Summary: Marlbray Ltd v Laditi: Court rules that an “off plan” purchase contract signed by a husband on behalf of himself and his wife, but without his wife’s authority, was still valid and enforceable against the husband as the contract imposed joint and several liability.
In 2005, Mr and Mrs Laditi, attended a sales fair organised by an agent of a vendor of an aparthotel.
Mr Laditi signed an instruction memo to one of the solicitors’ firms acting for purchasers at the fair instructing the solicitor to act in connection with the purchase of a unit.
Mr Laditi also signed a contract for the grant of a long lease of the unit which included particulars listing the purchaser as both him and Mrs Laditi; provided that all obligations in the contract were joint and several and stated, in the signature block, that he was signing on behalf of the purchaser. This contract was exchanged at the fair and Mr Laditi paid an initial reservation fee.
Mr Laditi went on to pay the balance of the 25% deposit, which was held by the vendor’s solicitor as stakeholder, and took steps to arrange a mortgage on behalf of himself and his wife. Mr and Mrs Laditi were unable to obtain a mortgage and so did not complete the contract. The vendor rescinded the contract and deposit was forfeited.
Mr and Mrs Laditi then issued proceedings claiming that their contract did not exist and for return of their deposit.
The initial court ruling agreed with Mr and Mrs Laditi that there was no valid or enforceable contract. The vendor appealed against that ruling and the Court of Appeal allowed the appeal finding that:
- there was a valid and enforceable contact as between the vendor and Mr Laditi which was compliant with statutory requirements for contracts for the sale of land; and
- subject to the other issues of unconscionable bargain and deposit to be decided at a later hearing, the vendor could retain the deposit.
Valid and enforceable contract with several liability:
Both courts agreed that Mr Laiditi did not have authority from his wife to enter the contract and she had not subsequently ratified it. However, that did not mean that the contract did not exist or was not binding on Mr Laditi.
On the facts of the case, there was nothing to support the analysis that Mr Laditi signed the contract on the understanding, or condition, that he would only be liable if his wife had authorised him to sign on her behalf. There was even less support that the other parties to the contract were only contracting on the basis that Mrs Laditi was a joint purchaser. The joint and several provisions of the contract made it clear that the husband and wife were not being viewed as a composite purchaser.
As the contract in question was to purchase property, with the inclusion of express joint and several provisions, the contract could be performed by one of the two proposed purchasers alone. Mr Laiditi could not avoid the contact, given that he had certainly signed the particulars attached to the contract and authorised exchange on his own behalf. Each individual and several obligation was enforceable against him as one of the “promisors”.
Nothing in the law of agency prevented him from being bound on his own behalf as principal even though he also purported to sign as agent on behalf of someone who has not authorised him.
Off plan sale contracts are a necessary feature of residential sales fairs, especially where marketing overseas. Incorporating both joint and several liability in the sales terms ensured the validity of the contract for the vendor, and for the time being, the retention by the vendor of the 25% deposit.