Smith & Stanton Snippet
No 4 - Unintended consequences
It's always important that any special conditions included in a contract properly reflect the intentions of the seller and buyer, and that there is a definite outcome/consequence of the condition. Poorly drafted conditions may not let a party to the contract proceed as they intended.
For example, a condition like the following (which has been included in a contract received recently by us) would not allow the seller to accept a better offer for their property.
“The buyer acknowledges that notwithstanding the existence of this contract the seller intends to continue to offer the property for sale. Should the seller receive an offer in the form of a signed contract, then the seller shall immediately notify the buyer in writing of such an offer and furnish the buyer with a copy of the contract.”
The obvious intention of the seller was that if they received another offer for the property that they were prepared to accept, the first buyer had to elect to make the first contract unconditional and proceed to settlement, otherwise the seller could terminate and sell to the second buyer.
Unfortunately, the clause does not provide for that. All the condition says is that the seller must provide the buyer with a copy of any other offer – there is no obligation on the buyer to do anything. If the buyer wanted to proceed with the purchase, they would not be obliged to make the contract unconditional, but could simply continue with the contract subject to itsexisting terms. The seller has no rights to make the buyer elect to go unconditional or
terminate, so that they can consider the second offer.
If in doubt, you should refer any special conditions to the parties' lawyers for confirmation before the contract is signed.
Produced by:
- Anita De Domenico – Conveyancing Manager
- Naomi Wright – Conveyancing Support
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