Finance company — Breach of contract — Appellant lender agreeing to provide bridging finance for purchasing property — Appellant failing to provide finance — Respondent buyer unable to complete purchase — County court awarding damages for consequential loss — Whether judge erring in concluding that finance contract enforceable — Appeal dismissed
In 2002, the respondent property developer purchased houses in a terrace. The following year he had the opportunity to purchase the remaining two houses for £117,000 each. Following discussions, the appellant finance company wrote two letters dated 10 December 2003, one for each property, agreeing to provide bridging finance for the purchase “subject to our formal terms and conditions”.
This was followed by a document headed “Facility Letter”, which contained terms and conditions for the facility being offered in the letters. The facility was stated to be available on or before 31 December 2003.
The respondent subsequently brought an action for breach of contract and misrepresentation against the appellant for failing to supply the promised finance, as a result of which he had suffered loss. The county court gave judgment in his favour for £15,000 and interest of £1,500. The appellant appealed.
The question for the Court of Appeal was whether the judge had erred in law or in fact in failing to hold that the contract between the parties was unenforceable by virtue of section 2 of the Law of property (Miscellaneous Provisions) Act 1989, which required the parties to put all the terms expressly agreed into a single document.
The respondent relied upon section 2(2) of the Act which expressly contemplated that one document might incorporate the terms of a second document by reference.
Held: The appeal was dismissed.
In the circumstances of the case, section 2(2) of the Act applied and the judge had not erred in not holding that the section invalidated the contract. All that had been agreed between the parties had been put into either the letter of 10 December or the terms and conditions that were referred to in that letter. Although the agreement between the parties was contained in two documents, the letter of 10 December was the contract for the purposes of section 2 and it was incorporated into the terms and conditions set out in the draft facility letter: First Post Homes v Johnson [1996] 1 EGLR 175; [1996] 13 EG 125 considered.
Furthermore, the fact that the respondent still sought finance after the 31 December deadline did not mean that there must have been a variation not reflected in the contract, contrary to section 2. It was clear from the judge’s findings that there had been no express agreement to vary the terms stated in the 10 December letter.
The appellant lender had agreed to waive the term requiring the facility to be made available by 31 December 2003. It was entitled to do so because of the terms inserted for its benefit as lender. However, since no express agreement to vary the contract had been made, section 2 did not invalidate what had happened. Section 2 did not in fact apply to that act of the lender, but only to the terms agreed between the parties. It was only those terms that section 2 required to be inserted into the contract between the parties: McCausland v Duncan Lawrie Ltd [1996] 4 All ER 995 distinguished.
Hashim Reza (instructed by Dass Solicitors, of Birmingham) appeared for the appellant; Nicholas Bard (instructed by Richards Solicitors) appeared for the respondent.
Eileen O’Grady, barrister