Do I have grounds to claim legal costs?

Hello there, wonder if you can advise me.

We were selling a small business, the purchaser asked us to wait until his house was sold which we agreed to. The house was finally sold 10 months after the initial offer and we were getting to the exchange point, we asked for exchange and completion on the same day. The purchaser had assured us that the sale was going through and to get on with the rest of our lives which had been held in limbo for months. We took him at his word … then he pulled out after a discussion with another business owner in the same small town who was opening up a similar business. This scared our purchaser off, didn’t like the competition. We have been left with a huge problem running the business as we had moved on and bought another in a different part of the country and we now have legal fees of ?6000 for the sale that didn’t happen.

Do I have any comeback against the purchaser who promised dozens of times that this purchase was going to happen? Had he not had that conversation the week we thought we were exchanging and completing, it would have gone through.

Any guidance would be much appreciated.

132 viewslitigation

Alasdair Taylor's Answer

It is difficult to give useful guidance for this kind of question without being in full possession of the facts. Accordingly, please treat what I say below with caution: there may be circumstances that mean what I say is misleading – or plain wrong.

What you are looking for is a “cause of action”: a basis upon which you can bring (or threaten to bring) legal proceedings against the other party. On the facts as you present them, I can’t see any obvious candidates.

First, breach of contract.  If you have not exchanged contracts, presumably there is no contract. Could there be an ancillary contract of some kind? You need (amongst other things) an “intention to create legal relations”, and an agreement to agree is not usually enforceable (although there are exceptions).

Second, promissory estoppel. This is a claim that a person relying upon a promise, to his detriment, may enforce that promise. However, in general promissory estoppel can be a shield, but not a sword.  See:

I can imagine other more outlandish arguments under the law of negligence (negligent misstatement) or even malicious falsehood, but I doubt these would succeed.

For the reasons given above, I think you should consider getting proper advice about this.

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