It May Be Legal, But Is It Right?

Posted on May 30, 2007 by | 0 Comments

Consumers Beware!The estate agent told the purchaser that his offer had been accepted BEFORE the vendor had actually signed the contract. The purchaser was horrified to discover that he was bound, but the vendor was not!

Another reason why estate agents should NEVER be permitted to handle contracts.

If you enter into a contract to buy real estate you cannot enforce it against the other person unless they have signed it.

So what’s the situation if YOU have signed it, and they have not?

We recently received an enquiry from a purchaser who had signed a contract and submitted it to the estate agent. The estate agent later informed the purchaser that the offer had been accepted. This meant that the purchaser was locked in, and had to proceed with the purchase.

When the purchaser asked for a copy of the contract he was told that the vendor had not yet signed it. Was the purchaser change his mind, and cancel the sale?

No. The contract could be enforced against the purchaser, but it could not be enforced against the vendor!

This is a common situation, and it can easily be used as a vehicle for criminal deception.

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In England more than 300 years ago, Parliament passed the Statute for Prevention of Frauds and Perjuries, which required that certain contracts be written and signed before they would be enforced by the courts.

The idea was to prevent a person from committing fraud and perjury by falsely convincing a court that there was an enforceable oral contract.

If a contract for the sale of land was not in the form of a written, signed agreement, it could not be enforced, regardless of whether the parties had actually created an oral contract.

Nowadays lawyers refer to this principle as the “statute of frauds.”

Australian states, having originally adopted English law, have also adopted in one form or another laws that reflect the statute of frauds.

In Victoria Section 126 of the Instruments Act 1958 states that no action can be taken on a contract for the sale of land unless the contract “is in writing signed by the person to be charged…”

This means that if a purchaser wants to enforce the contract against the vendor, then the purchaser must be able to prove that the vendor signed the contract.

Our client had signed a contract, and delivered it to the estate agent. The estate agent later contacted the purchaser by telephone and informed him that the vendor had accepted his offer. Because the purchaser had signed the contract, the vendor could enforce it against the purchaser.

When the purchaser went to collect a copy of the signed contract he was told by the estate agent that the vendor had not yet signed it. This meant that the purchaser was locked in, but the vendor was not.

PROBLEM: What if the estate agent was not telling the truth? The purchaser would believe that he has purchased the property, but the contract cannot be enforced against the vendor.


Continue reading “Conveyancers Leaving A Trail Of Destruction”

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