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Have I entered a legally binding contract?(21 Posts)
I was looking at buying a field to keep my horses in. I went to have a look around before Christmas and since then have been emailing the chap.
I emailed him last week to confirm I would like to go ahead with the purchase and to give him 2 options about how to complete the purchase (I am paying by instalments). He emailed me back to ask me to call him to discuss, which I did and we agreed in principal to the terms of the sale.
I was then asked to draft up a document setting out what I was proposing and send it over to him to look at which would then be sent to his solicitor to turn into a legal document and then obviously forwarded onto my (as yet to be found) solicitor.
He then asked me to pay him a deposit (into his personal) bank account by this coming Friday in order to secure the sale and for him to tell the other person interested (who he has already received a deposit from) that he was not longer proceeding and to allow him to repay their deposit.
This left me a bit uneasy and when I googled further I found planning issues and stuff that has made me think its not worth it, however when I emailed to say I had decided I no longer wanted to go ahead he said that we had already entered a legally binding contract with me sending over the draft document and that emails constituted a contract and that even though I hadn't signed the document my intention to proceed was clear and that therefore I owed him the deposit and it made more sense to continue with the purchase.
I just wondered if the circumstances above meant that I had entered a legally binding agreement in which case I will have no choice but to proceed as I cant afford to through several thousand pounds away, but if I haven't id rather pull out altogether?
Absolutely not. The draft document is just that a draft. It hasn't been accepted by either party & surely any deposit to be paid would need to be detailed in the contract.
Are you in Scotland? I suspect the email would be a contract here.
Are you in England or Wales?
Surely you haven't entered into anything without a wet signature on a document and transfer of funds. That's the purpose of the deposit, isn't it? To secure the purchase contractually? You hadn't got that far, so I'd say he can swing.
Hopefully a conveyancer will be along in a minute...
Are you buying land?
Emails can be a valid contract but the sale or transfer of land in England or Wales must be signed as a deed by both parties. Law of property miscellaneous provisions act.
An exchange of emails can be a binding contract in England and Wales. But it comes down to intention. If your emails say 'I'd like to go ahead subject to contract' then it's reasonably clear that the emails were not intended to be a binding contract. For reference for the future, heading emails 'subject to contract' makes your position clear.
The sale of land is subject to different rules and must be in writing, signed by both parties (England and Wales).
He's taken a deposit off some (imaginary I expect) chump and he's saying you're in breach of contract! What a hustler!
Bellaposy is right about English law.
Hi thanks everyone for your responses. Sorry for the delay replying my mum called round and that always takes forever
To answer some questions ... Yes I am in England and Wales and am buying a plot of land. The planning issues are that his site which is next to the field he has developed into a garden centre which does not have planning permission and obviously his neighbours are (fairly enough) strenuously objecting his retrospective application. Id want to put stables up and I was given the impression it would be easy as he'd had planning granted in 2007 which how now lapsed, but that it would just be a formality to reapply now.
Its mainly the deposit request as I feel if its in his bank prior to me having a signed contract ultimately surely Im not protected at all? Then with the whole planning drama, it just doesn't seem worth it.
The document I sent over was headed Proposed Contract of Sale, and in one of my emails I say "I confirm I would like go ahead with the purchase if the option is available"
Hes telling me that our emails are electronic signatures and therefore the contract is binding, and although I can pull out I forfeit my deposit.
Well obviously I haven't yet paid the deposit, but hes saying if I pull out, I will still need to pay it to him as per the terms of my draft document and then forfeit it.
NO - it is as stated above for the sale of land in England and Wales the transaction must be signed as a deed by both parties. Law of property miscellaneous provisions act.
So similar to a house purchase exchange of contracts and completion.
So in the same way any time before those you can withdraw without incurring any costs of the Seller etc.
Tell him to go take a hike if you haven't paid anything over yet DO NOT !
OK Brilliant thanks. I was in such a tizz. Lesson learned!
Google tells me a deed has to say its a deed and be witnessed to actually be one, and it definitely doesn't say its a deed, and there are no physical signatures on the documents and definitely no witness signatures so hopefully if I tell him that it will be the end of it
Thanks very much all x
Law of Property Miscellaneous Provisions Act 1989
“2. Contracts for sale etc of land to be made by signed writing
(1) A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed and in one document or, where contracts are exchanged, in each.
(2) The terms may be incorporated in a document either by being set out in it or by reference to some other document.
(3) The document incorporating the terms or, where contracts are exchanged, one of the documents incorporating them (but not necessarily the same one) must be signed by or on behalf of each party to the contract ….”
This is not the same as the provisions for the Deed of Conveyance or Transfer.
By the sound of it you are lucky that you hadn't both signed the terms of agreement that you sent to the seller! To save getting in this sort of problem again always title all correspondence when discussing the purchase of land with the words 'SUBJECT TO CONTRACT' then you won't be caught out.
Does it need signatures signed in pen and witnesses?
The seller is basically saying that because I emailed the proposed document as part of a conversation where I confirmed the purchase and he replied agreeing the sale that counts as electronic signatures and therefore the document is signed.
No, it doesn't count.
If he keeps harassing you, tell him you're going to the polIce.
If he already has a buyer who paid a deposit surely any contract he wants to enforce with you must have a counterpart with the other buyer and he has broken that contract.
No you are not in contract so tell him to do one. It has to be signed and there has to be consensus ad idem (a meeting if minds) in other words you both had to intend to create the contract at that point which you clearly didn't have.
How much is the deposit? Is it going to be worth his while suing you?
Is it going to be worth his while suing you
It is definitely not going to be worth his while regardless of the size of the deposit. As stated above, there is no contract so any legal action will fail.
We don';t have electronic conveyancing yet in English law although EU law and the electronic signatures directive by the way do say electronic signatuers are enough and there are a lot of cases on that topic.
However you might have an agreement to transfer the land later regarding the deposit ie separate fro the transfer of land contract. In my view I would not worry about it particularly as one of your emails said "proposed" and you never sent the deposit to him but in future label all these kind of emails - subject to contract and if you say you want to "go ahead" and agree something say "subject to contract " and ideally add something like -obviously until this is all finalised nothing is binding or something along those lines.
if you ever do pay a pre contract deposit do speak to a solicitor before paying anything so they can make sure the wording is very clearly not binding (or indeed binding if you want it to be - plenty of people are the other way - very very keen the pre contract deposit of some kind IS binding).
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