The case of Sandpiper Kooragang Pty Ltd v Fortis Products Pty Ltd [2020] NSWSC 1256

considered whether a purported termination of a sale of land was valid. The purchaser in this case sought specific performance of a contract for sale of land owned by the vendor. 

The vendor served a notice of termination upon the purchaser based upon failure of the purchaser to comply with the notice to complete. The purchaser claimed that the vendor was in default of the agreement for breach of warranty and also that the vendor was not ready, willing and able to proceed to completion because they were not in a position to issue a clear land tax certificate. 

The issue in the case was whether the respondent’s purported termination of the contact was valid.

The court held that the notice to complete was valid and effective to make time of the essence for the completion of the contract. However, it was not open to the vendor to rely upon the purchaser’s failure to complete as a breach of contract that entitled the respondent to terminate the contact as the breach of the warranty had no relevant bearing on the obligation to complete. Additionally, the vendor was not ready willing, and able to perform his obligations because he had not paid the outstanding land tax and it would not be possible for him to provide a clear land tax certificate at the time fixed for completion. 

Therefore, the termination of contract was invalid and the contract remained on foot. 

This case demonstrates the importance of contract drafting to ensure that what the parties view as ‘essential’ is reflected in the contract, as only a breach of an ‘essential term’ of a contract will enable a party to terminate a contract. It also shows that parties wishing to terminate a contract must be ready, willing and able to perform the contract themselves. 

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