The Gazette 1979

GAZETTE

MARCH 1979

When is a Contract?

JOHN F. BUCKLEY, Solicitor

In the Casey and Irish Intercontinental Bank case, the owners were again in financial difficulties having given an equitable mortgage of their lands to the Northern Bank and subsequently given a legal mortgage and a power of attorney to Irish Intercontinental Bank under which Irish Intercontinental could sell the lands. Once again the Defendants were being pressed by their Creditors and they decided to sell the lands by Auction. The Auction was held but the highest bid was £86,000.00 and the owners would not accept this but the Plaintiff who had attended the Auction, sometime afterwards contacted the Auctioneer and indicated that he was still interested in buying the lands. The Auctioneer asked him for £150,000.00 but the Plaintiff would not go beyond £110,000.00 which the Auctioneer agreed on Friday, 30th January to put to the owners and if they accepted it they would get authority to sign a Contract. So the next day (Saturday) he telephoned the Plaintiff and said "You are the owner of Park House. The farm is yours", and it was arranged the Plaintiff would come into the Auctioneer the following Monday to sign the Contract and pay the deposit. When the Plaintiff came in, the Auctioneer decided to get a form of Contract signed by the Plaintiff and he directed his Typist to type it on the Firm's headed paper and the material terms of it were: 1, Patrick Casey, Gurrane House, Dunoughmore agree to purchase Park House and lands for £110,000.00 subject to contract and title. I agree to pay £25,250.00 as deposit. Patrick Casey. Director: A. B. O'Keeffe J. L. O'Sullivan the names of the two Directors and the heading being printed and the typed agreement was then signed by Mr. Casey. The words "subject to contract and title" had not been used during the meeting on Friday or the telephone conversation on Saturday between the Plaintiff and the Auctioneer. The Supreme Court held that the conversations between the Auctioneer and the Plaintiff on Friday, 30th and Saturday, 31st January constituted a contract by the Plaintiff to buy and by the Owners to sell the property to the Plaintiff for £ 110,000.00 and that the words "subject to contract and title" were not introduced until the 2nd February when an oral contract had already been made. The Court also held that when the Party to be charged has written or dictated a document on paper which has his name printed on it he should be regarded as having adopted the printed name as his signature and so shall be regarded as having signed the document. In fact, in this case, it was also held that a second oral contract in favour of the Plaintiff also existed because in April 1976 the owners not being willing to complete the sale with the Plaintiff, the Banking Manager of Irish 37 O'KEEFFE & O'SULLIVAN LIMITED Auctioneers, Valuers & Estate Agents

The recent decisions of the Supreme Court in the cases of Patrick Kelly v. Park Hall School Limited and Patrick Casey v. The Irish Intercontinental Bank Limited & Others have caused great ripples of concern to run through the ranks of Conveyancing Practitioners. As is so pften the case a consideration of the text of the judgments •n the two cases reveals that there is little that is revolutionary about the two decisions, following, as they do the path of similar decisions both in English and Irish Courts, though there are aspects of them which certainly nay cause concern to Auctioneers or others directly engaged in the sale of land on behalf of the owners. It is significant that in each of the two cases the Note or Memorandum in writing, which the Supreme Court held to be sufficient evidence of a previously concluded oral agreement, so as to entitle the Plaintiff in each case to an order for specific performance, originated with the Auctioneer. It may be helpful if a brief resume of the facts in each of the cases is given, when it will appear that there were unusual circumstances in each of the two cases which helped the Court to come to the conclusion that there was a clear agreement reached between the parties of which the Note °r Memorandum in writing was evidence. In the Park Hall case the Defendants were in severe financial difficulties and their Bankers were pressing them to re duce their overdraft and while they had applied for Planning permission for a 5 j acre plot of land they were under such pressure that they decided to sell the property Without waiting for a decision on the Application for Planning Permission. Patrick Kelly was a Builder who uad bought adjoining lands, held under the same title, from the Defendants at an earlier stage and he was anxious to acquire the rest of the land. He made an offer of f 175,000.00 to the Estate Agents who had been •nstructed to find a buyer and the Agents reached an oral agreement with Mr. Kelly for the sale of the lands to him. Subsequently the Agents wrote to a Financial Adviser to fhe Defendants setting out the principal terms to be •ncluded in the contract, referring to the lands, to the Purchaser, to the proposed price and setting out Particular terms relating to the deposit. There was a delay ln getting a suitable map prepared and it was almost a J^onth later before the Defendants' Solicitors sent out a 'etter with a draft Contract to the Plaintiffs Solicitors ^hich attempted to impose a condition that the "offer" h ad to be accepted by the Plaintiff within seven days, ^hich "offer" in the event did not reach Mr. Kelly in time ,( J r him to accept it. The Supreme Court held that ^though the letter from the Agent to the Financial Adviser indicated that the sale had been agreed "subject 10 contract", the Trial Judge having held that the oral a & r eement recorded in the letter was a completed agreement the sense that nothing further was left to be negotiated, ne words "we have agreed, subject to contract" in the et ter had to taken to mean that a contract had been made ub Ject to its being formalised in writing.