Thomas v BPE Solicitors (A Firm)
High Court
Citations: [2010] EWHC 306 (CH).
Facts
The defendant was a firm of solicitors. The claimants were two of their former clients. The claimants sued the defendant over the way they handled the sale of the claimants’ shares in a company.
To complete the sale, the claimants had to deliver specific documents. The parties envisaged that this would occur after the buyer’s solicitors had undertook to provide the purchase money, at a completion meeting scheduled by phone for a particular date. On that date, a Friday, the buyer’s solicitors sent the defendant an undertaking to send the purchase price by electronic transfer the next working day (Monday). The defendant stated that it would require interest for the period between the undertaking being given and the money being sent (i.e., over the weekend). The buyer pulled out of the deal the next day after learning that the company’s business was suffering.
The claimants argued that the transaction was complete. Since, the defendant had failed to advise them of this, the claimants thought they had lost the opportunity to insist that the sale be given full effect.
The defendant responded that when the buyer pulled out, the transaction was incomplete. They were therefore not negligent in failing to advise the claimants of this. Alternatively, the defendant argued that even if the transaction had been completed the claimant would have agreed to the sale being called off as the financial circumstances had changed. Any breach had not caused any loss.
Issue(s)
- Had a completed contract arisen between the claimant and the buyer?
- Would the claimant have agreed to cancel the sale in any event?
Decision
The High Court held in favour of the defendant. The circumstances indicated that completing the sale required a) the buyer’s solicitors to give a satisfactory undertaking; b) the defendant to accept that undertaking; and c) a completion call between the two solicitors’ firms.
The defendant had not thought that the undertaking was adequate, because it did not include interest accrued over the weekend. Their response to the buyer’s solicitors indicated that they did not accept the undertaking. Additionally, no completion call had taken place. The sale was therefore incomplete and there was no contract. The defendant was therefore correct not to advise the claimant that the sale was complete, and not negligent. In any case, the court found that the claimants would not have proceeded with the sale even if they had been advised that they could. They had therefore suffered no loss.
This Case is Authority For…
Whether a contract has been completed is assessed objectively from the perspective of a reasonable bystander. The subjective understandings of the parties or their lawyers are irrelevant.
Other
Blair J stated, obiter, that for the purposes of contract law instantaneous forms of communication such as email are treated as communicated as soon as they are received. He rejected the idea that the postal rule would be applicable in such cases. However, he suggested that whether an email acceptance is ‘communicated’ immediately if it arrives outside of business hours may vary depending on what the parties objectively intend.
For example, in this case the parties anticipated that there was still the possibility of the deal going through some time Friday night. Blair J therefore thought that an email sent at, say, 18:00 would be communicated immediately even if, in fact, the recipient had gone home.
