The court considered the nature of an option to buy land. Hoffman J said: ‘The granting of the option imposes no obligation upon the purchaser and an obligation upon the vendor which is contingent upon the exercise of the option. When the option is exercised, the vendor and purchaser come under obligations to perform as if they had concluded an ordinary contract of sale . . The exercise of an option is a unilateral act. It would destroy the very purpose of the option if the purchaser had to obtain the vendor’s counter signature to the notice by which it was exercised.’
The exercise of an option by notice does not make the notice a contract. The courts have moved away from construing an option as an irrevocable offer as opposed to a conditional contract which arises only when the grantee seeks to exercise unilaterally the option.
Hoffman J spoke as to the Law Commissions report leading to the 1989 Act: ‘The recommendation that contracts relating to land should be incorporated in a signed document which contains all the terms was, clearly, intended to promote certainty. There is no reason why certainty should be any less desirable in relation to arrangements for security over land than in relation to any other arrangements in respect of land. The present case itself illustrates the need to be able to identify the obligation which is to be secured. I do not find it surprising that Parliament decided to enact legislation which would be likely to have the effect of avoiding disputes on oral evidence as to the obligations which the parties intended to secure’.
Judges:
Hoffman J
Citations:
[1991] Ch 537, [1991] 1 All ER 600, [1991] 2 WLR 931
Statutes:
Law of Property Act 1925 40, Law of Property (Miscellaneous Provisions) Act 1989 2
Jurisdiction:
England and Wales
Cited by:
Cited – Irwin v Wilson and Others ChD 23-Feb-2011
The claimant sought a declaration that his contract for the sale of leasehold property to the defendants had been lawfully terminated by a letter from his solicitors. The defendants had moved in before completion, but the claimant found himself . .
Cited – United Bank of Kuwait Plc v Sahib and Others CA 2-Feb-1996
The bank appealed against a decision that the simple deposit of deeds with a bank did not take effect as an equitable charge.
Held: Depositing deeds with a bank is not sufficient to create a charge over them. The old law as to the creation of . .
Cited – Sharma and Another v Simposh Ltd CA 23-Nov-2011
The parties created an oral (and therefore void) contract for a development, the claimants paid a deposit, expressed to be non-refundable, and the defendant builders completed the building work. The buyers backed out. The developer now appealed . .
Lists of cited by and citing cases may be incomplete.
Land, Contract
Updated: 04 June 2022; Ref: scu.430311