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Developer must honour oral agreement to sell land to family

Posted: 23rd February 2017   In: Commercial Property

A property developer has been told he must honour an oral agreement to sell some land to former friends despite falling out with them during the course of the transaction.

The case involved a developer who agreed in 2003 to sell a building plot and a meadow to some family friends for £200,000. The plot was £120,000 and the meadow £80,000.

In 2004, the family paid £66,000 towards the purchase price. In February 2005, the developer allowed them to start building a house on the plot while the conveyancing was being completed.

Contracts for the sale of the plot were exchanged in September 2005, the deposit being stated as £66,000. Special Condition 6 provided that the family entered into the contract solely on the basis of the terms now being written down, and "not in reliance on any warranty, statements, representation otherwise whether oral or implied".

The family then paid the balance of the sum due for the plot and sold their existing house. They then paid a further £80,000 for the meadow.

Shortly afterwards the parties fell out. The developer sent the family a cheque for £40,000 and informed them that they could only purchase half of the meadow.

The family took legal action to enforce the oral agreement but the developer argued that it was not binding.

The judge found in favour of the family. He held that by the time of the written contract, the parties had concluded what they all regarded as an immediately binding agreement, with the developer promising unconditionally to sell the meadow.

The family had acted on that promise to their detriment. Special Condition 6 did not negate the oral agreement and so they were entitled to the whole meadow.

Please contact Sing Li if you would like more information about the issues raised in this article or any aspect of contract law.

Posted by: Sing Li
Corporate Commercial
Luton Office