Pitt v PHH Asset Management Ltd
Encyclopedia
Pitt v PHH Asset Management Ltd [1994] 1 WLR 327 is an English contract law
case, which confirmed the enforceability of lockout agreements.
, Suffolk
, is a residence known as "The Cottage". PHH Asset Management Ltd were undisclosed agents of mortgagees, who were selling The Cottage for £205,000. Mr Pitt and Miss Buckle put in competing bids. Mr Pitt bid £200,000, which PHH accepted ‘subject to contract’. Miss Buckle then increased her bid to £210,000. PHH withdrew its acceptance of Mr Pitt.
Mr Pitt threatened to sue for an injunction
, to compel transfer of the cottage to him (it was noted in the Court of Appeal that this probably would have not succeeded, and just caused nuisance). So PHH agreed to sell to him and said they would consider no further offers. This is known as a "lock down agreement". But then, PHH sold to Miss Buckle anyway. Mr Pitt sued. PHH argued in its defence, there was no consideration to not consider further offers (for the lock out agreement), because Mr Pitt had only promised to be ready, willing and able to proceed with exchange of contracts, and he was already obliged to do that.
English contract law
English contract law is a body of law regulating contracts in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth , and the United States...
case, which confirmed the enforceability of lockout agreements.
Facts
In Parsonage Lane, ChelsworthChelsworth
Chelsworth is a village and civil parish in Suffolk, England. Located on the B1115 road, 10miles either way between Sudbury and Stowmarket. It is part of Babergh district...
, Suffolk
Suffolk
Suffolk is a non-metropolitan county of historic origin in East Anglia, England. It has borders with Norfolk to the north, Cambridgeshire to the west and Essex to the south. The North Sea lies to the east...
, is a residence known as "The Cottage". PHH Asset Management Ltd were undisclosed agents of mortgagees, who were selling The Cottage for £205,000. Mr Pitt and Miss Buckle put in competing bids. Mr Pitt bid £200,000, which PHH accepted ‘subject to contract’. Miss Buckle then increased her bid to £210,000. PHH withdrew its acceptance of Mr Pitt.
Mr Pitt threatened to sue for an injunction
Injunction
An injunction is an equitable remedy in the form of a court order that requires a party to do or refrain from doing certain acts. A party that fails to comply with an injunction faces criminal or civil penalties and may have to pay damages or accept sanctions...
, to compel transfer of the cottage to him (it was noted in the Court of Appeal that this probably would have not succeeded, and just caused nuisance). So PHH agreed to sell to him and said they would consider no further offers. This is known as a "lock down agreement". But then, PHH sold to Miss Buckle anyway. Mr Pitt sued. PHH argued in its defence, there was no consideration to not consider further offers (for the lock out agreement), because Mr Pitt had only promised to be ready, willing and able to proceed with exchange of contracts, and he was already obliged to do that.
Judgment
Peter Gibson LJ held there was consideration. First, Mr Pitt had agreed to not apply for an injunction. Even though the claim may not have worked, PHH was freed from the ‘nuisance value’ of defending the claim. Second he had agreed not to make nuisance with Miss Buckle. Third, the promise to proceed within two weeks was consideration. Mann LJ agreed and Sir Thomas Bingham MR gave the following judgment.See also
- Walford v Miles [1992] 2 AC 128
- Law of Property (Miscellaneous Provisions) Act 1989Law of Property (Miscellaneous Provisions) Act 1989The Law of Property Act 1989 is a United Kingdom Act of Parliament, which lays down a number of important provisions for English property law....
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