Discuss about the Real Estate Property Rights and Contracts Law.
Firstly, it is important to distinguish and define Trimm’s lease with respect to whether it is a licence, licence with interest or a lease. The owner of a licence does not have the right of exclusive possession and this is the main distinguishing feature between a lease and licence (Sharlene 2017d, p.28). Accordingly, proprietary rights do not arise with respect to licences while they arise in the case of leases. As such, while a lease holder has protective interests under the Property Law Act, a licence holder does not (Sharlene 2017e, p.29). Leases exceeding 3 years must be registered according to the provisions of ss. 61, 181 and 182 of the Land Titles Act 1994 and such registration creates a legal estate. S.11 of the Property Law Act provides that such leases must be registered. With respect to the two-year option, Trimm’s lease agreement can include the said option in writing within an options clause.
Where a purchaser of land accepts title with the knowledge of certain defect thereon, it is presumed in some cases that such purchaser waives his right to good title. Accordingly, where the encumbrance on vacant possession goes to the title, then the purchaser’s acceptance of title may be considered as a waiver of right of vacant possession (Re Gloag & Millers Contract 1883). Trimm’s lease is an example of such an encumbrance with contractual protection. Although the case of Isaacs v Maguire (1888) held that mere acceptance of title does not constitute a waiver of the right to vacant possession, acceptance of the lease foe Sky is an express term of contract. Since Sky already accepted the contractual condition of Trimm’s lease, the company is bound by the same. There are limited options available to Sky.
The first option is the effluxion of time (Sharlene 2017d, p.3). The second option for Sky is through surrender by agreement. This is where Trimm agrees to give up his interest in the land through registration under s.69 of the Land Title Act. The other means of terminating Trimm’s lease is by repudiation of the lease by Trimm and accepted by Sky. The option available to Sky is negotiating with Trimm for him to terminate the lease under s.130, 131 and 137 of the Property Law Act (PLA) by issuance of notice in prescribed form.
The other option available to Sky is carefully reviewing the lease to determine whether there are any breaches that warrant termination. The next step would be serving Form 7 under the PLA for Trimm to remedy the breach (Property Law Act 1974, s.124). Failure to remedy the breach within a reasonable time entitles Sky to service of an unequivocal demand for possession on Trimm (Sharlene 2017d, p.14).
The REIQ Contract for Houses and Residential Land, clause 7.4 (3) (a), extends disclosure duties upon the vendor with respect to contaminated land under the Environmental Protection Act 1994 (EPA). S.421 (2) of the EPA requires the vendor to notify a purchaser of the land being on the contaminated land register. Non-compliance with the above pre-contract disclosure obligations by the vendor entitles the vendor to rescission. Section 421 (3) of the EPA provides for rescission up to possession or completion, whichever comes first. In the case of Turrisi Properties P/L v LJ & BJ Investments P/L (2010), it was held that a vendor may not waive the disclosure requirements. Furthermore, a seller cannot contract themselves out of the requirements for disclosure by virtue of s.421 (5) of the EPA.
The REIQ Contract for Houses and Residential Land vendor disclosure provisions are further aimed at land that has not yet come to the EPA’s administering authority’s attention (EPA 1994, s.374). Under cl. 7.4(3)(a)(i) of the Houses and Land Contract all outstanding obligations must be communicated by the vendor at the date of the contract to notify the authority of any activity on the land. Breach of contractual warranties by Jackson entitles Sky to termination of the contract in writing. Therefore, Sky has the legal right to terminate or avoid the contract with Jackson’s Lot.
The legal purpose of a deposit is essentially guaranteeing or securing the completion of the purchase (Queensland conveyancing law commentary 2009). It also acts as part payment of the purchase price, provided the contract is completed. In the case of Soper v Arnold (1889, p.435), Lord Justice McNaughton stated that the deposit guarantees “that the purchaser means business.” The deposit enables the vendor to take, from the market, the property and be concerned with other offers as was held in the case of Brien v Dwyer (1979, p.131). Accordingly, Sky is obligated by law to pay the deposit. However, the special condition of $100,000 presents a difference in the law.
In the case of Iannello & Anor v Sharpe (2007), the purchaser was required to pay a 5% deposit upon exchange. A special condition required payment of a further 5%. The purchaser defaulted in paying the further amount upon the exchange and the vendor terminated the contract. The Court of Appeal of New South Wales held that the court must look at the character of the payment and the obligation of making it. A normal deposit demonstrates the buyer’s commitment. In that case, the Court rejected the second payment as being illustrative of commitment. The buyer was, therefore, under no obligation to pay. Using the preceding argument, Sky is not obligated to pay the further $100,000 required by Marshner.
It is of importance to mention the REIQ contract of sale with respect to deposit. Under that contract, the deposit is payable upon signing of the contract according to clause 3 (1) of the REIQ Contract Commercial Land and Buildings. Failure by the Buyer to pay the deposit entitles the Seller either terminating or affirming the contract. Clause 3.3 provides that the rights to termination or affirmation are in addition to other legal or equitable rights. The deposit should not exceed ten percent of the purchase price and if it does, that becomes an instalment contract.
To the extent that Barry’s advertisements were unequivocal statements by which Barry intended to be binding if any party to whom it is made accepts, he made a valid offer. A valid offer indicates the offeror’s intention of entering into a contract that is binding with the offeree on particular terms (Sharlene 2017a, p.22). The case of Carlill v Carbolic Smoke Ball Company (1892) found that an offer can be made to the whole world. The general rule is that advertisements are usually construed to be invitations to treat (Partridge v Crittenden 1968). However, there are exceptions to the rule where advertisements are considered as offers, as in the Carlill case, where money set aside in aside in a prominent bank demonstrated sincerity. The requirement of signing, form filling and returning by post demonstrates sincerity. It also indicates a specified counter promise and specific act. Therefore, Barry made a valid offer.
Acceptance occurs when the offeree communicates to the offeror his acceptance of the terms of the offer (Sharlene 2017a, p.22). Of importance, also, for there to be an acceptance, the timing and method of acceptance must conform to the offeree’s requirements. Although Paul communicated his acceptance, it was not according to the requirements. Furthermore, he made a counter-offer instead of accepting the one offered by Barry. As such, Paul’s response does not constitute a valid acceptance.
Helen’s response constitutes a valid acceptance for the following reasons. Firstly, she communicated her acceptance and secondly, she did it according to Barry’s requirement – via Post. In cases where offers are acceptable via post, the Postal Acceptance rule applies. According to the rule acceptance happens on the date of posting the letter as opposed to its arrival date. Hence, Helen’s response constitutes a valid acceptance.
Woody’s response does not constitute a valid acceptance for the reason that he expressly rejects Barry’s offer and makes a counter offer instead. This is notwithstanding the timely and correct method of responding to the offer by Barry.
One of the legal ways of terminating a contract is by a ‘trigger clause’. This is a specific contractual provision regarding the right of termination by a party to the contract (Sharlene 2017c, p.9). Under the special condition, the right would only be exercisable if communicated within 14 days. Helen communicated past the time stipulated under the special condition. Hence, Helen’s termination does not constitute a valid termination.
The major justifications for legal termination of a contract are in cases where there is a breach of terms, mistake, fraud misrepresentation, performance, agreement, frustration, trigger clause or contractual term (Sharlene 2017c, p.6). With respect to the preceding justifications, there is no legal justification upon which Helen’s termination was based. The Buyer’s solicitor’s failure to provide timely advice was not part of the agreement and as such cannot be invoked as a defence.
The type of consideration featuring here is past consideration. As a general rule, past consideration does not constitute valid consideration (Sharlene 2017b, p.16). This was the position in the cases of Roscorla v Thomas (1842) and Anderson v Glass (1868).
The kind of relationship intended from the facts in the scenario is a contractual one. For Jane to succeed in her claim, she must demonstrate that all the elements of a valid contract were present: intention, capacity, offer, acceptance and consideration. From the fact pattern, all the preceding elements were present. There was an intention to create an agreement which was followed by an offer, accepted by Jane and then the promise of consideration. Hence, Jane would succeed in her claim for breach of contract.
References
Anderson v Glass (1868) 5 WW AB L 152 G
Brien v Dwyer (1979) 53 ALJR 123
Carlill v Carbolic Smoke Ball Company (1892) 1 QB 256
Iannello & Anor v Sharpe (2007) 69 NSWLR 452
Isaacs v Maguire (1888) 14 VLR 815
Partridge v Crittenden [1968] 1 WLR 1204
Re Gloag & Millers Contract (1883) 23 ChD 320
Roscorla v Thomas (1842) 3 QB 234
Soper v Arnold (1889) 14 AC 429
Turrisi Properties P/L v LJ & BJ Investments P/L [2010] QSC 325
Queensland conveyancing law commentary 2009, the document, CCH Australia Limited, Contract for Sale, North Ryde.
Scharlene, N 2017a, Introduction to Contract Law (Part 1), Lecture notes distributed in Real Estate Property Rights class SSUD-106
Scharlene, N 2017d, Leases, Lecture notes distributed in Real Estate Property Rights class SSUD-106
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