as a matter of fact, prepared to descend on such a sale.’

Judges:

Brightman J

Citations:

[1971] 1 WLR 803, [1971] 2 All ER 1500

Cited by:

CitedFraser v Thames Television Ltd QBD 1984
Three actresses, an all girl group called ‘Rock Bottom’ and their composer and manager developed an idea for a television series based on the group and their lives. The television company’s head of drama said she would commission a pilot script. . .
Lists of cited by and citing cases may be incomplete.

Land, Contract

Updated: 04 May 2022; Ref: scu.540360