Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 imposes strict requirements that affect contracts to buy and sell land. They must be made in writing, must incorporate all the terms that have been expressly agreed, and must be signed by or on behalf of the parties. It pays to observe these formalities; contracts that do not comply with the requirements are void.
Marlbray Ltd v Laditi [2016] EWCA Civ 476; [2016] PLSCS 151 concerned the validity of a contract that was signed at a sales fair, which was held to whip up interest in rooms in a hotel that had not yet been built. The contracts signed at the fair required the buyers to pay an initial deposit on the day, to make further substantial payments at agreed intervals, and to pay the balance due and accept a 999 year lease of a room in the hotel when it was built.
Some of those who signed up at the fair had second thoughts. However, the High Court upheld all but one of the contracts: Rabiu v Marlbray Ltd [2013] EWHC 3272 (Ch); [2013] PLSCS 261. The document that was found wanting was signed by one of two joint purchasers, purportedly on behalf of them both. Was it “void”, “invalid” or “unenforceable” because the individual who did sign the contract lacked authority to sign on behalf of his wife or, alternatively, because the document had not been signed by all the parties and, therefore, did not comply with the requirements of section 2?
The Court of Appeal ruled that the question of whether or not a valid contract has come into force as between A and B, both of whom have signed a contract, notwithstanding that C has not done so, will depend on the common intention of the parties ascertained from the circumstances surrounding the transaction. To put the question in another way: was the husband’s agreement to execute and his execution of the contract expressly or impliedly conditional upon his wife signing the agreement as well?
The court noted that the contract imposed joint and several obligations on the buyer. This indicated that the parties described as the buyer were not to be treated as one “composite” purchaser. Indeed, the seller could, if he chose, sue both parties in one action under their joint contract, or bring separate actions against either of the parties named as “the buyer” in respect of their several obligations under their several contracts.
Lady Justice Gloster went on to explain that the husband was entitled to call for the grant of a lease to himself and his wife under the terms of his several contract and that it was not necessary for the wife, as the proposed co-tenant, to be a party to her husband’s several contract for the purposes of section 2. Therefore, the requirements of section 2 had been met and the husband was bound by his contract – even though the wife was not.
Her Ladyship added that it would make a mockery of section 2 if the husband could rely on technical arguments to escape from his obligations under his several contract in circumstances where the failure to obtain his wife’s authority to sign the contract was entirely his. It is hard to disagree.
Allyson Colby is a property law consultant
