Is a vendor legally bound to make an offer to a purchaser of land that is not for sale to the purchaser at a price agreed upon?

The case of Smith v. Morgan, supra, is instructive with respect to the problem raised by counsel for the plaintiff. In that case the parties executed a conveyance containing a covenant which guaranteed to the purchaser the first right of refusal in respect of land adjoining the land being conveyed. The covenant provided that “should the vendor wish to sell . . . the first option of purchasing the said land . . . shall be given to the purchaser at a figure to be agreed upon . . . ”. The vendor subsequently took proceedings to have the covenant declared void for uncertainty. It was held, per Brightman, J., the covenant was enforceable as against the vendor as conferring a preferential right on the covenantee to purchase the adjoining land at the price at which the vendor would be prepared to part with her interest in the event the land was offered for sale. The reference in the covenant to an agreement between the parties at some future date was interpreted to be only an expression of the obvious fact that no binding obligation to sell or to purchase was imposed on the vendor and purchaser respectively. At page 1504 of his judgment, Brightman, J., states as: Paragraph 1 of Sch 2 to the conveyance states nothing whatever about market value and nothing about a reference to the court, even if the court were willing to accept such a reference. In my view it is implicit in para. 1 of Sch 2 that a purchase, if it results from an offer, should be at a price acceptable to both parties. On that basis it appears to me that para. I can only mean one thing: that the obligation on the vendor, should she wish to sell, is an obligation to make an offer to the purchaser at the price and at no more than the price at which she is, as a matter of fact, willing to sell. If that offer is accepted by the purchaser, then there will be a purchase at a figure which has been agreed on. If the offer is rejected, then cadit quaestio. . . . I shall therefore declare that on the true construction of the covenant on the part of the vendor contained in para 1 of Sch 2 of the conveyance, should the vendor wish to sell the land . . . she is legally bound to offer the said land for sale first to the purchaser at a price, but at no more than the price, at which she is, in fact, willing to sell.

In this connection, I would also adopt the reasons of Noble, J., in Michaels v. Hume Farms Ltd. et al., supra, where the sufficiency of a clause creating a right of first refusal was sustained, notwithstanding the absence of any present agreement as to the essential terms upon which a future contract for sale might be concluded.