The respondent, Stainforth, obtained a loan from the appellant company, Lexi, to purchase a property. Stainforth had difficulty in re-financing the loan and asked Lexi if it knew of anyone who might be interested in buying the property. Lexi knew of a property investor who expressed an interest in buying the property. Lexi and Stainforth therefore entered into an “exclusive sale agreement” drafted by Lexi. The property investor did not proceed with the purchase. Lexi therefore tried to cancel that agreement, demanded repayment from Stainforth and appointed a receiver of the property.

Stainforth claimed that he had been discharged or released from any liability under the exclusive sale agreement. The judge agreed with Stainforth and held that the agreement had the effect of discharging Stainforth’s liability in return for his “relinquishing all rights” to the property.

Lexi appealed against that decision and argued that the judge’s construction of the agreement was wrong. Lexi claimed the main purpose of the agreement was simply to confer authority on Lexi to sell the property and the discharge of Stainforth’s liability was dependent on the sale taking place.

What was the true effect of the exclusive sale agreement?