“The property vendor made a verbal agreement to accept a 5% deposit. Now they’re suing me for 10%.” Which case won?
Vendor and purchaser enter into property contract following auction
The vendor listed a commercial property for sale in South Yarra, Victoria as mortgagee in possession.
The vendor and purchaser entered into a written contract of sale on 24 February 2005 following a public auction of the property held that day.
The written contract provided for a purchase price of $4,562,000, with a deposit of $400,000 payable on signing. The balance was payable 45 days from the day of sale, or earlier by mutual agreement.
The purchaser provided the vendor with a deposit cheque for $400,000.
Later that day the vendor’s agent banked the cheque with a request for special clearance.
Purchaser’s deposit cheque dishonoured and vendor rescinds contract
The following day, the bank notified the agent that the cheque had been dishonoured, and the vendor issued a notice of rescission to the purchaser.
The notice of rescission required that the default in payment be remedied within two days of service of the notice.
When the default was not remedied, the vendor rescinded (ie cancelled) the contract, and sold the property to another buyer for $4,562,000.
The vendor then commenced proceedings against the purchaser to recover the $400,000 deposit.