Pitt v PHH Asset Management Ltd

Pitt v PHH Asset Management Ltd 1 WLR 327 is an English contract law case, which confirmed the enforceability of lockout agreements.

Facts

In Parsonage Lane, Chelsworth, Suffolk, is a residence known as "The Cottage". PHH Asset Management Ltd were undisclosed agents of mortgagees, who were selling The Cottage for £205,000. Mr Pitt and Miss Buckle put in competing bids. Mr Pitt bid £200,000, which PHH accepted 'subject to contract'. Miss Buckle then increased her bid to £210,000. PHH withdrew its acceptance of Mr Pitt.
Mr Pitt was invited to increase his offer but declined as he didn't want to enter a bidding war. The sales agent subsequently invited the two parties to submit sealed bids to which Mr Pitt agreed provided were he to submit the successful bid then the vendor would not consider further offers. This is known as a "lock-out agreement" with Mr Pitt ready, willing and able to proceed to completion of the purchase within a 2-week period on receipt of the draft contract. Mr Pitt submitted the highest of the sealed bids and believed PHH Asset Management Ltd on behalf of the vendor were contractually committed to sell to him. Miss Buckle subsequently increased her offer which the vendor accepted. Mr Pitt withdrew from the process as he believed the vendor had reneged on the agreement, the "lock-out agreement" and took legal action to recover his costs.

Judgment

Peter Gibson LJ held there was a consideration. First, Mr Pitt had agreed to not apply for an injunction. Even though the claim may not have worked, PHH was freed from the 'nuisance value' of defending the claim. Second, he had agreed not to make a nuisance with Miss Buckle. Third, the promise to proceed within two weeks was considered. Mann LJ agreed and Sir Thomas Bingham MR gave the following judgment.