• In the case of Daulia Ltd v Four Mill Bank Nominees Ltd 1978 Ch 231, it was found that a contract to do something which has the effect of disposing of an interest in land is a contract to dispose of an interest in land within s.40 Law of Property Act 1925

Facts of the case

  • D Ltd negotiated with F Ltd for the sale of certain properties. 
  • D Ltd alleged that there was an oral agreement that F Ltd would exchange contracts for the sale of the properties if D Ltd attended at their offices with a draft contract in terms already agreed and a banker’s draft for the deposit.
  •  D Ltd complied with those conditions, but F Ltd refused to exchange contracts. D Ltd claimed damages for breach of the oral agreements.
  • The judge struck out the statement of claim as disclosing no cause of action in that there was no note or memorandum of the agreement sufficient to satisfy the Law of Property Act 1925.
  • D Ltd appealed.

Issues in Daulia Ltd v Four Mill Bank Nominees Ltd 1978 Ch 231

  • Did a unilateral contract exist between the parties meaning the defendants were bound to complete the written contract for the property.

Held by Court of Appeal

  • Appeal dismissed

Buckley LJ

  • It was held,  dismissing the appeal, that D Ltd, having satisfied the conditions specified, there was a valid unilateral contract of which F Ltd were in breach; although the unilateral contract was not for the sale of land or an interest in land, s.40 of the Act applied to it and, in the absence of a memorandum in writing, there had to be an act of part performance before it could be enforced; D Ltd’s acts did not point to there being some contract so there was no act of part performance to exclude the provisions of s.40(1) of the Act.
  • “The acts relied on as constituting part performance are those alleged in paragraph 9 of the re-amended statement of claim. Having regard to the surrounding circumstances other than the unwritten contract, were these acts such as to suggest that it is more likely than not that they were p done in pursuance of some contract? (Steadman v. Steadman [1976] A.C. 536.) In my judgment they were not. I agree with Goff L.J. in thinking that, if one ignores the unwritten contract, the natural conclusion to draw from the acts must be that they were done not in pursuance of a contract but in contemplation of making a contract.  For these reasons I agree that this appeal must fail.” Pg 250