Clause & Effects – Costly Court Case, Commission Lost and A Solicitor Sued

Posted on January 17, 2008 by | 2 Comments

Tim O'Dwyer M.A., LL.B by Tim O’Dwyer M.A., LL.B
Solicitor
Consumer Advocate
watchdog@argonautlegal.com.au


 


Two years ago this month Don and Elsie Luxton, an elderly couple, successfully escaped an apparently binding contract for the sale of a vacant acreage block.  They had earlier agreed to sell the property to Shaun and Sheree Johnson, a young couple, who planned to convert it into a mountain-bike park.Contract Clauses Made Simple


Luxtons’ agent prepared the contract dated 28th November 2005, with settlement in 60 days, subject to this two-part special condition:


            (a)        This contract is conditional upon the buyers entering into a binding contract on terms satisfactory to them for the sale of their existing property within 30 days from the date hereof, failing which this contract will be at an end …


            (b)        In the event that subparagraph (a) is satisfied, this contract is subject to settlement of the sale of the buyers property by the settlement date hereof.


The  theLuxtons decided afterwards that they had sold too cheaply, and would cancel if Johnsons could not secure their prior sale in time.


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2 Comments

  • http:// says:

    Dear Readers,

    As the author of Clauses Made Simple I think it is appropriate to make the following comment about the book. The book is simply a compilation of precedent clauses and as I state clearly in the book, I add two important qualifications to the use of these clauses.

    Firstly, they are precedents only and must be adapted to the circumstances of the particular sale. Secondly, the terms should be vetted by a solicitor, prefereably the solicitor acting for the party who will receive the benefit of the clause.

    The above case highlights the importance of proper use of precedent clauses.

    Rob Balanda
    Solicitor and Author of Clauses Made Simple

  • Hi Rob,

    Welcome aboard. I think the problem arises when estate agents use contract clauses on behalf of vendors and purchasers.

    Usually, when an estate agent inserts a clause into a contract it’s because the purchaser has indicated a need for protection, and the estate agent seeks to either limit the protection (as is the case with the REIV’s “major structural defect” building inspection clause), or to avoid having the purchaser’s solicitor involved. In either case the estate agent fails to remember whose side of the transaction he/she is on.

    Similarly, where the estate agent inserts a clause for a vendor client, the estate agent assumes the role of legal adviser to the vendor, notwithstanding the vendor’s being represented by a legal practitioner.

    I really don’t think there are any circumstances where an estate agent should be using contract clauses and precedents.

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