The Gazette 1979

GAZETTE

MARCH 1979

When is a Contract?

JOHN F. BUCKLEY, Solicitor

The recent decisions of the Supreme Court in the cases of

Patrick Kelly

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

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

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"

ad to be accepted by the Plaintiff within seven days,

^hich "offer" in the event did not reach Mr. Kelly in time

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

contract", the Trial Judge having held that the oral

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

ter had to taken to mean that a contract had been made

Ject to its being formalised in writing.

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:

O'KEEFFE & O'SULLIVAN LIMITED

Auctioneers, Valuers & Estate Agents

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