Sheriff Principal upholds off plan missives.
The admissibility of evidence of negotiations, and the effect of entire agreement clauses.
Since the 2008 credit crunch there have been numerous attempts by purchasers under missives, particularly those concluded when the property market was still booming, to withdraw from them on a range of grounds, some justified and some imaginative. The latest judgment on this topic is by the Sheriff Principal of Tayside, Central & Fife, Alastair Dunlop, Q.C., in Scotia Homes (South) Ltd. v. McLean (30 November 2012).
In early 2008 the purchasers had entered missives to buy 'off plan' an upper storey flat which had yet to be built. They later purported to resile, but the builders sued for damages. The purchasers argued that the contract was void from uncertainty, because the missives themselves had not contained any detailed description of what was to be built, beyond referring to it by plot no. When the purchasers had reserved the flat the builders had given them a detailed floor plan, but it had not been incorporated into the contract; indeed, the missives contained an entire agreement clause excluding reliance on prior representations.
The Sheriff had rejected the purchasers' argument, and the Sheriff Principal refused their appeal. He held that the court should strive to give a workable meaning to what was plainly intended to be a binding contract. A plan handed over before parties contracted was admissible extrinsic evidence of what they both meant by referring to the plot no. The handing over of the plan was not part of any inadmissible "prior negotiations"; even if it had been handed over in the context of negotiations, evidence of negotiations was admissible for the purpose of establishing what facts had been known to both parties, such as what a plan showed. The entire agreement clause was not an agreement that a document such as the plan could not be considered in order to work out in practical what the missives' reference to the plot no. meant; entire agreement clauses in standard terms regulate what is incorporated into a contract, not what the express terms mean. The floor plan did not define the flat vertically, but other constraints such as building standards would supply that deficiency. Ambiguities about such details as a right to garden ground, a garage or a car parking space did not drive the court to the extreme conclusion that the contract was unworkable. Hastie Stable member Michael Upton's clients Scotia Homes were found to be entitled to enforce the missives.
The builders' case could proceed to proof on quantum.