Can agents sign contracts to buy or sell land on behalf of clients? Section 2(3) of the Law of Property (Miscellaneous Provisions) Act 1989 requires contracts for the sale of land to be in writing and to be signed by or on behalf of the parties. Consequently, agents can sign contracts on behalf of buyers and sellers.
Crucially, however, the question of whether a party is bound by a contract signed by another will depend on the law of agency and whether the person who signed the contract had the requisite authority to do so. On a sale by auction, an auctioneer has implied authority to sign on behalf of both parties. However, although clients confer implied authority on their agents to perform many tasks on their behalf in the course of sales by private treaty, instructions to buy or sell property do not of themselves authorise agents to conclude legally binding contracts on behalf of their clients.
Consequently, practitioners need either a power of attorney or, alternatively, express authority to sign contracts on behalf of clients. Since section 2 requires contracts for sale to be in writing, in what form must such authority be given?
In McLaughlin v Duffill [2009] EWCA Civ 1627; [2009] PLSCS 242, a seller refused to accept that she was bound by a contract that her selling agent had signed. She claimed that the agent had acted without authority and she therefore refused to complete the sale. The buyer issued proceedings for specific performance of the contract. At the trial, it was found as a fact that the seller had told the selling agent that it could sign the contract on her behalf.
The Court of Appeal upheld the buyer’s claim. It rejected the seller’s argument that the agent did not have proper authority to sign the contract because section 53(1)(a) of the Law of Property Act 1925 provides that “no interest in land can be created or disposed of except by writing signed by the person creating or conveying the same, or by his agent thereunto lawfully authorised in writing”.
The court ruled that section 53 applies to disposals of land, as opposed to contracts for such disposals, which are governed by section 2 of the 1989 Act. Section 2 does not suggest that authority to sign a contract to buy or sell land must be conferred in writing and there was no reason to apply a restriction that parliament had not imposed.
None the less, where logistics make it impracticable for clients to sign contracts, most agents will require evidence of their authority to sign in their stead so as to safeguard their position. Written authority should also be obtained to satisfy other parties that the contract is valid and binding.
Where a party to a contract comprises more than one party, it is essential to obtain authority to sign on behalf of them all and, where a company forms part of a larger group, it is also worth establishing that the authority emanates from the appropriate source within that group.
Allyson Colby is a property law consultant
