Effect of applying for planning on a potential contract

cup of tea

Just have a question. Just what I think is an interesting slant on a problem. In relation to seeking specific performance of a sale of property. Lets say the parties agreed the vendor would seek planning permission for an extention was agreed between the parties but not conditional in the fulfillment of the transaction.

Buyer pulls out after planning has been denied despite an oral agreement and subject to contract( I know the 'subject to contract' is a whole other kettle of fish) memo agreement. Could 1) the seller claim that the agreement had been concluded and contract commenced once he applied for planning 2) the seller claim part performance as he applied for planning. Just a different slant to take on such a problem. Was looking for caselaw but havn't come across anything. Cheers

Reloc8

Are you familiar with the caselaw on 'subject to contract/contract denied' ?

Your answer lies within. If all material terms have been agreed, and the statute of frauds is satisfied (memo in writing) then the use of 'subject to contract' will not preclude the court from concluding that an enforceable contract has been struck.

cup of tea

Thanks for your response. Thats what I originally presumed. S 52(1) supports that 'subject of contract' would be immaterial if it was inconsistent with the existence of a concluded contract. Kelly v Park Homes and Casey v Central bank followed this in caselaw.

However this is what has confused me.....

In Mullhall v Haren, casey was not followed and the courts reverted back to the traditional view of 'subject to contract'. Held that there was no valid memo.


Boyle v Lee - Suprememe Court. 4 judgements said 'subject to contract' was fatal to the claim for specifici performance. Majority view was that Casey or Kelly should not be followed and that oral contract should not trump written.

LRC REPORT ON GAZUMPING@ 2.012

Edit:

Ronan Keane also says that Any expression in the memo such as ;subject to contract' which is inconsistent with the existence of a concluded contract, will render it insufficient for the purpose of s52(1)

It is now clear that a written note which denies the existence of a contract cannot constitute a memorandum for the purposes of the Statute of Frauds. The usual way of incorporating such a denial in any written note is to head it with the phrase “subject to contract.” This phrase means that no agreement has been concluded since the parties have agreed that they will not be bound in the absence of a formal contract, and, as a result, any note which is headed with the phrase cannot constitute a memorandum.


they further add that ''That would leave the possibility of any exception as a very remote one,following Boyle''



Maybe it's a case that cases pre the land reform act don't apply?.Or maybe that I shouldn't be substituting cases that deal with the fraud acts for the land reform act.

Victor

Is there a quantum meruit case for the costs of applying for planning permission, depending on who carried the costs.

cup of tea

Victor wrote: »

Is there a quantum meruit case for the costs of applying for planning permission, depending on who carried the costs.

Not that I have found

Reloc8

cup of tea wrote: »

Just have a question. Just what I think is an interesting slant on a problem. In relation to seeking specific performance of a sale of property. Lets say the parties agreed the vendor would seek planning permission for an extention was agreed between the parties but not conditional in the fulfillment of the transaction.

Buyer pulls out after planning has been denied despite an oral agreement and subject to contract( I know the 'subject to contract' is a whole other kettle of fish) memo agreement. Could 1) the seller claim that the agreement had been concluded and contract commenced once he applied for planning 2) the seller claim part performance as he applied for planning. Just a different slant to take on such a problem. Was looking for caselaw but havn't come across anything. Cheers

Fair play - you're well on top of the 'subject to contract' stuff.

Just to clear something up for me - are we saying that it was agreed, as part of the contract, that a planning application would be made, but that the outcome of the application was not fundamental to the agreement (i.e. the contract was not 'subject to planning being granted') ?

If so, then applying for planning could constitute part performance.

If not then it might difficult or impossible to argue that the application for planning triggered commencement of contract/constituted part performance, as the agreement on planning was not fundamental to the contract.

It might in those circumstances evidence that one party thought the contract was concluded and it was time to perform, but that would only be admissible if the written terms of contract were vague in some relevant way.

As regards a claim for quantum meruit QM is classically a claim for work done or services provided for or to another in circumstances which imply that the other will pay for the work done or services provided where there is not a concluded contract.

It seems difficult in this case to conclude that a planning application was done as a service provided/work done for the purchasor, as he gets no benefit from same. Further, it seems to me that just because it was agreed that the vendor would apply for planning, the circumstances as stated don't indicate to me that it was reasonably implied that he would be paid by the purchasor for doing so.

There are circumstances in which QM can be recovered for work is done under a void contract, which was believed by the worker to have been valid at the time. Again, was it part of the contract that planning would be applied for or not ?

cup of tea

Yes you are correct n your understanding, maybe I could have phrased it better.Was specified in the terms that planning would be applied for however was not a condition to the commencement of the contract. That is why I think there is leeway that the act of applying for said permission could constitute part performance i.e the vendor presumed there was a contract and proceeded to taking steps in fulfilling the contract. The process of applying for planning would have incurred a fee, perhaps an engineers fee/architects fee and time.

Just a further point in relation to something else. If a memo is signed by both parties and thus satisfying s.51, would problems arise if the actual contract was not signed by the purchaser i.e could the purchaser argue no contract exists despite the fulfillment of s.51...a written and signed memo in place.

It seems the 'subject to contract' is relatively water tight since that Supreme Court decision. Havn't come across any caselaw going against it since and the wording of s.51 doesn't seem likely to change the stance.

Reloc8

What the statute requires is a sufficient memo in writing as you know.

I'm open to correction but my starting position is that lack of a signature on the contract document is not in itself going to be fatal to a claim that a contract has been agreed, if there is sufficient evidence that this is so (in the absence of very specific terms stipulating a signature is required to finalise agreement), although obviously a signature would be very compelling evidence (and would reduce the person denying contract to a non est factum position in order to succeed).

cup of tea

Exactly my thinking!!. Just trying to find caselaw where such a situation has happened but it's like finding a needle in a haystack at the moment.

I'll post it up when/if I find one

Tom Young

Contracts for the Sale of Land are dealt with per the Statute of Frauds Act 1695. If that be the starting point, which I think it should, then matters have a slightly different complexion. Further, the LLCA 2009, S.51 - http://www.irishstatutebook.ie/2009/en/act/pub/0027/sec0051.html#sec51 deals with the issue of Contracts relating to Land and S.52(2)(c) and (d), seem to me to be dealing adequately with the issues you have raised in the OP.

Subject to Contract - See Boyle v Lee [1992] 1 IR 555, and Thomson v King [1920] 2 IR 365

Tom Young

I'd also refer you to Jodifern v Fitzgerald [2000] 3 IR 321, 327 per Keane J. and link to Mulhall v Haren [1981] 1 IR 364, at 392 - In re. Subject to Contract.

Planning Permission - PP: Wylie classifies PP as a Condition Subsequent - 7.16 of his 3rd, Ed.

I'd refer you to Macken v Deane [2010] IEHC 192 - On the issue of PP and McKenny v Martin [2010] IEHC 293 - vendor withdrawal.

Devereux v Goff [2009] IEHC 398, the court considered the issue of express satisfaction with PP granted, versus application submitted. Courts will impose a standard of reasonableness - Draisey v Fitzpatrick [1981] ILRM 219.