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GAZETTE
MARCH/APRIL
1980
ing that the memorandum in writing must record a
completed agreement and all the terms thereof and must
"contain not only all the essential terms, but a recogni-
tion that a contract had been made". Mr. Justice
Hamilton also referred to the judgement of Mr. Justice
Kenny in the case of Law & Anor v. Robert Roberts and
quoted him "when a principal has entered into a binding
contract, neither he nor his solicitor can deprive it of the
binding effect by unilaterally treating the transaction
'subject to contract' " and again quoted from Mr. Justice
Henchy's judgement in Kelly v. Park Hall "we have
agreed terms subject to contract must be taken to mean
that the contract had been made, subject to its being
formalised in writing."
The view that the recent decisions represent a
departure from a previously understood position does not
stand up to examination. It is clear that the Irish Courts
have over the years, established a clear distinction
between the situation where, on the one hand, parties had
agreed on all the necessary terms for the sale of land or a
house and all that remained to be done was to reduce the
terms of the agreement into writing and the situation, on
the other hand, where the parties were still in negotiation.
If people have been surprised by the decisions, it can
only be because they were operating in the mistaken belief
that the addition of the words "subject to contract" to
correspondence had, of themselves, the magic effect of
denying the existence of a previously concluded verbal
agreement. This, of course, had not been the law in
Ireland and the Courts have now confirmed in a series of
cases that the use of these words would have no effect if
there had been a previously concluded verbal agreement,
but would be of significance if the parties were still in
negotiation.
The decisions serve as timely reminders to those
engaged in the sale of property, whether as principals or
agents, of the necessity of ensuring that the parties to any
proposed sale are clear at all stages as to precisely how
far they are committed. It is difficult to avoid the
conclusion that the vendor frequently attempts to ensure
that the purchaser will be bound by an offer which he has
made, but that the vendor is still free to consider other
offers. If a vendor wants to remain in that position, it is
difficult for him to do so unless it is made clear to the
purchaser that the vendor still regards himself as free to
consider other offers up to the time of his accepting the
purchaser's offer. Such a stance may, of course, meet
with substantial sales resistance from a purchaser, parti-
cularly if it has been indicated to him that the vendor is
prepared to sell at a particular price and the purchaser
offers that price. Persons acting as agents for vendors (or
purchasers) are well advised to ensure that their clients
clearly understand that they will be bound by any figures
at which they agree to sell (or buy), following
negotiations.
The writer does not see why parties should not expect
to be bound by bargains which they had reached. The
constant thread running through the cases which have
come to the Courts is one of a vendor who thought he got
the best price obtainable and agreed to sell, but
subsequently had succumbed to the temptation to try to
accept a higher offer. It would be difficult to justify any
change in the law which would improve the position of
such a party.
In the discussion session which followed, the queries
raised fell under four main headings:
(1) As to when an agreement between the parties existed;
(2) As to what was the meaning of "in writing";
(3) As to the question of the authority of a solicitor or
other agent to bind his principal;
(4) As to the nature and effect of "booking deposits".
(1) Agreement between the Parties
The absence of some normal terms of a contract for
sale, such as a closing date, does not mean that there
could not be said to be an agreement between the parties.
This is one of the terms which a Court would be willing to
imply and a reasonable closing date would be fixed by a
Court.
It is very doubtful, however, whether the Court would
imply the terms in a lease. The Supreme Court has
confirmed that the date of commencement of a lease must
be either stated or ascertained before there could be a
binding agreement.
The only way to keep the position open is by making it
clear in negotiations that they are only negotiations and
are subject to contracts being signed, preferably
exchanged, and a deposit paid.
(2) "In Writing"
A solicitor will find it difficult to protect his client, and
indeed himself, against providing the necessary evidence
in writing by merely sending out a draft contract. The
Supreme Court has held in the Park Hall case that the
attempted imposition, by solicitors for a vendor of a new
term of the contract by seeking the return of the contract
within a specified period, was not permitted. The most a
solicitor can do is to send out a covering latter which, by
its wording, indicates that the parties are still in negotia-
tion, but there can be no guarantee that this will succeed.
Even if no covering letter is sent, there must clearly be a
danger that the mere sending of the draft contract, with
the parties names on it, or the solicitors' names, might be
held to be sufficient. In the Irish Intercontinental Bank,
case the auctioneer's headed notepaper has been held to
be sufficient.
The use of the words "without prejudice" has to be
rejected because the mere use of these words does not, of
itself, give any protection to the letter. Letters are only
truly "without prejudice" if they are written with the
purpose of trying to settle or resolve a dispute. It can
hardly be suggested that letters sending out a draft
contract for the sale of a house should fall into that
category.
(3) Authority
The position regarding the authority of a director or an
employee of a body corporate to bind it presents
particular problems and must largely depend on the
potition in individual cases; it is suggested, for example,
that a director of a company whose principal purpose is
dealing in land could hardly avoid the allegation that he
had appropriate authority.
On the question of solicitors' liability, an extract from
the judgement of Mr. Justice Kenny in Law & Another v.
Robert Roberts, where he adopted the view expressed by
Mr. Justice Murnaghan in Kearns v. Manning that
"comparatively slight evidence, in accordance with
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