Gazundering!

NotInventedHere · 03-10-2005 9:48am #1

It's the opposite of gazumping. I'm in a situation where I know the vendor needs a quick sale. I was thinking of saying I can only raise 5 grand less than the asking price ( I have it all BTW) as contracts are being signed tomorrow just to chance my arm. What do you people think?

MorningStar · 03-10-2005 9:56am

NotInventedHere wrote:

It's the opposite of gazumping. I'm in a situation where I know the vendor needs a quick sale. I was thinking of saying I can only raise 5 grand less than the asking price ( I have it all BTW) as contracts are being signed tomorrow just to chance my arm. What do you people think?

It's a really sh*tty thing to do. A bad personal and business approach. Karma is a bitch. IMHO

AndyWarhol · 03-10-2005 12:06pm

MorningStar wrote:

It's a really sh*tty thing to do. A bad personal and business approach. Karma is a bitch. IMHO

What? If he thinks he's paying too much, then why not bargain with the seller if he thinks he can? It's called business.

ambro25 · 03-10-2005 12:13pm

NotInventedHere wrote:

It's the opposite of gazumping. I'm in a situation where I know the vendor needs a quick sale. I was thinking of saying I can only raise 5 grand less than the asking price ( I have it all BTW) as contracts are being signed tomorrow just to chance my arm. What do you people think?

Are you saying that you and the seller agreed a price, on the basis of which contracts are being signed tomorrow, and you now want to pay €5k less?

That is a breach of contract, yours specifically, my friend (verbal offer and acceptance of same is a binding contract).

If not the above situation, and you're still at negotiation stage (you have not made an offer for the asking price) then I can't see any reason why not.

rooferPete · 03-10-2005 12:25pm

Hi,

It could be more than a tad embarrasing if the vendor says no problem I'll let the next in line buy it ?

If you shake hands on a deal it should be worth more than your signature on a piece of paper, ever hear the saying "my word is my bond" ?

Negotiate, haggle get the best deal by all means but when that deal is done the legal part should be nothing more than a formality.

Just my ten cents

MorningStar · 03-10-2005 12:38pm

AndyWarhol wrote:

What? If he thinks he's paying too much, then why not bargain with the seller if he thinks he can? It's called business.

He agreed a price and now wants to go back on his word that's not business.

As you think I am scum by just being a landlord maybe you should look at your own actions/suggestions and figure out it is what you do that makes you scum.

copacetic · 03-10-2005 1:21pm

AndyWarhol wrote:

What? If he thinks he's paying too much, then why not bargain with the seller if he thinks he can? It's called business.

it's not called business, he offered this price and now he hopes to shaft the seller because he thinks at this late stage he might get away with it. All the bargaining was presumably done a while ago and a price was agreed.

However there is nothing to stop him doing it except common decency, you might say that has no place in business, but what about if the seller calls his bluff and says not only will he not go down 5k, he is raising the price by 5k.

If you play with fire expect to get burnt, I know if I was the seller I would tell him where to go and would consider not even selling to him at the original agreed price.

ambro25 · 03-10-2005 1:31pm

daveym wrote:

All the bargaining was presumably done a while ago and a price was agreed.

However there is nothing to stop him doing it except common decency

Wrong. Read my post (said with a kind voice

): if the OP offered a price (with no conditions, e.g. subject to survey, not subject to contract) and the seller accepted it, then there is a verbal contract between the seller and the buyer, for the buyer to sell and the seller to buy at the agreed price.

It's only the actual sale (transfer of title in the property, if you will) which is subject to contract, not the price agreed.

The Seller may not up the price either, by the same (legal, btw) reason.

However, the Seller would be in his rights to issue legal proceedings (leaving aside any further commentary on that - suffice to point out that contracts have *presumably, from the OP* been drawn on the basis of the originally agreed price - so pretty much open and shut, insofar as 'verbal agreement' cases go).

copacetic · 03-10-2005 2:32pm

ambro25 wrote:

Wrong. Read my post (said with a kind voice ): if the OP offered a price (with no conditions, e.g. subject to survey, not subject to contract) and the seller accepted it, then there is a verbal contract between the seller and the buyer, for the buyer to sell and the seller to buy at the agreed price.

It's only the actual sale (transfer of title in the property, if you will) which is subject to contract, not the price agreed.

The Seller may not up the price either, by the same (legal, btw) reason.

However, the Seller would be in his rights to issue legal proceedings (leaving aside any further commentary on that - suffice to point out that contracts have *presumably, from the OP* been drawn on the basis of the originally agreed price - so pretty much open and shut, insofar as 'verbal agreement' cases go).

I am assuming there is no way the buyer offered the price without 'subject to contract' no solicitor would let you. There is a name for this 'gazundering' just as there is a name for 'gazumping'.

check out the law reform report:
http://www.lawreform.ie/publications/data/lrc105/lrc_105.html

section 1.09

Since the effect of the stipulation 'subject to contract' might not always be obvious to the lay person, we also posed questions which were designed to explore the extent to which a purchaser understands that neither party is legally bound, and in particular that the vendor is not obliged in law to sell at the agreed price

the web is great! another quote from the above doc:

Secondly, the much more usual way is to avoid creating a memorandum which would satisfy the Statute of Frauds. This means that even where there is already a concluded oral agreement, without a memorandum that oral agreement is not enforceable

apology accepted in advance!

(meant in the nicest possible way!)

ambro25 · 03-10-2005 3:09pm

I note (in passing) that the Reform Reports appear to be just that - Reports. Have Statutes been suitably updated? As that would be quite a momentous change to the Law of Contracts and the legal principle of Equity, as they currently stand in the UK and IE (both of which are Common Law jurisdictions, Statutes notwithstanding, not Civil Law jurisidictions per -say- FR, DE, IT, etc.).

Not quite apologizing just yet

Further excerpts -

2.002

In order to enforce an agreement for the sale of land, a plaintiff must first show that there is an agreement. He must then show that the necessary formalities, as required by s. 2 of the Statute of Frauds (Ireland), 1695,1 have been complied with. Alternatively, an oral agreement may be enforced by reliance on the equitable doctrine of part performance. The pregnant phrase “subject to contract” will usually prevent a binding contract from coming into existence. The law on these matters is, for the most part, well-established, and is set out here so as to place the problems associated with booking deposits in context.

Is there a Concluded Agreement?
2.003

This first enquiry is crucial. Without an agreement, there is nothing to enforce. In order to have an agreement, there must be consensus on all essential terms. As a matter of law, the essential terms will always include the parties, the property to be sold and the purchase price. In addition, there must be agreement on any terms regarded by the parties as being essential.2 Any non-essential terms which have not been settled by the parties will be implied into the agreement by general law.3

2.004

Whether the parties have actually agreed on the necessary issues is an evidential matter. The courts are usually quite willing to find that the parties have come to a concluded agreement. The cases reveal that even where the parties have discussed an issue, thereby demonstrating that it has some importance for them, the courts may still find as a fact that they did not regard it as essential.4 In this way, the courts lean towards enforcement. However, once the court finds that the parties regarded a term as essential, agreement must have been reached on the issue.5

2.007

The parties must also have intended to enter into a legally binding contract for there to be a concluded oral agreement. If the parties agree that they will not be bound in the absence of a written contract, there is no concluded agreement even if all of the terms regarded as essential at law have been settled. In the recent case of Embourg Ltd. v. Tyler Group Ltd,12 a booking deposit had been paid and was accepted subject to the exchange of formal contracts. The Supreme Court held that the parties had not intended to be bound until these formalities had been completed. Since this had not been done, there was no binding agreement.13

(...)

"The phrase “unless the agreement upon which such action shall be brought or some memorandum or note thereof shall be in writing” means that there are two ways in which an enforceable contract for the sale of land can come into being: either the agreement itself is in writing, or there is an oral agreement of which there is a written memorandum or note. An oral contract for the sale of land can, therefore, be enforced provided the person seeking to enforce it can produce appropriate evidence in the form of a memorandum or note."

And especially:

2.023

There are two ways to avoid binding legal obligations. Firstly, either party may state orally that they do not wish to be bound. Without a mutual intention to create legal relations, there is no concluded oral contract. Secondly, the much more usual way is to avoid creating a memorandum which would satisfy the Statute of Frauds. This means that even where there is already a concluded oral agreement, without a memorandum that oral agreement is not enforceable.30 While no particular set phrase is required, the best known of the phrases used by both parties to achieve this result is “subject to contract.”

That this phrase can effectively delay binding legal obligations was assumed by virtue of a long series of authorities,31 beginning with Winn v. Bull,32 in which Jessel M.R. stated:

“Where you have a proposal or agreement made in writing expressed to be subject to a formal contract being prepared, it means what it says, it is subject to and is dependent upon a formal contract being prepared. When it is not expressly stated to be subject to a formal contract, it becomes a question of construction whether the parties intended that the terms agreed should merely be put into correct form, or whether they should be subject to a new agreement, the terms of which are not expressed in detail.”33

There was a similar statement in Thompson v. The King34:

“Where an offer and acceptance are made subject to a subsequent formal contract, if such contract is a condition or term which until performed keeps the agreement in suspense, the offer and acceptance have no contractual force. On the other hand, if all the terms are agreed on, and a formal contract is only contemplated as putting the terms in legal shape, the agreement is effectual before and irrespective of such formal contract.”

So, the crux of the matter in this thread, is whether the price is such a "term agreed" and I'd venture that -considering the context of a house purchase- it is.

copacetic · 03-10-2005 3:20pm

ambro25 wrote:

I note (in passing) that the Reform Reports appear to be just that - Reports. Have Statutes been suitably updated? As that would be quite a momentous change to the Law of Contracts and the legal principle of Equity, as they currently stand in the UK and IE (both of which are Common Law jurisdictions, Statutes notwithstanding, not Civil Law jurisidictions per -say- FR, DE, IT, etc.).

Not quite apologizing just yet

maybe so but the report deffo reflects what those in the industry feel is the state of the law, so even if they are all wrong that is what they think.
i.e you would never get a solicitor to bring a case for breach of oral contract on a house sale..

Maybe it's a case of general practise rather than actual law, I wouldn't pretend to be an expert, but when I bought my place, my sol and the vendors sol were at pains to point out at every stage that until the contracts were signed nothing was legally binding...

copacetic · 03-10-2005 3:23pm

ambro25 wrote:

I note (in passing) that the Reform Reports appear to be just that - Reports. Have Statutes been suitably updated? As that would be quite a momentous change to the Law of Contracts and the legal principle of Equity, as they currently stand in the UK and IE (both of which are Common Law jurisdictions, Statutes notwithstanding, not Civil Law jurisidictions per -say- FR, DE, IT, etc.).

Not quite apologizing just yet

Further excerpts -

must point out though that your second extract says that the oral contract is useless without paper to back it up !! not quite qed but close!!

ambro25 · 03-10-2005 3:32pm

daveym wrote:

must point out though that your second extract says that the oral contract is useless without paper to back it up !! not quite qed but close!!.

Note that the written contract (not yet signed) constitutes such a memorandum

"Question 13 asked if depositors in general understood that either party was completely free to renege before a formal contract was entered into.Responses were evenly divided.

The next question asked if depositors nonetheless sometimes believed that they had legally binding contracts entitling them to purchase at the stated price. Interestingly on this question the majority of responses indicated that purchasers believed this to be so. This suggests that purchasers believe either (a) that they can renege, but the vendor cannot, or (b) that either party can renege, but if the sale goes ahead the price has been fixed. Question 15 asked if depositors nonetheless believed that they had a concluded oral agreement. Again, responses were evenly divided"

2.003
This first enquiry is crucial. Without an agreement, there is nothing to enforce. In order to have an agreement, there must be consensus on all essential terms. As a matter of law, the essential terms will always include the parties, the property to be sold and the purchase price. In addition, there must be agreement on any terms regarded by the parties as being essential. Any non-essential terms which have not been settled by the parties will be implied into the agreement by general law.

daveym wrote:

maybe so but the report deffo reflects what those in the industry feel is the state of the law, so even if they are all wrong that is what they think.

But that's exactly the point: ignorance of the law does not shield you from its effects. Which is surprising from "those in the industry" (those in the industry of applying the Law being Judges, last time I checked

- one on the 'panel'). So unless the report has caused "the Law" (or its interpretation in Court) to be changed, The Law is still The Law. Is my point

Good link, btw. And re-check my post, third raft of quotes

TBH, I doubt that it would be worth the hassle for the seller, all the same - and chances of a win I'd put at 50/50 at best. But under current Contract Law, if the Seller felt 'anal' about it, there would be a breach of an oral agreement, technically (legally) speaking.

Gazundering!

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