Court of Appeal Decision has Highlighted the Issues Faced in Joint Party Property Agreements

In the case of Marlbray v Laditi and Laditi in 2005, Dr Laditi signed a purchase agreement for an apartment at the Park Plaza Hotel in Westminster. He signed the contract in his own name and on behalf of his wife without her authority.

When Dr Laditi could not secure funding for the purchase, Marlbray terminated the contract and forfeited the £78,750 deposit.

It was established that the wife had not given authority for her husband to sign on her behalf, and that she was therefore not a party to the contract.  However, Dr Laditi then argued that there was no valid contract at all, because:

• the earlier case of Suleman v Shahsavari held that there can be no contract unless all joint parties confirm their intention to be bound;
• section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 requires contracts for the sale or other disposition of land to be 'signed by or on behalf of each party'.

 The Court of Appeal reviewed previous cases and concluded that:

• the Suleman case applied only where there were 'joint parties'. In this case, the contract imposed 'joint and several' liability upon Dr Laditi and his wife. In the absence of his wife's agreement, Dr Laditi's obligations could be severed and continue alone;
• there may be circumstances in which the parties objectively intended not to enter a binding contract unless all joint and several parties agree to be bound but this was not such a case;
• section 2 of the 1989 Act could not be used by a party to excuse himself of liability where the failure to obtain proper authority was entirely his;
• Dr Laditi was therefore a party to the contract.

This case highlights the importance of ensuring that all joint (and joint and several) parties have given authority to be bound before contracts are exchanged. Failure to do so runs the risk that the contract will fail or that only one of the parties will be bound.

If you would like to discuss any property issues please contact Jackie Roe 0117 314 5261 in respect of residential property or Rory Young 0117 314 5683 in respect of commercial property.