Case summary

Quick Property Sale Ltd (QPS) (the buyer) sought specific performance of an agreement for the sale of a repossessed property. The defendants (the sellers), Mr and Mrs Solaja, resisted enforcement, alleging misrepresentation and undue influence by a third party agent. The court found the sale contract to be unenforceable due to non-compliance with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, impossibility and undue influence, of which QPS was held to have constructive notice.

Key points

1. Compliance with Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989

The case underscores the importance of strict adherence to section 2 requirements for agreements for the sale of land. One of the requirements of section 2 is that all of the terms which the parties have expressly agreed are incorporated in one document and in writing. Failure to comply with section 2 requirements can render an agreement for the sale of land unenforceable. In this case, QPS argued that it was agreed between the parties that the substantial deposit would be released on exchange to allow the seller to redeem a mortgage which, in turn, would allow the sellers to obtain possession of the property from the bank. However, the agreement did not expressly permit the deposit to be released by the sellers' conveyancer in this way and, in fact, contained a contradictory term by virtue of incorporation of the standard conditions. The court therefore found that the whole agreement was void for lack of section 2 compliance.

2. Impossibility

Due to the structure of the deposit, the sellers could not perform their obligations under the agreement, which rendered the contract impossible to perform. The sellers were therefore entitled to treat themselves as discharged from the agreement.

3. Undue influence

The defendants further successfully argued that they had been unduly influenced to enter into the transaction by a third party agent who had created a relationship of trust and confidence with them. QPS, who were aware of the sellers' circumstances, was found to have constructive notice of the undue influence exerted by the agent and the court therefore held that the sellers were entitled to set aside the agreement.

Conclusion

The judgment serves as a crucial reminder for parties involved in all property transactions of the necessity to comply with section 2 requirements to ensure that all expressly agreed terms are included in the property contract. This applies to any agreement for a disposition of land so will include sale contracts and agreements for lease alike. It is clear that parties also need to be vigilant against undue influence, particularly where they have agents acting on their behalf.