BUCKLEY L.J. In this action the plaintiffs, Mr. and Mrs. Domb, sue as purchasers for specific performance of a contract of sale by the defendant, Dr. Isoz, to them of property known as 34 Erskine Hill, London, N.W. 11. Alternatively, they claim damages for breach of contract. The action was tried before Dillon J., sitting at that time as a deputy judge of the Chancery Division, on July 31, 1978. At that stage the plaintiffs were seeking specific performance of the contract. The deputy judge dismissed the action on the ground that there was no concluded contract. The plaintiffs appeal from that dismissal. Since judgment they have bought another house and consequently at the opening of this appeal the plaintiffs elected to seek damages rather than specific performance.
The contract in question formed one of a chain of transactions, as so frequently occurs nowadays when domestic accommodation is being disposed of on the market: there were three transactions involved. The plaintiffs were proposing to sell their house, 38 Chelmsford Square, Willesden, to a Mr. Petsas. The plaintiffs' solicitors acting in that matter were the firm of Yudolph & Brooke and the partner in that firm who was acting for the plaintiffs in the matter was a Mr. Redstone. Mr. Petsas's solicitors were Messrs. Lickfolds. The plaintiffs were proposing to acquire 34 Erskine Hill from the defendant, and in that matter again Mr. Redstone was acting for the plaintiffs. The defendant was represented by the firm of William Heath & Co. in the person of a Mr. Bond, who was a salaried solicitor employed by that firm.
The defendant was proposing to acquire a flat or maisonette in Westbourne Terrace, London, from a Mr. Holding. In respect of that transaction Mr. Bond was the solicitor acting for the defendant and, by coincidence, Yudolph & Brooke were the solicitors acting for Mr. Holding. But it was not Mr. Redstone who was acting for Mr. Holding; it was Mr. Brooke, another partner in that firm. I shall refer to those three transactions as the first, the second and the third transaction. This action relates to the second transaction.
On December 22, 1977, Mr. Redstone wrote a letter to Mr. Bond (for the sake of simplicity I shall refer to them by their individual names rather than by the names of their firms) in relation to the second transaction. In that letter he said:
"We enclose herewith our clients' part of the contract together with their cheque in your favour for £2,950 the balance of the deposit the sum of £300 being held by Messrs. Benham & Reeves your clients' agents."
Then there comes a passage which relates to a separate matter, but I shall read it now while I am on the letter:
"We are instructed that there are included in the sale for the avoidance of doubt the following: (1) Garden shed. (2) All bathroom fittings. (3) All kitchen fitted units including wall and floor units, electric hob and the wall oven. Our clients are of the opinion that the reasonable value that may be ascribed to the above fixtures and fittings is £2,500 and would you, therefore, please confirm that the price of £32,500 may be apportioned as to £30,000 for the property and £2,500 for the above mentioned items. The transfer from your client to our clients will then be at £30,000."
Then I omit two irrelevant short paragraphs and read on:
"Would you please hold the enclosed contract and deposit cheque to our order until we are able to agree with you on the telephone that contracts may be exchanged and agree a completion date which we are fairly fluid on as we should be receiving in the course of the next day or so our clients' contract for the sale of their present property and we wish to effect simultaneous exchange of contracts on both transactions."
Immediately before February 9, 1978, which was a crucial (late in the history of this matter, the position with regard to the three transactions was as follows; I read from the judgment:
"The First Transaction. On December 20, 1977, Messrs. Lickfolds had sent to Mr. Redstone the part of the contract for the purchase of 38 Chelmsford Square signed by Mr. Petsas and a cheque for the deposit. They had expressed eagerness on Mr. Petsas's part for early completion and had authorised Mr. Redstone to exchange at any time by inserting a completion date 14 to 28 days from exchange and sending the vendors' part. Subsequently, by further letters, Messrs. Lickfolds had sought to put a degree of pressure for an early exchange on the plaintiffs. By February 9, Mr. Redstone had in his hands the part of this contract signed by the plaintiffs and was in a position to exchange if he could tie up the second transaction.
"The Second Transaction. On December 22, 1977, Mr. Redstone sent to Messrs. William Heath & Co. the part of the contract for the purchase of 34 Erskine Hill signed by the plaintiffs and a cheque for the deposit. The relevant paragraph of his letter reads as follows"
- and then the judge read a passage from the letter I have just referred to and the judgment goes on:
"By February 9, Mr. Bond of William Heath & Co. had in his hands the part of this contract signed by the defendant and was in a position to exchange if he could tie up the third transaction. There was, in fact, a difference between the part of the contracts signed by the plaintiffs and the part signed by the defendant; this raises an entirely separate point to which I shall refer later. "The Third Transaction. The title to 40 Westbourne Terrace was sub-under leasehold and a bit complicated although registered. Mr. Bond had had some difficulty in getting hold of documents which he needed to see before he would agree to an exchange of contracts. Mr. Brooke did not hold these documents since he had not acted on Mr. Holding's purchase. Accordingly, Mr. Bond had got in touch with the solicitors who had then acted and on the morning of February 9, he received from them the documents he wanted. He had in his hands the part of this contract signed by the defendant and he had been told by the defendant that Mr. Holding had told her that March 2, 1978, would be acceptable to Mr. Holding as a completion date. Mr. Bond did not, however, know that Mr. Brooke had not yet received Mr. Holding's signed part of the contract. Moreover, though Mr. Bond believed from what the defendant had told him that Mr. Holding would have told Mr. Brooke that March 2 was an acceptable completion date, I am not satisfied that Mr. Holding had in fact mentioned this date to Mr. Brooke."
On February 9, 1978, Mr. Bond telephoned Messrs. Yudolph & Brooke and spoke in the first instance to Mr. Brooke. He told Mr. Brooke that he had received the outstanding documents, and there was some discussion about inspection of the register and the obtaining of evidence that there was no encumbrance affecting the title. At that stage Mr. Bond asked to be transferred to Mr. Redstone, and the switchboard at Yudolph & Brooke's transferred Mr. Bond to Mr. Redstone and another conversation took place between them. According to the judge's findings, Mr. Bond and Mr. Redstone agreed March 2, 1978, as the completion date for the second transaction. Mr. Redstone then proposed that the contracts should be treated as immediately exchanged by telephone as of the moment they were speaking, and that this should be irrevocable and without benefit of second thoughts; and Mr. Bond, fully understanding that proposal, agreed to it.
Mr. Bond was then transferred back again by the switchboard to Mr. Brooke, and some reference was made between them to March 2 as a proposed completion date for the third transaction; Mr. Brooke said that he would have to obtain instructions about that from Mr. Holding. I should observe here that after that conversation Mr. Redstone despatched to Messrs. Lickfolds the plaintiffs' part of the contract for the sale comprised in the first transaction, and Mr. Bond, on that same day, dictated a letter in the following terms addressed to Messrs. Yudolph & Brooke:
"Dear Sirs, Re: 34 Erskine Hill, N.W.11. As arranged, we enclose our client's signed part of the contract having dated both as of February 9 and having inserted in each as the completion date March 2 next as arranged."
Mr. Brooke made contact with Mr. Holding and was instructed by Mr. Holding to insist on a six-week completion period, with the consequence that he was unable to comply with Mr. Bond's request that the completion date for the third transaction should be March 2, and with the ultimate result that the contract between Mr. Holding and the defendant went off, and the defendant never succeeded in acquiring the premises in Westbourne Terrace.
The judge took the view that the effect of the conversation on the telephone of February 9 between Mr. Bond and Mr. Redstone was that they thereby purported to dispense with exchange of the contracts relating to the second transaction, and to bind their clients immediately to a contract in the terms of the documents which they had already signed but which, on the judge's view, had not been exchanged.
With deference to the judge, I take a different view. Mr. Redstone and Mr. Bond did not purport to dispense with exchange of the contracts; they purported to effect an exchange of the two parts of the contract. The question is, I think, whether they succeeded in achieving their object.
By that conversation Mr. Redstone released Mr. Bond from the obligation under which he had hitherto been in consequence of the letter of December 22, to hold the plaintiffs' part of the contract relating to the second transaction to Mr. Redstone's order. Mr. Bond, by the same transaction, by implication if not expressly, undertook to transmit the defendant's part of the same contract to Mr. Redstone. [His Lordship reviewed part of the evidence in the course of which Mr. Bond accepted that in consequence of the telephone conversation he became under an obligation to send his client's signed part of the contract to Mr. Redstone.]
Mr. Millett says that thereafter Mr. Bond held the defendant's part of the contract to the order of Mr. Redstone, and that Mr. Bond could have no right to retain it from Messrs. Yudolph & Brooke. I think the question which arises is whether Mr. Bond had ostensible authority to do that; if so, did it amount to an exchange of contracts?
Mr. Godfrey has submitted that Mr. Bond did have ostensible authority to effect exchange of contracts in relation to 34 Erskine Hill, but he says "in the customary manner" - that is to say, by an exchange carried out in accordance with the settled practice of conveyancing, for example by physical or postal delivery to the purchaser's solicitors of her part of the contract, and he submits that Mr. Bond did not have ostensible authority to effect exchange of contracts in relation to 34 Erskine Hill otherwise than in what he describes as "the customary manner."
In that respect Mr. Godfrey relies on the decision of this court in Eccles v. Bryant and Pollock  Ch. 93. The headnote of that case reads:
"Where parties enter into an agreement for the sale of real property 'subject to contract,' the contract, in the absence of express agreement to the contrary, is not complete until the parties have exchanged their copies in accordance with ordinary conveyancing practice, and until such exchange is effected either party can withdraw."
In so far as that headnote suggests that the court said anything about what the "ordinary conveyancing practice" was, I think the headnote goes further than anything that can be found in the judgments.
Lord Greene M.R. said, at p. 97:
"One thing is quite clear on the facts of this case to my mind, that both firms of solicitors, one of whom - that is the vendors' solicitors - practised in East Grinstead and the other of whom, the purchaser's solicitors, practised in London, when they were instructed to carry this matter through by their respective clients, contemplated and intended from beginning to end to do so in the customary way which is familiar to every firm of solicitors in the country, namely, by preparing the engrossment of the draft contract when agreed in duplicate, the intention being to do what I have no doubt at this very moment is happening in dozens of solicitors' offices all over the country, namely, to exchange the two parts when signed by their respective clients."
Lord Greene M.R. continued, at pp. 99-100:
"When parties are proposing to enter into a contract, the manner in which the contract is to be created so as to bind them must be gathered from the intentions of the parties express or implied. In such a contract as this, there is a well-known, common and customary method of dealing; namely, by exchange, and anyone who contemplates that method of dealing cannot contemplate the coming into existence of a binding contract before the exchange takes place.
"It was argued that exchange is a mere matter of machinery, having in itself no particular importance and no particular significance. So far as significance is concerned, it appears to me that not only is it not right to say of exchange that it has no significance, but it is the crucial and vital fact which brings the contract into existence. As for importance, it is of the greatest importance, and that is why in past ages this procedure came to be recognised by everybody to be the proper procedure and was adopted. When you are dealing with contracts for the sale of land, it is of the greatest importance to the vendor that he should have a document signed by the purchaser, and to the purchaser that he should have a document signed by the vendor. It is of the greatest importance that there should be no dispute whether a contract had or had not been made and that there should be no dispute as to the terms of it. This particular procedure of exchange ensures that none of those difficulties will arise. Each party has got what is a document of title, because directly a contract in writing relating to land is entered into, it is a document of title. That can be illustrated, of course, by remembering the simple case where a purchaser makes a sub-sale. The contract is a vital document for the purpose of the sub-sale. If he had not got the vendor's part, signed by the vendor, to show to the sub-purchaser, he would not be able to make a good title. "If the argument for the purchaser is right and the contract comes into existence before exchange takes place, it would mean that neither party could call upon the other to hand over his part. The non-exchanged part would remain the property of the party who signed it, because exchange would be no element in the contract at all and therefore you could get this position, that the purchaser might wish to resell and would have no right to obtain from the vendor the vendor's signed part."
I draw attention in particular to the sentence in which Lord Greene M.R. said that if the argument for the purchaser was right and the contract came into existence before exchange took place, it would mean that neither party could call upon the other to hand over his part of the contract.
That judgment, in my opinion, throws no light on what methods of exchange can properly be employed, or can be described as "exchange in accordance with ordinary conveyancing practice." Nor, I think, does either of the other judgments do so.
In my judgment, the essential characteristic of exchange of contracts is that each party shall have such a document signed by the other party in his possession or control so that, at his own need, he can have the document available for his own use. Exchange of a written contract for sale is in my judgment effected so soon as each part of the contract, signed by the vendor or the purchaser as the case may be, is in the actual or constructive possession of the other party or of his solicitor. Such possession need not be actual or physical possession; possession by an agent of the party or of his solicitor, in such circumstances that the party or solicitor in question has control over the document and can at any time procure its actual physical possession will, in my opinion, suffice. In such a case the possession of the agent is the possession of the principal. A party's solicitor employed to act in respect of such a contract has, subject to express instructions, implied authority to effect exchange of contracts and so to make the bargain binding upon his client. This he can, in my judgment, do by any method which is effectual to constitute exchange.
In the present case, in my judgment, Mr. Bond on February 9 constituted himself Mr. Redstone's agent to hold the defendant's part of the contract to Mr. Redstone's order from the moment of the telephonic agreement, and to despatch it to Mr. Redstone forthwith, or upon Mr. Redstone's demand. At the same time Mr. Bond became the holder of the plaintiffs' part of the contract to the order of his own client, the defendant, and was discharged from any continuing obligation to hold it to Mr. Redstone's order as he had theretofore been bound to do in pursuance of the letter of December 22.
It is, I think, erroneous to suggest that any special authority from the defendant would have been necessary to enable Mr. Bond to take this course. He had authority to effect exchange, and he had ostensible authority to effect exchange at any time, and he did effect exchange of the defendant's part of the contract for the plaintiffs' part of the contract. From the moment of the telephonic agreement the defendant's part of the contract was in the effective control of Mr. Redstone and in his constructive possession. It was no longer the defendant's document.
The judge thought that such a practice was a bad practice. Again with deference, I do not agree. In the present state of the property market, particularly where domestic houses are concerned, chain bargains are of very frequent occurrence. These necessarily require simultaneous contracts for sale and purchase all the way along the chain. Synchronisation of this kind cannot as a practical matter be secured by physical exchange across the table, or by messenger, or by post; the only method which counsel have been able to suggest involves telephonic agreements which are synchronised, or as nearly completely synchronised as is humanly possible. The mechanics for carrying out such an exchange may, I think, vary. There are probably a number of variants that could be adopted; but the essence is that, as the consequence of the telephonic communication, the part of the contract signed by each party must be either physically or constructively in the hands of the other party or his solicitor, free from any claim of the first party which would enable him to control the second party in his right to hold and retain the document and deal with it as he chooses. As the matter must be handled, if not by a party in person, by solicitors - that is to say, by professional men of high integrity who are officers of the court, amenable to the control of the court in the conduct of their professional affairs, such a procedure does not, in my view, involve any undesirable degree of risk of its leading to errors or confusion.
On these grounds in my judgment the events which occurred in the present case on February 9 constituted an effective exchange of contracts, and the sale by the defendant to the plaintiffs of 34 Erskine Hill thereby became binding.
When Mr. Bond came to deal with the defendant's part of the contract for sale, he wrote in an additional clause dealing with the position in regard to the fixtures and fittings. He added in manuscript a clause to the following effect under the Special Conditions of Sale:
"At completion the vendor shall sell and the purchasers shall purchase the garden shed, all bathroom fittings and all kitchen fitted units including wall and floor units, electric hob and the wall oven, and of the price of £32,500 the sum of £2,500 shall be attributable to the above-mentioned fixtures, fittings and effects."
The point was taken below, and it has been taken in this court, that consequently the part of the contract signed by the defendant did not accord in all respects with the part of the contract signed by the plaintiffs, for which reason it is said that there was no concluded contract between them. Reference has been made to Harrison v. Battye  1 W.L.R. 58, where it was held that a sale of land subject to contract was not concluded until the two parts of the contract were exchanged in the same terms, and since in that case the vendor's part had not been amended to show the changed amount of the deposit, the two parts would have been in different terms if they had in fact been exchanged, and there was no concluded contract. In that case Sir Eric Sachs pointed out that the position would have been very different if it had been possible to raise a case for rectification of the defective part of the contract. In the present case, if the clause which was written in by Mr. Bond on the defendant's part of the contract gives rise to any substantial difference between the two parts of the contract as signed by the parties, there could in my judgment be no doubt whatever that the remedy of rectification would be available, for it is common ground that both parties intended that the sale should include the fixtures and fittings referred to, and the apportionment of the price was purely a matter of conveyancing and not of contract and would be of no significance. In my judgment, the fact that Mr. Bond wrote that additional clause into the part of the contract signed by the defendant in no way affects the right of the plaintiffs to relief in the present action.
For these reasons I have reached a different conclusion from that of the judge who, as I said at the outset, took the view that there was no concluded contract because there had been no exchange of contracts. In my judgment the contract was concluded and, had the plaintiffs wished to pursue their remedy in specific performance, they would have been entitled to specific performance of it. However, they have made the choice of asking for damages and not for specific performance, so there will have to be an inquiry as to damages.
The question has been raised as to the date at which damages should be assessed, and in that connection we were referred to Johnson v. Agnew  2 W.L.R. 487, a decision of the House of Lords. In that case Lord Wilberforce said, at p. 499:
"In cases where a breach of a contract for sale has occurred, and the innocent party reasonably continues to try to have the contract completed, it would to me appear more logical and just rather than tie him to the date of the original breach, to assess damages as at the date when (otherwise than by his default) the contract is lost."
Applying that observation to the present case, it seems to me that the date at which damages should be assessed was yesterday's date, that being the day upon which the plaintiffs elected to pursue the remedy of damages in lieu of the remedy of specific performance, which down to that date they had pursued. The fact that between trial and the hearing of the appeal they have bought another house, which is no doubt the reason which now prompts them to be content with damages rather than specific performance, does not in my judgment mean that at the date of that purchase they elected to abandon their right to specific performance; that purchase in no way affected their right to insist upon the performance by the defendant of her obligations under the contract for sale which is now under consideration, and had they wished to do so, there would have been no reason why they should not have continued to pursue their remedy in specific performance.
Accordingly, I would direct an inquiry as to damages, indicating that the correct date at which to assess the damages is yesterday.
BRIDGE L.J. A solicitor acting for a vendor or a purchaser who holds his client's signed part of the contract has his client's ostensible authority to effect exchange of contracts; so much is common ground.
With respect to Mr. Godfrey's argument, I can see no reason why the transaction which is to constitute the exchange should not be carried into effect in any manner which the law can recognise as amounting to an exchange. If both parts of the contract have been physically exchanged in advance and are held by each solicitor to the order of the other, it is again common ground that each solicitor can then agree by telephone to release his client's part of the contract to be held by the other solicitor on his own client's behalf.
Similarly where, as here, the vendor's solicitor holds the purchaser's part of the contract to the order of the purchaser's solicitor but also holds his own client's part on behalf of his own client, I can see no sensible reason why an agreement that the purchaser's solicitor will release the purchaser's part of the contract to the vendor, and the vendor's solicitor will hold the vendor's part to the order of the purchaser, should not take effect according to its terms. Thereupon the vendor's solicitor has the actual possession of the purchaser's part of the contract, which he holds on behalf of his client, and the purchaser's solicitor on behalf of his client has possession of the vendor's part through the agency of the vendor's solicitor, who has agreed to hold it to his order.
In conveyancing transactions, for a solicitor to hold documents for the order of a party other than his own client is the merest commonplace, and the conduct of conveyancing business, particularly when mortgagees are concerned, could hardly be efficiently conducted if that were not so. If it is within a solicitor's authority, actual or ostensible, to hand over his own client's document to the other party, it is equally within his authority to agree to hold the document to the other party's order.
Accordingly, I am satisfied that on the judge's findings of fact an exchange of contracts was here effected by the telephone conversation between Mr. Redstone and Mr. Bond on February 9, 1978, and that thereupon a binding contract was concluded.
For these reasons and for those given in the judgment of Buckley L.J., including his reasons relating to the point raised as to the difference between the two parts of the contract, I too would allow the appeal and direct an inquiry as to damages; on the point as to when damages are to be assessed, I also agree with Buckley L.J.
TEMPLEMAN L.J. Conveyancing is a complicated business. A chain of transactions is frequently involved where no vendor will sell until he can purchase and no purchaser will buy until he can sell. Each client as vendor and purchaser needs time to make up his mind and change his mind after studying surveys and legal reports and other relevant matters and each client expects everyone else to be ready when he is ready. Skilful conveyancers are required to forge the chain, to see that no bargain is lost and that no one is left without a home. Binding and enforceable undertakings between professional men play an essential part at different stages. Mistakes are bound to occur occasionally and each client must be protected by the insurance of his solicitor against financial loss, even though damages will never fully compensate a client for the loss of a bargain or the loss of a home. This appeal illustrates some of the difficulties which can arise and some of the reasons why the Royal Commission on Legal Services came to the conclusion that conveyancing should be confined to members of a trained and responsible profession, which should be improved rather than diluted or invaded.
Mr. Petsas was ready and willing to contract to buy 38 Chelmsford Square from the plaintiffs, Mr. and Mrs. Domb. The Dombs for their part were willing to sell 38 Chelmsford Square to Mr. Petsas; by February 1978 all that remained to be done was for the part of the contract signed by the Dombs to be delivered by their solicitor, Mr. Redstone, to the solicitor acting for Mr. Petsas. But although the Dombs were willing to sell 38 Chelmsford Square, they were not ready to do so. They were willing to contract to buy 34 Erskine Hill from the defendant, Dr. Isoz, and as early as December 22, 1977, their part of the contract had been sent by Mr. Redstone to Mr. Bond, the solicitor acting for Dr. Isoz. The letter which accompanied the Dombs' part of the contract when it was sent by Mr. Redstone to Mr. Bond contained the following request and direction by Mr. Redstone to Mr. Bond:
"Would you please hold the enclosed contract and deposit cheque to our order until we are able to agree with you on the telephone that contracts may be exchanged and agree a completion date which we are fairly fluid on as we should be receiving in the course of the next day or two our clients' contract for the sale of their present property and we wish to effect simultaneous exchange of contracts on both transactions."
What remained to be done to complete a contract in respect of 34 Erskine Hill was for the part of the contract which had already been signed by Dr. Isoz and was in the possession of Mr. Bond to be delivered to Mr. Redstone, and for Mr. Redstone to authorise Mr. Bond to hold the Dombs' part of the contract to the order of Dr. Isoz.
But although Dr. Isoz was willing to sell 34 Erskine Hill to the Dombs, she was not ready to do so. She was willing to contract to buy 40 Westbourne Terrace from Mr. Holding, but he was not ready to sell and in the event proved unwilling to sell. Mr. Redstone was therefore in fact, and as his letter dated December 22, 1977, disclosed to Mr. Bond, acting for clients the Dombs, who were only willing to purchase if they could sell, and Mr. Bond was acting for a client, Dr. Isoz, who was only willing to sell if she could purchase
On February 9, 1978, Mr. Bond mistakenly believed that Mr. Holding was ready and willing to sell 40 Westbourne Terrace to Dr. Isoz and that therefore a contract for the sale of 34 Erskine Hill by Dr. Isoz to the Dombs could safely be concluded. Mr. Bond telephoned Mr. Redstone. At that time Mr. Redstone was anxious to complete the exchange of contracts for the purchase by his clients, the Dombs, of 34 Erskine Hill in circumstances which would enable him immediately to complete the exchange of contracts for the sale by the Dombs of 38 Chelmsford Square to Mr. Petsas before Mr. Petsas changed his mind or some other incident happened which prevented Mr. Redstone from safeguarding the Dombs from loss of bargain or loss of home. Mr. Redstone appreciated that simultaneous, or practically simultaneous, exchange of contracts for the purchase of 34 Erskine Hill and for the sale of 38 Chelmsford Square was the best way, and perhaps the only way, of fulfilling his instructions from the Dombs. Mr. Bond was willing to exchange contracts for the sale by his client, Dr. Isoz, of 34 Erskine Hill to the Dombs, because Mr. Bond mistakenly believed that Mr. Holding was ready and willing to sell 40 Westbourne Terrace to Dr. Isoz and that if he exchanged contracts for the sale of 34 Erskine Hill he would be carrying out the instructions of Dr. Isoz and acting in her best interests to see that she did not lose a bargain or lose a home.
Mr. Redstone had ostensible authority to exchange contracts on behalf of the Dombs for the purchase of 34 Erskine Hill and Mr. Bond had ostensible authority to exchange contracts on behalf of Dr. Isoz for the sale of 34 Erskine Hill.
The telephone conversation which took place between Mr. Redstone on behalf of the Dombs, and Mr. Bond on behalf of Dr. Isoz, was recorded in an attendance note by Mr. Redstone in these terms "Agreed irrevocable exchange of contracts as at now, absolutely irrevocable. Completion March 2, 1978." The word "now" was recorded in capital letters and underlined. Mr. Bond, as he said in evidence, appreciated that the effect of the telephone conversation was that Mr. Bond ceased to hold the Dombs' part of the contract to the order of Mr. Redstone pursuant to the directions contained in the letter dated December 22, 1977, from Mr. Redstone but instead held the Dombs' part of the contract on behalf of Dr. Isoz. Mr. Bond also appreciated that the telephone conversation involved Mr. Bond in the obligation to send to Mr. Redstone the part of the contract signed by Dr. Isoz. Mr. Bond in his evidence agreed that after the telephone conversation he held the Dombs' part of the contract to the order of his own client, Dr. Isoz and recognised an obligation to send the part signed by Dr. Isoz to Mr. Redstone. In my judgment, as soon as Mr. Bond ceased to hold the Dombs' part of the contract to the order of Mr. Redstone but was authorised to hold, and agreed to hold, the Dombs' part of the contract to the order of Dr. Isoz, the delivery of the Dombs' part of the contract from purchasers to vendor, which was one of two essential elements in the exchange of contracts, was forthwith completed. Similarly as soon as Mr. Bond knew, appreciated and accepted that he was under a duty to send Dr. Isoz's part of the contract to Mr. Redstone, he thereupon held Dr. Isoz's part of the contract to the order of Mr. Redstone and that constituted constructive delivery by Mr. Bond to Mr. Redstone of Dr. Isoz's part of the contract, which was the second and final essential element in the exchange of contracts. The exchange of contracts was completed when Mr. Bond held the Dombs' part of the contract as agent for Dr. Isoz and held Dr. Isoz's part of the contract as agent for Mr. Redstone and thus for Mr. Redstone's clients the Dombs.
Mr. Godfrey, who appeared for Dr. Isoz, submitted that contracts could only be exchanged by physical delivery, effected personally or by post, of the vendor's part to the purchaser and the purchaser's part to the vendor. Delivery to the solicitor as agent for his client obviously suffices. Mr. Godfrey submitted that delivery to an agent appointed by the solicitor would only suffice if the lay client expressly authorised the solicitor to effect exchange by means of an agent appointed by the solicitor. Moreover, he submitted that a solicitor acting for one party could not agree to act as agent for the solicitor of the other party to receive delivery of the relevant part of the contract.
In my judgment a client impliedly authorises, and ostensibly authorises, his solicitor to effect exchange of contracts in such manner and by such agents as the solicitor may think fit. The client confers power to exchange, but is not interested in the machinery or method of exchange, which is a matter for the solicitor and the general law. I see no reason why one solicitor should not undertake to hold a document to the order of another solicitor. Such an undertaking is binding on the solicitor who holds the document and constitutes constructive delivery of the document to the other solicitor provided that the solicitor who holds the document has ostensible authority to deliver the document to that other solicitor, In the present case Mr. Bond had ostensible authority to deliver Dr. Isoz's part of the contract to Mr. Redstone, and was entitled to effect constructive delivery by undertaking to hold that part on behalf of Mr. Redstone and his clients.
Immediately after the telephone conversation between Mr. Redstone and Mr. Bond and in the belief, induced by that conversation, that a contract for the purchase of 34 Erskine Hill had been exchanged, Mr. Redstone forthwith concluded the contract for the sale of 38 Chelmsford Square by delivering the part of the contract signed by his clients to the solicitor acting for Mr. Petsas.
In my judgment exchange took place on February 9, 1978, for the sale and purchase of 34 Erskine Hill. Indeed, Mr. Bond dictated a letter on that very day saying:
"As arranged we enclose our clients part of the contract having dated both as of February 9 and having inserted in each as the completion date March 2 next as arranged."
The term "as arranged" means "as promised" and the draft of that letter makes it quite clear that Mr. Bond appreciated that a binding contract had come into existence on February 9. By accident and not design that letter and Dr. Isoz's part of the contract which should have accompanied it were not despatched on February 9 or 10, or indeed at all before hostilities broke out.
It was submitted that there are uncertainties and dangers in exchange by telephone. But there are also severe disadvantages in the other two methods of exchange, namely personal exchange and postal exchange. Where three or more solicitors are involved with two or more houses it is impracticable to arrange a time and place for simultaneous personal exchange between all the solicitors or their agents. Even if personal exchange were possible in these circumstances, the arrangement would involve delay in negotiation and in implementation and the danger that one vendor or purchaser might change his mind before, or that one solicitor or his agent might be unable to attend the meeting. Each vendor and purchaser would be in danger of losing the bargain. Postal exchange, as the facts in this appeal demonstrate, is uncertain and dangerous because a client who is a vendor of one property and the purchaser of another property will not know for certain, when his solicitor posts off his part of a contract to sell, and thus completes exchange of a contract to sell, that his opposite number with regard to the house he is purchasing will in fact post off his part of the contract until the postmen have disgorged all the parts of the contracts which have in fact been posted. A client who is a vendor of one property and the purchaser of another will not know for certain whether he has lost or gained a bargain or a home or both. Exchange by telephone, it seems to me, eliminates, or at any rate substantially reduces, the danger that any client will lose a bargain or be left without a home. Exchange by telephone can only take place after both vendor and purchaser sign contracts in identical form (subject to the question of rectification, which can apply to any contract) so that there is no doubt about the terms of the contract. Exchange by telephone can only take place when a contract signed by a client is in the physical possession of his own solicitor or in the possession of the solicitor on the other side who has agreed to hold that part to the order of the despatching solicitor. It is said that there may be uncertainty about the terms and effect of a telephone conversation which creates an exchange of contracts by telephone. This is perhaps a reason why, as a matter of professional practice, exchange by telephone should only be carried out by a partner or proprietor of a firm of solicitors. It is a reason why, if two solicitors exchange by telephone, they should then and there agree and record identical attendance notes. It is a reason why a short formula which effects exchange by telephone might be devised and adopted by the profession. No doubt the Law Society, which is at present considering the whole procedure of conveyancing, will consider and give guidance to the profession in the light of this appeal. But many important transactions must perforce be carried out or completed by telephone and conveyancing is no exception. At the end of the day professional solicitors must be trusted, and can be trusted, to fulfil their instructions and to fulfil their obligations. In any one year there may be one million instances of a solicitor acting for a client in a conveyancing transaction. A mere handful of transactions lead to uncertainties and only the isolated case is so uncertain that it results in litigation. The facts of the present isolated case reflect only on Mr. Bond, who was mistaken in believing that Mr. Holding was ready and willing to sell 40 Westbourne Terrace to Dr. Isoz. The facts in the present case, and the forceful observations of Mr. Godfrey, do not persuade me to condemn a practice without which contracts could not be exchanged with the maximum of safety and the minimum of delay.
For these reasons and for the reasons given by Buckley L.J. and Bridge L.J. with whom I entirely agree, I too would allow the appeal accordingly.
Appeal allowed with costs.
Inquiry as to damages ordered, to be assessed as at November 28, 1979.
Leave to appeal refused.
Crown Copyright acknowledged
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