Summary

The parties had not reached a oral agreement providing one party with an extension of time by which to deliver an environmental report. Even if there had been an oral agreement, the court would have been bound to declare that no agreement had actually been concluded as the parties had been operating on a subject to contract basis.

Facts

The claimant company (B) claimed a sum of money that had been retained by the defendant urban regeneration agency (U) following the completion of a contract for the sale of B's land to U. B had agreed to sell a land site to U for urban redevelopment. The contract for sale provided that on completion B would provide U with a sum of money to be retained in an account, that within three months of completion B would vacate the site, and that U would instruct an environmental consultant to assess the site for contaminated substances and deliver a report to B. If a report was not delivered within the three months, or there was no relevant contamination, the contingency sum would be paid to B. Completion took place, but B continued to occupy the site under a lease. U then granted B a further lease at the expiry of which B vacated. U failed to deliver a report within three months of B's vacation. B demanded the contingency sum, but U refused to pay. U contended that there had been an oral agreement between the parties by which, in consideration for U granting B a second lease, B had agreed to extend the time for delivery of the report.

Held

(1) From the evidence there had been at least one discussion between the parties as to the possibility of a lease extension and an extension of time for delivery of the report. However, it was not suggested that that discussion was legally binding on either party. A letter entitled "without prejudice subject to contract" from a representative of U to B referred to U reverting to B on the terms of a new lease. While the words "without prejudice" and "subject to contract" indicated that the parties were close to agreeing a new lease and time extension, no contract had been concluded between the parties as neither party had spoken words to each other, either subjectively or objectively, that amounted to an offer by one party that was unequivocally accepted by the other party. While a second lease had been agreed, that agreement was silent as to the issue of extending time for the production of the report. (2) If it had been determined that there had been an oral agreement, the court would have been bound to conclude that no agreement had actually been concluded as the parties had been operating on a subject to contract basis.

Judgment for claimant