Background
In MacPherson v MacQueen (7th august 2015) the Inner House considered the customary 2 year non-supersession clause in missives of sale.
The defender purchased a house from the pursuer. As part of the deal, the pursuer (seller) was to acquire a strip of land from the purchaser (defender) to allow development on a neighbouring site. This was encapsulated in Clause 7 of the missives which also provided:
"7. .... however, this [the conveyance of the strip] is a separate matter and it is not a condition of the Missives that it be completed prior to the date of entry."
The sale of the house went ahead and the sellers began construction on the neighbouring site. Three years went by before the sellers asked the purchaser to convey the strip. The purchasers refused to do so and the sellers commenced a court action.
Discussion
In their defence the purchasers argued that the matter was time barred - Clause 22 providing:
"The Missives shall cease to be enforceable after a period of two years from the Date of Entry except insofar as (i) they are founded upon in any court proceedings which have commenced with the said period or (ii) this provision is excluded in terms of any other condition of the Missives."
The sellers, argued that the wording of clause 7 (above), meant that the conveyance of the strip was not a condition of the contract of sale and therefore the two year time limit in clause 22 did not apply.
The Sheriff agreed with the Pursuer; finding that the parties were capable of entering into a separate contract, the terms of which could also be contained in the missives.
Decision of the Inner House
The Inner House disagreed with the Sheriff.
In their view, the obligation contained in Clause 7 was incorporated into the missives; but it was not an obligation that had to be completed "prior to the date of entry." That was all that was meant by Clause 7; it was not a separate agreement – just a post completion obligation. The Sheriff had erred when he had focused on the words "this is a separate matter and it is not a condition of the missives." The clause had to be read as a whole.
As such, the two year time limit of Clause 22 applied and the seller's claim was time barred.
Comment
Parties should beware that the two year time limit may apply to all aspects of missives- and not just the core conveyance. As with all matters of interpretation, each case has to be decided on its own merits.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
