Enforceability of Contracts in Writing under the Law of Contract

Scenario involving Mr Kuznetzov and Mr Lee

Assignment Part Two Scenario.

Mr Kuznetzov is an experienced property developer in New Zealand who has bought and sold many sections of land over the last ten years. Sadly, his father has just passed away leaving him several sections of land located in different parts of the North Island.

One of the sections is in a remote part of the North Island called Rays Creek. It is not until the 5^th of January when most of the country is on holiday that Mr Kuznetzov can find the time to go and view the section.

Upon arriving he realises the section of land is quite small and he also does not like how remote it is. He realises that he cannot even get cell phone reception and there are no land lines either.

As Mr Kuznetzov is looking around, he is approached by a person that Mr Kuznetzov recognises as Mr Lee who is another experienced property developer from Auckland. Mr Lee explains that he has a holiday home at Rays Creek which is his place to have peace and quiet.

Mr Kuznetzov tells Mr Lee that he has inherited the section they are standing on, but that Rays Creek is too quiet for him and he will be selling as fast as possible. Mr Lee says, “tell you what I will do – I will buy it off you for $200,000”.

Mr Kuznetzov says “ok, that is a fair price – there is no point in delaying – you have a deal. They agree that Mr Lee will pay $2000 cash deposit straight away and settlement will be on the 1^st February and they shake hands on the deal. Mr Lee hands over the deposit of $2,000 cash straight away.

Two days later on January 7^th Mr Kuznetzov is back in cell phone coverage. He writes out a receipt, images it and sends it by email to Mr Lee. It reads:

‘Received from Mr J Lee $2000 being deposit on the purchase of my section at 21 View Road, Rays Creek. Balance of $198,000 to be paid on settlement on 1^st February.” Then on January 9^th Mr Kuznetzov receives an emailed letter from Mr Lee. It reads:

“Thank you for the receipt for the deposit paid on my purchase of your Rays Creek section. Please let me know the name and address of your lawyer so he can arrange for the necessary transfer documents.” Mr Kuznetzov thinks to himself that this sale was faster than usual. He wonders if an enforceable contract has actually been formed between him and Mr Lee. 

Assignment Question

Outline the relevant law of contract, especially the law relating to contracts in writing and discuss whether there was an enforceable contract or not by Mr Kuznetzov against Mr Lee on (1) the 5th of January, (2) the 7th of January and (3) the 9th of January. As part of your answer discuss why some types of contracts must be evidenced in writing to be enforceable and some do not. 

Note that you may assume that electronic communications of the kind listed in the scenario are equivalent to writing & signatures on paper. You do not need to discuss this.