Proprietary estoppel and subject to contract: proposed lease of a farm

In James v Evans ([2000] 3 EGLR 1, CA (Eng)) H and E had agreed in principle for the grant by H to E of a lease of a farm. The discussions were ‘subject to contract’ and, in any event, section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 required the contract to be in writing. H had allowed E into possession of the farm pending completion of the lease. The negotiations failed and H’s estate sought to recover possession of the farm (H had died in the meantime). E argued that because he had gone into possession and worked on the farm, H was estopped from recovering possession. The English Court of Appeal found that there was no estoppel; this was a simple case of subject to contract negotiations that never came to fruition. Because they were subject to contract there could be no estoppel.

Wright J provided this summary of the ratio in Attorney-General of Hong Kong v Humphrey’s Estate (Queen’s Gardens) Ltd:

‘where negotiations for the sale of an interest in land were being carried on “subject to contract”, so that it was clear that the parties did not intend to be bound until the execution of the documents necessary to give legal effect to the transaction, and unless it could be shown that it was unfair or unjust or unconscionable for the vendor to refuse to proceed, no estoppel operated to prevent him from exercising his legal right to refuse to execute the document and to withdraw from the transaction.’ (per Wright J at 3)

There is an explanation of the fact that a solicitor generally lacks implied authority to bind his client to a contract.


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