A recent case in the NSW Supreme Court, Lee v Lee [2022] NSWSC 181, considered whether a contract of sale for a unit was valid and enforceable. The contract of sale was entered into on 9 February 2021, with a 10% deposit being duly paid by the Plaintiff and completion stipulated for ‘90 days after the contract date.’

The contract contained a Special Condition that ‘The purchaser must not register any caveat against any of the Certificate of Title relating to the Land or Property notifying its interest under the Contract’ and this was stated as being an essential term.

The Applicant requested that the settlement occur on a later date than the contract specified, but settlement did not occur on this date. On 19 May 2021, the Respondent’s solicitor sent an email to the Applicant stating that the contract had not been properly exchanged so that it could not be binding on either party. Importantly, the Applicant lodged a caveat against the title to the property which was the subject of the contract for sale. The Respondent’s solicitors then sent an email to the Applicant’s solicitors saying that they retracted the statement that the contract was not binding and sought to terminate it for breach of contract.

The court agreed that the contract had been validly exchanged, however the Applicant had breached a special condition not to lodge a caveat on the Title of the contract, which was an essential term. Hence, the respondent validly terminated the contract.

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