Buyer Not Bound by Uncorroborated Verbal Agreement

Yet another case involving a dispute over a verbal agreement was decided recently.



It involved a company that was the owner of three properties, which it intended to sell at auction. It had made an agreement with a man that he would buy the properties at an agreed price if they did not reach the reserve. The man paid deposits on each property to secure the agreement.



When the properties did not reach their reserve prices, the company that owned them became contractually bound to sell them and the man became legally obliged to purchase them. The company then served the prospective buyer with notices to complete on the three properties. However, the company also claimed that there had been an oral agreement between the man and a director of the company to increase the price paid by £10,000 per property. The prospective purchaser denied that any change to the purchase price had been agreed.



The prospective purchaser refused to complete at the ‘revised’ prices and the company claimed that his deposits should be forfeited. The dispute went to court.



The court ruled that the deposits should be returned. The company that owned the properties had breached the contracts and the notices to complete were invalid since they specified a price which was not that agreed under the contracts.



This decision was upheld by the Court of Appeal.