H L Estates Ltd. & Anor v Parker-Lane Homes Ltd

A variation of a contract for the sale of land must satisfy Law of Property (Miscellaneous Provisions) Act 1989, section 2, but the document need not explain the commercial consideration for each varied term. It is sufficient that the written agreement identifies the parties, the property and the consideration for the sale, and incorporates the other agreed terms. A variation may be treated as a new contract, with its terms considered in their entirety. The absence of an immaterial term or an explanation of why the parties renegotiated the bargain does not invalidate the agreement.

The claimants owned land which they had agreed to sell to the defendant. After the defendant failed to complete, the parties signed a written variation increasing the price, releasing deposits, imposing further payments and postponing completion. The defendant again failed to complete, and the claimants sought the resulting shortfall after resale.

The defendant contended that the varied agreement was unenforceable under section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 because it did not state that the increased price was the consideration for the postponed completion date. The preliminary issue was whether the varied agreement was enforceable.

The court held that the varied agreement was enforceable.

1. Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 applies to a contract as varied. Following McCausland v Duncan Lawrie Ltd [1997] 1 WLR 38, the varied contract was to be considered as a new contract and its terms examined in their entirety.

2. The statutory formalities were satisfied. The document identified the parties, the property and the consideration for the sale. It also set out the new price, completion date and other agreed changes, and confirmed that the remaining terms of the original agreement continued.

3. The court rejected the submission that the document had to spell out the commercial deal by which the claimants refrained from enforcing their rights in return for a higher price and later completion. The consideration for the sale was stated. No hidden payment or uncertainty was suggested.

4. McCausland v Duncan Lawrie Ltd [1997] 1 WLR 38 was distinguished on its facts. There, the informal variation did not identify the parties, property or price. Here, those material terms appeared on the face of the signed agreement.

5. Wain v Warlters 1804 KB 10 was distinguishable because the document there recorded a promise without reciprocal obligations. The varied agreement recorded reciprocal obligations: conveyance of the land and payment of the stated sums.

6. The court adopted a purposive construction of section 2, encouraged by Spiro v Glencrown Properties Ltd [1991] Ch 537. The alleged explanation for the price increase and later completion was not a material term, and its absence would not invalidate the agreement.