In the case of Looe Fuels v Looe Harbour Commissioners (2008), the Court of Appeal had to consider the enforceability of an oral agreement for lease. Looe Fuels entered into discussions with the Commissioners for the grant a lease of a new refuelling facility which led to an oral agreement in principle. The agreement was never recorded in writing and discussions continued. The Commissioners ultimately withdrew from negotiations with Looe Fuels.
Looe Fuels sought to enforce what it said was a valid agreement for lease. The Commissioners denied this was possible as there was no agreement to grant a lease (it was an agreement for something else) and in any event it was not in writing. The Court held otherwise. As to the oral agreement argument the Court found that under the Commissioners’ constitution it could not grant leases for a period of more than 3 years so once it was determined that an oral agreement to grant a lease had been created, it followed that the agreement was enforceable.
This case does create new law. It does however serve as a reminder to landlords to be careful when conducting oral negotiations (especially through agents / intermediaries). There are very limited circumstances in which a tenant will be entitled to enforce an oral agreement, but in this particular situation the landlord was caught out.