Web Chapter 1 Guidance on questions

Question

Two years ago Daniel Tuncliffe, a child actor, then aged 15, and famous for his role in a series of successful films, signed a contract with Crumb, a property developer. In the contract he agreed to purchase for £1.5 million a penthouse flat in a luxury apartment block, which Crumb was in the process of building. Daniel, who was advised by leading city real-estate solicitors, paid a deposit of £250,000, with the balance of £1,250,000 due on completion. Two years later, Crumb has completed the flat, but the property market has crashed and it is worth less than half the contract price. Daniel wishes to recover his deposit and walk away, while Crumb wishes to hold Daniel to his obligation to pay the balance and buy the flat. Discuss.

Answer guidance

You are asked to ‘discuss’ the problem, so you must look at it from both sides and consider whether Daniel can recover his deposit and whether Crumb can enforce the contract (for issues concerning specific performance and recovery of an agreed sum, see chapter 17). As Daniel was only 15 when he purported to make the contract, the relevant issue is his capacity to contract. Contracts to acquire an interest in property, such as this, are binding on a minor unless disclaimed. As he is still only 17, Daniel can expressly disclaim the contract now and reclaim the deposit (although ordinarily a seller can retain the deposit when a purchaser repudiates a contract for the sale of land, this will not apply if the contract is disclaimed by a minor and is, in any event, subject to certain rules, on which see chapter 18). If the contract is disclaimed, Crumb will not be able to enforce it directly or indirectly by means of an action for damages for breach of contract, but you should consider whether Crumb has any other means of redress (in practice, a professional negligence against Crumb’s solicitors might be fruitful, if they allowed him to contract with a minor without checking his age!).