Parties negotiating contract for property rental — Defendant withdrawing from negotiations at late stage — Whether parties entering into oral contract — Whether defendant estopped from resiling from contract Claim dismissed
The claimant held an interest in a Grade II listed property, consisting of a house and various outbuildings. It was developing the property for sale and, as an interim measure, it occasionally rented out the property for filmwork and other purposes. The defendant company was seeking a property to be used for the filming of a television programme, Fame Academy, in which participants lived and worked together for a considerable period of time. The parties entered into negotiations for the use of the house. At the same time, the defendant was negotiating for the use of another property, which it eventually decided to use.
The claimant contended that the parties had entered into a binding contract. This was based on an oral agreement allegedly made during a meeting at the culmination of which the parties shook hands on an agreed deal, and the subsequent signing of a faxed draft agreement. The claimant further maintained that the defendant was estopped from denying the contract since, as a result of that agreement, the claimant had acted to its detriment by clearing the outbuildings, altering the domestic cooking arrangements, recommissioning the entrance gates, and postponing or limiting the sales marketing. It sought damages in the sum of £185,000, plus VAT, as representing the lost rental income for the period. The defendant argued that even if there had been an ostensibly complete and binding agreement, which it disputed, the contract was invalid because it did not comply with the provisions of the Law of Property (Miscellaneous Provisions) Act 1989.
Held: The claim was dismissed.
Although the disputed handshake at the culmination of the meeting might have served a symbolic function, given the lack of certainty between the parties as to the terms and conditions of any arrangement, in particular the lack of an end date for the period of occupation, the parties could not be said to have entered into an oral contract at that stage.
The defendant had been disingenuous in leading the claimant to believe that it had intended to proceed with the arrangement, when in fact it had been completing negotiations on another property. However, it had not entered into any formal agreement. The agreement signed by the claimant had been clearly marked as a draft, and did not include plans and schedules identified in the body of the document. It contained numerous manuscript notations and other marked alterations, and the terms were not put forward as an offer capable of acceptance. In any event, the claimant’s signed copy, which it had returned to the defendant, was itself marked up so as to alter the terms proposed by the defendant. It was trite law that the proposal of different terms, however slight, meant that what had been sent back was, if anything, a counter-offer.
Even if the parties had assumed themselves to be bound by an agreement, and the question of estoppel had arisen, the actions subsequently undertaken by the claimant were so insignificant that no unfairness could be said to have resulted from the defendant having reneged on the agreement.
Charles Douthwaite (instructed by John Healy & Co) appeared for the claimant; Francis Moraes (instructed by Berwin Leighton Paisner) appeared for the defendant.
Vivienne Lane, barrister
