The Gazette 1974

DECISION OF PROFESSIONAL INTEREST LAW v. JONES NOT FOLLOWED:

matter is not now proceeding, and shall be grateful if you would kindly return the papers." The purchasers solicitor replied on July 20 that "We are most surprised to learn that your instructions are that the matter is not proceeding. There is ample evidence that a contract was concluded between our clients. . . ." On August 28 he registered a caution at the Land Registy in favour of Wearwell. The vendors' solicitor applied by motion for an order that the entry of the caution be vacated. On October 3 Mr. Justice Goulding ordered that the caution be cancelled; the purchasers appealed. The appeal was expedited especially because of the importance of the case to the parties and to the profession. His Lordship rejected the procedural point taken by , Mr. Francis for the purchasers, that the court could not, or at any rate should not, use a motion so as summarily to vacate an entry before trial. The entry of a caution cast a dark shadow on the property. It paralysed deal- ings in it. No one would buy the property under such a cloud. The courts were masters of their own pro- cedure and could do what was right, and if it was drawn to the court's attention that a caution had been entered when it ought not to be then the court could order it to be vacated forthwith. ^ Did writing satisfy Statute of Frauds? The point of substance was whether there was any writing sufficient to satisfy the Statute of Frauds, now section 40 of the Law of Property Act, 1925. There were two lines of authority to be considered. According to the one line, in order to satisfy the Statute, the writing must contain, not only the terms of the contract, but also an express or implied recognition that a contract was actually entered into. According to the other, it was not necessary that the writing should acknowledge the existence of a contract. It was sufficient if the con- tract was by word of mouth and that the terms could be found set out in writing without any recognition whatsoever that any contract was ever made. The first line of authority was derived from a pro- blem which arose under section 17 of the Statute of Frauds which required a writing in the case of the sale of goods over £10. It was plain from the decision > of the Court of Appeal in Thirkell v. Cambi ([1919] 2 KB 590) that it was essential that the writing should contain an admission of the existence of the contract and of all its terms, and it was not sufficient to satisfy the Statute if it failed to do so. The cases on sale of goods were of good authority in relation to the sale of land. Written offer accepted orally The other line was derived from a problem which arose when one party made an offer in writing which was accepted by the other party by word of mouth or by conduct. It had always been held that the party who signed the offer was bound by it; the contract . could be enforced against him, but he could not en- force it against the other. His Lordship could well understand the reason why the courts established that doctrine about a written offer. As the common la\V knew nothing of the doctrine of part performance the decisions about the acceptance of a written offer were very necessary to meet the justice of the case. In Reus v. Picksley ([1866] LR 1 Ex 343) Mr. 12

SOL I C I TORS' CL I ENTS ST I LL P ROT ECT ED Tiverton Estate; Ltd. v. Wearwell Ltd. (1974) 1 All E.R. 209. Before Lord Denning, Master of the Rolls, Lord Justice Stamp and Lord Justice Scarman. A solicitor's letter setting out the terms of an oral agreement made in respect of the sale of land "subject to contract" was not sufficient to satisfy the require- ments of section 40 of the Law of Property Act, 1925. Section 40 provides: "No action may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action is brought, or some note or memo- randum thereof, is in writing, and signed by the party to be charged, or by some other person thereunto by him lawfully authorised." The Court of Appeal dismissed an appeal by Wear- well Ltd., of Commercial Road, East London, from an interlocutory order by which Mr. Justice Goulding on October 3 directed that a caution registered by them in respect of Empire House, Stepney, should be cancelled and the entry on the register vacated. The Master of the Rolls said that on April 10 a differently constituted Court of Appeal decided Law v. Jones; [1973] 2 WLR 994). It caused consternation among solicitors. They had always understood that, on a sale of land, they could protect their clients by writing their letters "subject to contract". Law v. Jones shat- tered that belief. To the minds of solicitors, it virtually repealed the Statute of Frauds. It exposed their clients to liability even though there was nothing in writing which acknowledged the existence of a contract. Their Lordships were called on to reconsider that decision. Facts of Case Tiverton Estates Ltd. owned a leasehold property, Empire House, registered as a lease for 80 years from 1934, with Tiverton as proprietors. On July 4 there was a meeting between Mr. Israel, a director of Tiverton, and Mr. Nadir, a director of a public company, Wear- well. Mr. Nadir, in an affidavit, said that at that meeting they orally agreed on the sale of the property by Tiverton to Wearwell for £190,000 and made arrangements about the time when possession should be given of various parts. They shook hands on the deal and agreed to instruct their solicitors to confirm the sale. On that very day the solicitor for the purchasers wrote to the solicitor for the vendors : "Empire House : We understand that you act for the vendor in respect of the proposed sale of the above-mentioned property to our client, Wearwell Ltd., at £190,000 leasehold subject to contract. We look forward to receiving the draft contract for approval, together with copy of the lease at an early date." The next day Mr. Israel tele- phoned to Mr. Nadir about completion and also wrote confirming that "you agreed that the completion of the purchase of the property can take place as soon as possible". On July 9 the vendors' solicitor wrote to the purchasers' solicitor sending a "draft contract for approval". The vendors, however, decided not to go on with the sale, and on July 19 their solicitor wrote to the purchasers' solicitor saying "We understand that the