Option — Exercise of option — Whether section 2 complied with — Whether option conditional contract or irrevocable offer — Option conditional contract for purposes of section 2
On November 14 1989 the plaintiff granted an option to the first defendant to buy property in Finchley for £745,000. The option was exercisable by notice in writing by 5.00 pm on the same day. The purchaser gave notice in writing within the stipulated time, but failed to complete the purchase. The plaintiff obtained judgment in default of a defence against the first defendant. Upon the hearing of summonses by the first defendant to set aside that judgment and by the plaintiff for judgment under RSC Ord 14 against the second defendant as guarantor, the issue between the parties was whether the contract upon which the plaintiff relied complied with the provisions of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989.
Held Judgment was given for the plaintiff.
An option is not strictly speaking either an offer or a conditional contract. It does not have all the incidents of the standard form of either of these concepts. To that extent it is a relationship sui generis. But there are ways in which it resembles each of them. Each analogy is in the proper context a valid way of characterising the situation created by an option. The question in this case is not whether one analogy is true and the other false, but which is appropriate to be used in the construction of section 2 of the 1989 Act.
There is nothing in the authorities which prevents the court from giving section 2 the meaning which is considered to have been the clear intention of the legislature. On the contrary, the purposive approach taken in cases like Re Mulholland’s Will Trusts [1949] 1 All ER 460 encourages the court to adopt a similar approach to section 2. The plain purpose of section 2 was to prescribe formalities for recording the consent of the parties. It follows that the grant of the option was the only “contract for the sale or other disposition of an interest in land” within the meaning of the section and the contract complied with the statutory requirements.
Griffith v Pelton [1958] Ch 205 applied
Beesley v Hallwood Estates Ltd [1960] 1 WLR 549 distinguished.
Beverly-Ann Rogers (instructed by Denton Hall Burgin & Warrens) appeared for the plaintiff; and Michael Douglas (instructed by Paul Shrank & Co) appeared for the defendant.
