P verbally agreed to buy an inn from D. On the next day D told his solicitors that he had entered into a verbal arrangement for the sale and instructed them to prepare an agreement. On the same day they forwarded a draft formal contract to P’s solicitors under cover of a letter which said: ‘[D] has been with us today, and stated that he had arranged with your client [P] for sale to the latter of the Golden Lion for andpound;950. We therefore send herewith draft contract for your perusal and approval.’
Held: This was insufficient as a note or memorandum. James LJ held that the only authority given to the solicitor was to prepare a formal document. Even if the letter had said that D had ‘told us that he has sold the property to you for andpound;950’ this would merely have been the communication of a fact. The signature would not make it a binding memorandum, not being affixed eo intuitu. The draft sent was not the same contract as had been agreed and a statement of the reason why it was being sent was not a memorandum signed by someone authorised by the person interested to sign it as binding.
Bagallay LJ regarded the agreement reached as conditional upon a formal contract and said that the authority conferred on the solicitor by D was not authority to convert it into an absolute agreement.
Lush LJ held that in order to satisfy the statute a note or memorandum must be one which the principal had authorised the agent to sign as a record of the transaction and that the authority actually given to the solicitors was merely to prepare a formal draft contract to be sent to the other side for perusal and approval.
Judges:
James LJ, Bagallay LJ and Lush LJ
Citations:
[1876] 3 Ch D 49
Jurisdiction:
England and Wales
Cited by:
Limited – John Griffiths Cycle Corporation, Limited v Humber and Co, Limited 1899
Smith v Webster was not to be taken as meaning that the agent must have had authority to sign the document as a record of the contract. All that Smith v Webster decided was that, in order to satisfy the Statute, it must be shown that the agent . .
Cited – Golden Ocean Group Ltd v Salgaocar Mining Industries Pvt Ltd and Another ComC 21-Jan-2011
The defendants sought to set aside orders allowing the claimants to serve proceedings alleging repudiation of a charterparty in turn allowing a claim against the defendants under a guarantee. The defendant said the guarantee was unenforceable under . .
Lists of cited by and citing cases may be incomplete.
Contract, Land
Updated: 07 October 2022; Ref: scu.430066