ABSTRACT
RIGHTS PRIOR TO EXCHANGE OF CONTRACTS Pitt v Asset Management (1994) A lock-out agreement will give the purchaser rights to recover damages for breach of agreement but it does not give rights to enforce a sale against the vendor First Post Homes v Johnson (1995) Contracts for the sale or disposition of an interest in land must be in writing and incorporate all terms and be signed by both parties Spiro v Glencrown Properties Ltd (1991) The exercise of an option to purchase land does not have to comply with s 2 LP(MP)A 1989 McCausland v Duncan Lawrie (1997) An informal variation of terms of a contract had to comply with s 2 LP(MP)A 1989 in order to be enforceable
AVOIDANCE OF THE STRICT FORMALITIES OF TRANSFER Yaxley v Gotts (2000) No writing is required where rights in land are acquired under a constructive trust or proprietary estoppel See also: Taylor v Dickens (1998)
Gillett v Holt (2001) Yeoman’s Row Management v Cobbe Ltd (2008)
EFFECT IN LAW OF EXCHANGE OF CONTRACTS Lysaght v Edwards (1876) Once there is a valid exchange of contracts for sale the vendor becomes a trustee for the purchaser of the estate sold
A lock-out agreement between the vendor and the purchaser, specifying that the vendor would not accept any offers for a specified period, was held to be enforceable between the parties.
The purchaser will not have any enforceable rights in land until contracts are exchanged between the parties. This leaves a purchaser vulnerable to the possibility of being ‘gazumped’ by another purchaser offering more money to the vendor. ‘Gazumping’ can be restricted if the purchaser enters into a lockout agreement with the vendor. A lock-out agreement is a prior collateral contract for consideration that during a stipulated period the vendor will not negotiate with anyone else. It does not give the purchaser the right to enforce sale but entitles the purchaser to recover damages for breach of the agreement.
