Today’s world sees lots of business being conducted via email. This is fine when both parties are aware of what they are doing . However, the recent Court of Appeal decision in the case of Nicholas Prestige Homes v Neal [2010] EWCA Civ 1552 highlights the fact that contracts can all too easily be formed between parties when corresponding by email, even if that is not the genuine intention of one of the communicating parties.
The case of Nicholas Prestige Homes (“NPH”) particularly shows that buyers (in this case, of residential property) must take care when dealing with suppliers of goods and services by email in order to avoid making expensive mistakes.
In this case, NPH’s claim for damages was upheld after it was found that the seller of the property had entered into a sole agency agreement with NPH by email but had then gone on to sell her property through a third party agent. Although the seller, Mrs Neal, had argued that there was no contract in existence with NPH, the court held that a contract did in fact exist and had been entered into by email (see details below). The contract with NPH had been breached because the seller had continued to instruct a third party estate agent and breached the sole agency clause of her contract with NPH.
Facts
In 2006, the Defendant, Mrs Neal, had been trying to sell her property. After having instructed several estate agents who did not find her a buyer, Mrs Neal entered discussions with NPH about selling her property. On 24 November 2006, Mark, an employee from NPH, sent Mrs Neal an email which said:
“Further to our meeting yesterday (23 November 2006) we write to thank you for your instructions and confirm the agreed arrangements….”
NPH’s email then went on to state that:
- NPH was to be appointed on a multi-agency basis until 31 December 2006 during which time Mrs Neal would disinstruct all other agents save for Mssrs Plum Property who would cease marketing the property from 1 January 2007;
- NPH would then have sole selling rights from 1 January 2007.
- Both sets of terms required Mrs Neal to pay NPH commission if at any time, contracts for the sale of the property were exchanged with a buyer that NPH had introduced in any way to the property during its agency period.
- NPH’s sole agency agreement would last for a period of 16 weeks and would continue until terminated by giving 21 days’ written notice. During the 16 week period, the seller would not market the property for sale privately or instruct any other agent to market or sell the property.
On 28 November 2006 Mrs Neal sent a reply to NPH’s email of 24 November in which she said:
“Hi Mark, that’s fine, look forward to viewings.”
It is to be noted that Mrs Neal’s response, which accepted NPH’s earlier email, was a direct reply to NPH’s email of 24 November 2006 and was not a new and freshly created email.
The property was actually sold through Plumm Properties to a buyer who had initially contacted NPH and then Plumm Properties. When NPH subsequently claimed £10,883 in commission, Mrs Neal argued that there was no contract between them and that she had never intended to bind herself to a sole agency agreement with NPH. Mrs Neal had not fully read the email from NPH nor the attachments sent with it, which related to both its sole and multiple agency terms.
The First instance decision
At first instance, the judge found that there was a contract between NPH and Mrs Neal which Mrs Neal had entered on 28 November 2006 on the terms set out in NPH’s e-mail of 24 November 2006 and which Mrs Neal had accepted in her e-mail reply of 28 November 2006. However, the judge dismissed NPH’s claim for commission, since he said that NPH had not caused the sale of the property.
NPH appealed this decision on an alternative claim of breach of contract and argued that Mrs Neal had breached the contract by continuing to appoint other agents who were eventually the cause of the sale of the property. NPH claimed the amount of £10,883 which it said it would have received on the sale of the property, had Mrs Neal not instructed Plumm.
The Court of Appeal Decision
The Court of Appeal allowed the appeal and Lord Justice Ward gave the leading judgment. Ward LJ upheld the finding of the first instance judge and found that there was a contract made by the two e-mails and proceeded on the basis that a sole agency agreement existed between NPH and Mrs Neal. He said that it was plain that during the period for which NPH had sole selling rights, NPH was to be the only person marketing the property.
However, because Plumm had remained instructed until 20 January 2007, the eventual purchaser had dealt with them and not NPH. Therefore, Ward LJ found that there was a breach of the express term of the contract that no other agent should be instructed, given that the e-mail term had expressly stated that Plumm was to cease marketing the property from 1 January 2007.
Accordingly, Ward LJ held that NPH was entitled to damages for loss of chance. NPH had lost the chance of earning the commission and if Plumm had not been instructed, the same sale would surely have been clinched by NPH. The “lost chance” was assessed at 100% and NPH was awarded damages of £10,883.