Question

Jay and Mitchell were negotiating for Jay to purchase Mitchell’s valuable antique book collection. They both signed a document prepared by Mitchell’s sales agent which clearly identified the parties, time of exchange, price and property and contained a clause which stated:

“This agreement is made subject to the preparation of a contract of sale which shall be acceptable to my solicitors on the above terms and conditions.”

Two days after this document was signed, Mitchell had informed Jay that he had changed his mind and did not wish to sell the book collection. Jay insists they have a contract. Mitchell says they do not.

Who is correct? Give reasons for your answers.

Answer 1

Answer- Mitchell is correct, because the both parties are legally not bound by the Contract as until the fornal Contract was executed. It can be clearly indentified by the clause mention in the Contract document which states "This agreement is made subject to the preparate of a Contract of sale which shall be acceptable to my solicitors on the above terms and Conditions. It This clause allows both party solicitors to modify the agreement to their satisfaction and include or delete any other terms and Conditions they consider appropriate. Hence the agreement between Jay and mitchell was not a formal agreement because the formal Contract was nott enecuted. In that case il mitchell refuses to sell his book collection to Jay. He Cando so and he is not legally bound by the agreement. Mitchell shows his intention of not selling his book collection to Jay before finalizing or formalising the agreement,