Mountford v Scott

A valid option to purchase, supported by valuable consideration, is an irrevocable offer during the stated period. Consideration may be nominal; anything of value, however small, can support the option at law. Once the option is duly exercised, a contract for sale and purchase is formed. The remedy is specific performance of that sale contract, not enforcement of a separate promise not to withdraw the offer. The nominal character of the option consideration does not, by itself, make specific performance inappropriate. A finding of an unconscionable bargain requires more than difficulty in finding suitable alternative accommodation after signing.

The defendant granted the plaintiffs an option to purchase his house for £10,000. The option was supported by £1 and was exercisable within six months. The defendant challenged the agreement on alleged misrepresentation, unconscionability and want of consideration. He further contended that, even if the option was valid, the plaintiffs should receive damages rather than specific performance.

Mr Justice Brightman rejected those contentions and ordered specific performance. The defendant appealed to the Court of Appeal. The order below is referred to as reported at 1974 1 All England Reports 248 and 1973 3 Weekly Law Reports 884. The central issues were whether the option was valid and irrevocable, whether the transaction was unconscionable, and whether the contract formed by exercise of the option should be specifically enforced.

1. Appeal dismissed with costs. The trial judge was entitled to reject the alleged representation that the defendant could withdraw from the transaction within six weeks. There was no sufficient evidential basis for interfering with that finding.

2. The transaction was not an unconscionable bargain. The agreed price was not shown to be inadequate. The defendant had time to consider the transaction, friends assisted him in understanding the agreement, and there was no duty on the plaintiffs or their agent to advise him about the availability or cost of alternative accommodation. His illiteracy did not establish weakness of mind or unconscionability.

3. The £1 option consideration was valuable consideration in law. A valid option to purchase constituted an irrevocable offer during the stated period, so the defendant’s purported withdrawal was ineffective. Exercise of the option then constituted a contract for sale and purchase.

4. Specific performance was properly ordered. The relevant contract was the contract of sale and purchase formed on exercise of the option, not a contract specifically enforcing the promise not to withdraw. Once that contract existed, the fact that the option consideration was merely nominal was irrelevant to the remedy. Lord Justice Russell also observed that, although a valid option may constitute an interest in land, that was not necessary to the conclusion on remedy. Lord Justice Cairns agreed with this approach. Sir John Pennycuick agreed with both judgments.

• Court of Appeal: Appeal from the order of Mr Justice Brightman dismissed with costs.
• High Court: Mr Justice Brightman ordered specific performance of the contract formed by exercise of the option and awarded costs to the plaintiffs. The judgment is referred to as reported at 1974 1 All England Reports 248 and 1973 3 Weekly Law Reports 884.