News

Spotlight on contracts: who needs to sign?

  • June 22, 2016 test
  • By Hunters Law

The Court of Appeal has decided that a lease contract was valid when a buyer signed a contract on behalf of both himself and his wife, even without securing his wife’s authority.

It is a well-known legal principle that in order for a contract to be enforceable it must be signed by both parties to the contract, buyer and seller. Where there are two or more people named in the contract as comprising one of the parties, either all of them must sign or one person, who has been authorised to do so, may sign on the other’s behalf.

In this case (Marlbray Ltd v Laditi and another [2016] EWCA Civ 476) the seller was a developer who, in 2005, sold units in an apart-hotel at a sales fair. At the fair several law firms were in attendance to represent prospective buyers and help them exchange contracts. The husband retained one of these solicitors to exchange contracts on a unit and paid a 25% deposit. The contract named him and wife as joint buyers, however only he signed the contract as his wife spent most of the day outside the fair looking after their young children.

Subsequently, the buyer could not raise the balance of the purchase price due, therefore the contract did not complete. The husband rescinded the contract and forfeited the deposit. The seller then terminated the contract on the basis that it had been breached and kept the deposit.

At the first instance, the judge held that the contract was not enforceable and therefore found in the couple’s favour. The judge reached this conclusion based on a number of factors all relating to the want of knowledge and participation of the wife who:

  1. Paid little attention to the contract as she was looking after their children;
  2. Had not instructed solicitors;
  3. Had not signed the contract, nor had she authorised her husband to sign on her behalf; and
  4. Had not later ratified the contract.

On appeal, the Court of Appeal accepted that the wife had not provided her husband with her authority to sign the contract on her behalf. However, the contract had stated that the obligations of two or more purchasers would be joint and several. On this basis there was no reason why the several obligations on the husband who signed the contract should not be contractually binding upon him.

In addition, even though the wife had not signed the contract, the creation of the contract was dependent on the common intention of the parties. The Court of Appeal held that there was no implication that the husband’s commitment to the contract was conditional on his wife signing it or that he would only contract on the basis that his wife was a joint buyer.

On this basis the court found that there was a valid and enforceable contract between the buyer and seller.

For queries in relation to dispute resolution matters, please contact the partner at Hunters having responsibility for your legal matters, or (for new enquiries) please contact a member of our Dispute Resolution team.

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