The Gazette 1973

acting within his authority, that the parties had entered into a new contract on the terms of the draft contract save for the alteration of the purchase price. That acknowledgment was not expressed to be "subject to contract" and any effect which that qualification in the letter of February 17 had had on the earlier corres- pondence was nullified by the firm oral agreement between the parties on March 13. Since the terms of the oral agreement were to be found incorporated in the letter of March 17 read with the earlier corres- pondence, and the draft contract, with which it was linked, those documents contained a note or memoran- dum of the oral agreement of March 13 within the meaning of S 40 (1). Griffiths v. Young (1970) 3 All ER 601 applied. Appeal By a writ issued on 25 April 1972 the plaintiff, Joseph Law, brought an action against the defendant, Stuart Martin Jones, claiming (i) an injunction re- straining the defendant from selling or otherwise dis- posing of the defendant's freehold dwelling-house known as Dingleberry Cottage, Yarningale Common, Claverdon, Warwickshire ("the cottage") except to the plaintiff; (ii) specific performance of an agreement by the defendant to sell the cottage to the plaintiff and (iii) damages for breach of contract. By his defence the defendant denied that there existed a binding contract to sell the cottage to the plaintiff and, in the alternative, relied on the procisions of S 40 of the Law of Property Act 1925 and denied that letters, correspondence and a draft conveyance which had passed between the de- fendant's and plaintiff's solicitors or any of them con- stituted a note or memorandum of the alleged con- tract. The defendant counterclaimed for a declaration that there was no binding contract between the plain- tiff and the defendant for the sale of the cottage and an order that the registration of a class C(iv) land charge in respect of an estate contract between the plaintiff and the defendant which the plaintiff had caused to be registered in the register of land charges be vacated. On 27 July 1972 Ungoed-Thomas J granted the plaintiff the decree of specific performance sought and dismissed the defendant's counterclaim. The de- fendant appealed. Stamp) decided that the April ruling—Law v. Jones— was wrong. They held that an oral agreement to sell a leasehold property for £190,000 was not binding because there was no written contract when the seller decided not to go ahead. Normally the Court of Appeal is bound to follow its own decisions but there is an exception where it has previously given inconsistent rulings, in which case it can select from among them. The three judges agreed that the decision in April was inconsistent with certain nineteenth century decisions and that the old cases should be preferred. It is virtually unheard of for the Court of Appeal to reverse itself on an important matter within a few months. But in this particular case the legal profession will breathe a considerable sigh of relief. It is still, how- ever, theoretically possible that the April decision will be restored, because leave to appeal to the House of Lords was granted. [The Guardian, 22 /11 /1973) 237

Again the agreement was oral but it was intended to be binding; the defendant assured the plaintiff that he would not go back on his word. On March 17 the defendant's solicitors wrote a letter to the plaintiff's solicitors in which they said : "We understand that an increase in the consideration has been mutually agreed and we shall therefore be obliged if you would amend the Contract in your possession to read a purchase price of £7,000". Subsequently a date for completion was agreed and on that date the plaintiff's solicitors for- warded the purchaser's part of the contract signed by the plaintiff. The defendant, however, believing that he could obtain a better price elsewhere, refused to complete. In an action for specific performance the defendant claimed that the contract of March 13 was unenforceable on the ground that the relevant corres- pondence and the draft contract were incapable of constituting a "note or memorandum" of the contract for the purposes of S 40 (1)* of the Law of Property Act 1925 since they did not look back to a concluded oral contract, but related exclusively to a different written contract to be concluded in the future. Held, by the Court of Appeal (Buckley and Orr L.JJ, Russell L J disenting) : The contract was enforce- able for the following reasons— (i) Where an oral contract for the sale of land had been proved, it was sufficient, for the purposes of S 40 (1) if the note or memorandum recorded the terms agreed on; it was not necessary that the note or memorandum should itself acknowledge the existence of the contract unless, in the absence of such an acknow- ledgment, the document would be read as denying the existence of the contract. (ii) Where a document contained the words "sub- ject to contract", it was open to the parties' subse- quently to waive that stipulation orally, thus creating a contract. In such a case the document might there- after serve as a sufficient note or memorandum if the waiver could be established by oral evidence. (iii) Even if the insertion of the words "subject to contract" by the defendant's solicitors prevented the letter of 17 February and the subsequent correspon- dence up to March 13 from constituting a note or memorandum, the letter of March 17 was a written acknowledgment signed by the defendant's solicitor, The rule established in Law v. Jones by the Court of Appeal in April that buyers and sellers of houses can be legally bound by an oral agreement was overturned yesterday—by the Court of Appeal. The April ruling had caused consternation within the legal provession. It decided that an oral agreement was binding even if the magic words "subject to con- tract" were included. These words have for more than a century been understood to mean that there was no binding agreement until formal written contracts had been exchanged. On this basis, when a buyer and a seller agree orally subject to contract each has been free to investigate further. The buyer has the property surveyed and gets his solicitor to discover whether, for instance, there is any plan to build a motorway through the back garden. Yesterday a differently-constituted Court of Appeal (Lord Dunning, with Lords Justices Scarman and

COURT THROWS OUT OWN RULING (Tiverton Estates v. Wearwell).