Scottish Court of Session Decisions

At advising, on 30th November 1988;—

LORD JUSTICE-CLERK (Ross).—The issue raised in this case is whether the parties entered into a valid contract for the sale by the defender to the pursuers of heritable subjects forming 20 Sherbrooke Avenue, Glasgow. The pleadings, which are commendably brief, set forth the various letters which it is maintained constitute the missives for the sale of these subjects. The pursuers maintain that a bargain was concluded for the purchase by them of the subjects, whereas the defender maintains that no contract for the sale of the property was ever concluded between the parties.

The case was debated before the sheriff. Although parties had not formally renounced probation, it was apparently agreed that the sheriff should decide the case on the basis of the hearing on debate roll. The sheriff set forth the terms of the letters relied on and indicated that had he been untrammelled by authority, he would have been inclined to come to the conclusion that a contract had been concluded between the parties. However, the sheriff considered that the circumstances in Wolf & Wolf v. Forfar Potato Co. 1984 S.L.T. 100 were indistinguishable from those in the present case, and he, accordingly, held that there had been no consensus in idem and that, accordingly, there was no concluded contract between the parties. He, accordingly, dismissed the action.

Against the sheriff's interlocutor dismissing the action the pursuers appealed to the sheriff principal. The sheriff principal allowed the appeal and proceeded to pronounce decree of declarator. The defender has now appealed against that interlocutor of the sheriff principal. The approach of the sheriff principal differed from that of the sheriff. The sheriff had examined the correspondence and had determined whether the letters were offers, counter-offers or acceptances. The sheriff principal on the other hand stated :

"In my opinion parties communings here cannot be construed as a series of offers and counter-offers. What we have here is a series of letters continuing negotiations and reflecting both parties' willingness to contract and both parties' expectation that consensus would be achieved"

[supra at p. 157].

It is clearly necessary to consider whether consensus has been achieved, but, with all respect to the learned sheriff principal, I am not persuaded that this case can be determined merely by considering whether the letters show that parties were in negotiation. In my opinion, it is necessary to analyse the correspondence and determine whether each letter was an offer, a counter-offer or an acceptance.

The first letter in the series is a letter dated 25th March 1988 from the pursuers' solicitors to estate agents offering to purchase the subjects in question upon certain terms and conditions. Condition 21 provides that unless the offer is previously withdrawn in writing it is open for acceptance to reach the pursuers' solicitors not later than 4 p.m. on 29th March, failing which the offer will be deemed to have been withdrawn. It is not suggested in this case that the offer was accepted by 29th March 1988, but as parties continued to exchange letters after that date, I am of opinion that the pursuers must impliedly have departed from this time-limit. In making their submissions to the court neither of the parties founded upon this time-limit.

The next letter in the series is a letter dated 28th March 1988 from the defender's solicitors to the pursuers' solicitors. This letter purported to accept the offer dated 25th March subject to certain qualifications stated in the letter. There was thus a qualified acceptance of the offer of 25th March 1988. Parties were agreed that this qualified acceptance fell to be regarded as, in effect, a new offer or counter-offer. (Gloag on Contract (2nd edn.) at p. 39.)

The next letter is a letter dated 29th March 1988 from the pursuers' solicitors to the defender's solicitors. This letter purported to accept the qualifications contained in the acceptance dated 28th March 1988 to the offer date 25th March 1988 but that subject to further qualifications.

On 30th March 1988 the defender's solicitors wrote to the pursuers' solicitors referring to their offer of 25th March and the qualified acceptance dated 28th March and intimating a further qualification on behalf of their client.

On 6th April 1988 the pursuers' solicitors wrote to the defender's solicitors in the following terms :—

"On behalf of and as instructed by our clients, Mr and Mrs William Findlater, we hereby accept the terms of your formal letter of amendment dated 30th March 1988 on behalf of your client, Mr Bashir Ahmed Maan, and we also hereby withdraw the qualification contained in our formal letter of 29th March 1988 thereby holding a bargain concluded for the purchase by our clients from your client of twenty Sherbrooke Avenue, Glasgow at a price of EIGHTY SEVEN THOUSAND, FIVE HUNDRED POUNDS (£87,500) STERLING".

The dispute between the parties arises from the two letters dated respectively 29th March 1988 and 30th March 1988. Counsel for the pursuers maintained initially that the letter of 30th March had superseded the letter of 29th March and was thus a new offer. He founded upon the terms of the letter of 30th March 1988. The penultimate sentence of that letter reads :

"We anticipate your clients will have re-inspected".

Counsel maintained that that sentence must be regarded as a reference to the qualification contained in the letter of 29th March 1988 to the effect that a timber specialist report was to be obtained by the pursuers, and that a specialist firm were to examine the property and report back to them. I am not persuaded that the penultimate sentence of the letter of 30th March 1988 necessarily refers to this timber inspection. In my opinion, the sentence may just as readily be taken as referring to clause 20 of the letter of 25th March 1988 which provides for the pursuers being given access to the property on a maximum of two occasions to carry out a measured survey. Counsel for the pursuers also founded upon averments in art. 4 of the condescendence which had been added to the pleadings when the case was before the sheriff principal. By that time parties had agreed to renounce probation. The passage in art. 4 of the condescendence upon which the pursuers relied was to the following effect :—

"Said letter of 29th March from Miller Jackson was dispatched by courier at about 3 p.m. on 29th March and was delivered to the defender's solicitors shortly thereafter".

Counsel for the pursuers maintained that what was stated in the foregoing averment was accepted by both parties. Senior counsel for the defender, on the other hand, explained that this was not so. So far as the defender was concerned his position was as set forth in the pleadings, namely, that the terms of the correspondence were admitted beyond which no admission was made. In other words, it was not admitted that the letter of 29th March was delivered to the defender's solicitors shortly after 3 p.m. In a case where parties have renounced probation, the court cannot go beyond what has been admitted in the pleadings. In the present case, I am satisfied that the court cannot proceed upon the basis that the letter of 29th March was delivered to the defender's solicitors that day since the averment to that effect has not been admitted. In these circumstances, I am of opinion that there are no grounds for concluding that the letter of 29th March 1988 was received by the defender's solicitors before they wrote the letter of 30th March 1988, and there is no reason to conclude that any reference to the letter of 29th March 1988 was being made in the letter of 30th March 1988. It is significant that in the latter express reference is made to the letters of 25th March and 28th March, and in my opinion it is a reasonable inference that no reference is, in fact, being made to the letter of 29th March.

In these circumstances, it appears to me that the proper way to regard the correspondence in this case is as follows. On 25th March 1988 the pursuers made an offer to purchase the subjects. On 28th March 1988 the defender's solicitors sent a qualified acceptance of that offer, and that qualified acceptance falls to be treated as a new offer. It then appears that on 29th March 1988 the pursuers' solicitors sent a qualified acceptance of the acceptance dated 28th March 1988. This, in turn, also fell to be treated as a new offer. Likewise, on 30th March 1988, the defender's solicitors under reference to the offer and the qualified acceptance dated 28th March added a further qualification. This, in turn, meant that the letter of 30th March 1988 also fell to be regarded as a new offer. This meant that there were, as counsel put it, two offers on the table at the same time, namely, the letter of 29th March 1988 and the letter of 30th March 1988.

The argument for the defender relied heavily upon a passage in Gloag on Contract and the case of Wolf & Wolf v. Forfar Potato Co. :

"Refusal.—An offer falls if it is refused. If the refusal is not peremptory, but combined with a request for better terms, the general construction is that the offer is gone, and that the party to whom it was made, on failure to obtain the terms he requests, cannot fall back on an acceptance of the original offer".

(Gloag on Contract (2nd edn.) at p. 37.)

This passage was expressly approved by the court in Wolf & Wolf v. Forfar Potato Co. [1984 S.L.T. at pp. 103 and 106]. In that case a question was raised as to whether the authorities relied on by Professor Gloag supported the propositions set forth in that paragraph, but the Lord Justice-Clerk (Lord Wheatley) dealt with that matter as follows [at p. 103] :—

"Whether or not the cases referred to by Gloag in themselves vouch that legal proposition, I am satisfied that it is sound, and, as previously noted, senior counsel for the pursuers did not dispute it as a general proposition".

The principal matter decided in that case was that on the making of a qualified acceptance and counter-offer, the original offer fell, and that on the failure to obtain the terms requested in the counter-offer, the party could not fall back on and accept the original offer. Counsel for the defender founded upon this case and in particular upon the proposition that when a counter-offer is made, the general construction is that the original offer has gone and cannot be accepted. They maintained that, in the present case, the letter of 29th March 1988 was such a counter-offer which was never acceded to by the defenders. They, therefore, submitted that it was not open to the pursuers to waive that offer and to accept the contract which had been proposed earlier. They also relied on the case of Rutterford Ltd. v. Allied Breweries Ltd. 1990 S.L.T. 249 which followed Wolf & Wolf v. Forfar Potato Co. They further maintained that the letter of 30th March did not refer to the letter of 29th March and, therefore, could not supersede it. They, therefore, maintained that the letter of 29th March remained the outstanding counter-offer, and that it, therefore, required acceptance by the defender. They further submitted, under reference to the letter of 6th April 1988 that, although the pursuers could withdraw the counter-offer constituted by the letter of 29th March, and could indicate that they were prepared to conclude a bargain on the earlier terms, it required some act from the defender before that result could be achieved.

Counsel for the pursuers, on the other hand, maintained that the proper approach to the problem was to regard the letter of 30th March 1988 as containing a counter-offer which revived the earlier communings between the parties. That letter was capable of being accepted and was accepted by the pursuers' letter of 6th April 1988. So far as the letter of 29th March was concerned, his initial submission was that that letter had been superseded by the letter of 30th March. Alternatively, if it had not been superseded by the letter of 30th March there was no reason why the pursuers should not have withdrawn the letter of 29th March. They were entitled to withdraw that letter unilaterally, and the consent of the defender was not required before that letter could be withdrawn.

I have reached the clear conclusion that this case can readily be distinguished from Wolf & Wolf v. Forfar Potato Co. What was critical in that case was that the qualified acceptance constituted a counter-offer; the result of sending the counteroffer was that the original offer had fallen and could not thereafter be accepted. What the pursuers did in the present case by their letter of 6th April 1988 was to accept the terms of the letter of 30th March 1988. They did not purport to accept the original offer, and accordingly the present case is different to Wolf & Wolf v. Forfar Potato Co. It is true that the letter of 30th March 1988 refers to the letter of 25th March which was the original offer, but it is plain from the terms of the letter of 6th April 1988 that what is being accepted is the letter of 30th March 1988. That letter no doubt incorporated the earlier letters of 25th March and 28th March. In a sense it revived the original offer which had been superseded by the qualified acceptance, but there was no question of the pursuers seeking to disregard the intervening correspondence and to go back to the original offer.

In my opinion, the true approach to be made in the present case is as follows. The letter of 29th March and the letter of 30th March were two offers which existed at the same time, one at the instance of the seller and one at the instance of the purchaser. They were not written under reference to one another and neither of them superseded the other; they both co-existed. In that situation I am of opinion that it was open to the pursuers to accept the offer contained in the letter of 30th March 1988. It was not disputed that that letter fell to be regarded as an offer, and it was an offer which was open for acceptance. The pursuers did accept that offer by their letter of 6th April 1988. Of course, so long as the other offer of 29th Mach 1988 remained in existence there could be no final consensus in idem. However, there was no reason why the pursuers should not withdraw the letter of 29th March 1988.

"Except in cases where there is an undertaking to hold the offer open for a definite time, it may be withdrawn at any time before acceptance." (Gloag on Contract (2nd edn.) at p. 37.)

By their letter of 6th April 1988 the pursuers did withdraw the letter of 29th March 1988, and, in my opinion, the consequence was that consensus was reached and a bargain was concluded for the purchase by them of the subjects from the defender. I am not persuaded that the defender required to consent to the withdrawal of the letter of 29th March 1988. I know of no principle of law which would require the consent of the defender to the withdrawal of such a letter. The argument for the pursuers was that the consent of the defender was required to the withdrawal of the letter of 29th March because if the pursuers withdrew the letter of 29th March that would revive the letter of 28th March and that, it was said, could not be done without the consent of the defender. In my opinion, this submission is not well-founded. By the time the pursuers withdrew the letter of 29th March they were aware that the defender had also superseded his own letter of 28th March by his later letter of 30th March which varied its terms by adding to them. Accordingly, when they withdrew their letter of 29th March that would not have the effect of reviving the letter of 28th March, because the defender himself had departed from the position taken up on 28th March and had stated a new position on 30th March 1988. The fact was that on 6th April 1988 there were two outstanding offers. Before there could be consensus in idem both these offers had to be dealt with. What the pursuers did was to accept one of these offers and withdraw the other. That having been done, there were no longer any matters at issue between the parties and, in my opinion, consensus in idem was achieved. A question was raised as to whether the letter of 6th April 1988 made it clear what the bargain was between the parties. With some hesitation, I have come to the conclusion that it does define the agreement with sufficient precision. I agree with senior counsel for the defender that it would have accorded with what I understood to be good practice if it had been expressly stated in the letter that the bargain being concluded was that constituted by the letters of 25th, 28th and 30th March and 6th April. The letter of 6th April did, however, refer expressly to the letter of 30th March which, in turn, referred expressly to the letters of 25th and 28th March, and these references thus defined the letters which constituted the bargain between the parties.

Counsel for the defender presented a separate argument to the effect that the sheriff principal had been wrong in concluding that the pursuers were entitled to waive the provisions in the letter of 29th March. The sheriff principal had held that the terms of this qualification were entirely in the pursuers' own favour and that the defender had no interest in the enforcement of the condition. He further held that a term of that nature could be waived unilaterally. Counsel for the defender maintained that the rules of waiver only referred to conditions which are terms of the contract and that they do not apply to terms contained in offers. I see no justification for drawing a distinction between conditions which are terms of the contract and conditions contained in offers in this context. It is plain that the condition referred to in the letter of 29th March was conceived solely in the interests of the pursuers. That being so, I am of opinion that the pursuers were entitled to waive compliance with the condition and to withdraw it. (Dewar & Finlay Ltd. v. Blackwood 1968 S.L.T. 196;Gilchrist v. Payton 1979 S.C. 380; Imry Property Holdings Ltd. v. Glasgow Y.M.C.A. 1979 S.L.T. 261.)

In the foregoing circumstances, I am of opinion that the learned sheriff erred in concluding that the present case was indistinguishable from Wolf & Wolf v. Forfar Potato Co. Although I do not agree in all details with the approach adopted by the learned sheriff principal, I am of opinion that he arrived at the correct conclusion, namely, that a valid contract was concluded between the parties for the sale by the defender to the pursuers of the property in question. I would accordingly move your Lordships to refuse this appeal.

LORD MURRAY .—I entirely agree with the opinion of your Lordship in the chair.