There have been several important developments in this area since the last update in [1993] Gazette, 28 April, 26.ENQUIRIES BEFORE CONTRACTThere is sometimes a danger that the process of the submission of enquiries before contract by the buyer's solicitor, and the seller's solicitor replying to these enquiries, (or the equivalent process using a property information form) may become something of a charade, due at least in part to the seller not wishing to be exposed to liability for misrepresentation on account of a false reply.

One way in which a seller may be willing to provide helpful information to the buyer, but nevertheless try to limit liability for misrepresentation, is to give information in the reply to the enquiry, qualified by some such expression as 'so far as the seller is aware'.

The Court of Appeal decision in William Sindall plc v Cambridgeshire County Council [1993] The Times, 8 June, concerns the effect of such a reply.A standard pre-contract enquiry asked: 'Is the vendor aware of any rights...specifically affecting the property, other than any disclosed in the draft contract..?' The seller's reply was: 'Not so far as the vendor is aware.' In fact, there was a sewer running across the land.

None of those involved in the sale by the county council was aware of the existence of the sewer, although subsequent research did bring to light documents in the archive of the county council which did reveal the existence of the sewer.Importantly, the court decided that the reply 'not so far as the vendor is aware' represents not merely that the vendor and his or her solicitor have no actual knowledge of a defect, but also that they have made such investigations as could reasonably be expected to be made by, or under the guidance of, a prudent conveyancer and that those investigations have revealed nothing.

On the facts of this case, the court decided that the county council had made the appropriate investigations; without any lead to go by, there was no reason to search the county council archive.

The reply did not therefore amount to a misrepresentation.Additionally, the court held that such an answer does amount to an implied representation that the seller's records are not in such a state that a reasonable conveyancer would realise that they were inadequate for the purpose of enabl ing him or her to answer the question; again on the facts here there was no misrepresentation.The case also deals with two other points of interest to conveyancers.

First, the court commented on the meaning of general condition 14 in the 20th edition of the national conditions of sale, which states that 'without prejudice to the duty of the vendor to disclose all latent easements...known to the vendor...

the property is sold subject to any...

easements...' Under this condition, the seller is undertaking to disclose all easements of which he or she has knowledge or the means of knowledge, but the buyer is taking the risk of there being other incumbrances not known to the seller.Secondly, the court considered the effect of the pre-printed disclaimer to be found on some standard forms, to the effect that replies are believed to be correct, but accuracy is not guaranteed and they do not obviate the need to make appropriate searches, enquiries and inspections.

Apparently, this may prevent the replies from constituting collateral warranties, but does not prevent the replies from constituting representations.CONTRACT FORMALITIESThere have been a couple of cases recently in which the courts seem to have taken a slightly stricter view of the requirements of s.2 of the Law of Property (Miscellaneous Provisions Act) 1989 than earlier cases such as Record v Bell [1991] 1 WLR 853 and Tootal Clothing Ltd v Guinea Properties Management Ltd (1992) 41 EG 117.In Wright v Robert Leonard Developments Ltd [1994] EGCS 69 one of the terms for the contract for the sale of a show flat was apparently that the sale would include certain of the contents.

However, the written contract made no mention of this and a dispute arose when the seller removed certain of the contents.

The court held that the oral agreement relating to the sale of the contents was part of 'one package' for the sale of the flat and contents.

S.2 therefore applied to this entire agreement and to comply with s.2 the written contract should have contained reference to the term for the sale of the contents.

As it did not do so, on the face of it there was no valid agreement for the sale of the flat.Interestingly, the court did not take the approach which saved the day in Record v Bell, by holding that there was a collateral contract (in that case a warranty as to title), which could be separated from the main contract for the sale of land.

However, the court was able to find another route to rescue the situation, by rectification of the written contract, which is specifically provided for in s.2(4).

Presumably in such cases the written contract is rectified to bring it in line with the previous oral agreement between the parties; obviously there may be difficulties of proof concerning this agreement.

Cases like this exemplify one possible effect of s.2, which is to allow a party to escape from a contract for what a lay person might think are 'technical' reasons, because of a defect in the drafting of the contract.The second case is Milton Keynes Development Corporation v Cooper (Great Britain) Ltd [1993] EGCS 142.

Conveyancers will remember that the fundamental requirement under s.2 is for one document, containing all the terms, to be signed by all the parties.

Of course, there is a saving provision for the standard conveyancing procedure whereby there are two separate identical documents, one of which is signed by each party, and which are then exchanged to bring the contract into existence.

However, the wording of s.2 is quite specific: this saving provision applies 'where contracts are exchanged'.In the Milton Keynes case, which concerned an alleged agreement to surrender an underlease, there had been an exchange of letters by fax.

The court held that the only way in which s.2 could be satisfied would be if the exchange of faxes amounted to an exchange of contracts.

The reference to exchange of contracts within s.2 was held to be a technical process, normally involving solicitors, as opposed to correspondence directly between the parties, as here.

It was clear that the exchange of faxes was not an exchange of contracts, and s.2 was not satisfied.

There was no valid agreement.To extrapolate from this case, it seems that any exchange of letters will be insufficient to satisfy s.2 unless one can characterise each letter as a 'contract' within the fairly narrow meaning adopted by the court.LOCK-OUT AGREEMENTSLock-out agreements, whereby a prospective seller agrees not to negotiate with anyone other than the prospective buyer for a certain period of time, have already been given the blessing of the courts in Walford v Miles [1992] 2 AC 128 and Pitt v PHH Asset Management Ltd (1993) 40 EG 149.

They may become more popular when the property market is again in full swing, and they may already be in evidence where local conditions lead to competition for a property.Certain considerations must be borne in mind when setting up and drafting the agreement.

First, there must be a clear statement of the period for which the lock-out will last, that is the period for which the seller agrees not to negotiate with any other buyers.

In the absence of an agreement concerning the duration of the lock-out, the court will not infer that the agreement is to last for a reasonable time and fix such a time.

Secondly, as with any other contract, there must be consideration provided by both parties.

In some circumstances there may be difficulty in showing that consideration is provided by the prospective buyer.In Pitt, the court held that the buyer had provided consideration by refraining from pursuing threatened injunction proceedings against the seller, although the court accepted that the buyer could never have succeeded in these proceedings.

The buyer had also previously threatened to cause trouble by informing a competing buyer of his withdrawal and inviting her to lower her offer.

Again, the court thought that the removal of this threat could be part of the consideration provided by the buyer.Perhaps of more general significance, the court held that the promise by the buyer to limit himself to the period of the lock-out agreement, which was two weeks, if he were to exchange contracts, was of value to the seller.

'The [seller] had the benefit of knowing that if he chose to give the [buyer] a draft contract to agree, there would be no delay on the [buyer's] part beyond a maximum of two weeks.' However, there can of course be no guarantee that an exchange of contracts will result from a lock-out agreement.

It is a lock-out agreement rather than a lock-in agreement obliging the parties to negotiate and agree.In drafting lock-out agreements, conveyancers should therefore be sure to identify not only the duration of the agreement, but also the consideration.

Incidentally, the court in Pitt decided that the agreement was not caught by s.2 of the Law of Property (Miscellaneous Provisions) Act 1989, as not being a contract for the sale or other disposition of an interest in land.STAMP DUTY ON EXCHANGESThe attention of conveyancers is drawn to the detailed statement on stamp duty on exchanges, containing t he text of the Inland Revenue press release, to be found in [1994] Gazette, 4 May, 32.

In particular, if a transaction is structured not as an exchange, but as a sale for a price which may be partly satisfied in kind (ie by another property), this will probably result in some saving of stamp duty.