How to walk away from a deal - Page 2 of 2
The court will admit the sale/purchase prices of comparable property in order to assist in ascertaining the market value. The purchaser may also recover as damages, any deposit paid and costs involved in the new purchase.
Damages are usually determined or assessed as the date of the breach. For a vendor, this application will determine the vendor's damages by ascertaining the property's market price at the date of the purchaser's breach.
The exception is where, at the court's discretion, justice requires the amount of damages to be assessed at another time. The date of assessment is important where the property market is experiencing wide fluctuations.
Where a purchaser is in breach and the market is falling, damages may be awarded in favour of the vendor as the date of the actual resale of the property, provided the vendor doesn't unreasonably delay the sale.
Where the vendor fails to mitigate his loss, the court may decline to award the difference between the contract price and actual sale price eventually obtained.
Courts will also look to a later date that the date of the breach for the assessment of damage
s where the innocent party attempts, although unsuccessfully, to obtain specific performance of the contract.
The parties may make express provisions for the remedies available to them in SPA. If properly worded, these remedies in the event of breach may be exclusive in that other remedies or damages available to the innocent party are excluded.
The following terms are commonly found in such agreements:
Damages are usually determined or assessed as the date of the breach. For a vendor, this application will determine the vendor's damages by ascertaining the property's market price at the date of the purchaser's breach.
The exception is where, at the court's discretion, justice requires the amount of damages to be assessed at another time. The date of assessment is important where the property market is experiencing wide fluctuations.
Where a purchaser is in breach and the market is falling, damages may be awarded in favour of the vendor as the date of the actual resale of the property, provided the vendor doesn't unreasonably delay the sale.
Where the vendor fails to mitigate his loss, the court may decline to award the difference between the contract price and actual sale price eventually obtained.
Courts will also look to a later date that the date of the breach for the assessment of damage
The parties may make express provisions for the remedies available to them in SPA. If properly worded, these remedies in the event of breach may be exclusive in that other remedies or damages available to the innocent party are excluded.
The following terms are commonly found in such agreements:
- Forfeiture of deposit – a deposit 10 per cent or less of the agreed purchase price will usually be treated as a genuine pre-estimate of loss;
- Liquidated damages – an SPA may contain an agreed stipulation that the purchaser may cancel the agreement by paying double the preliminary deposit; and
- Exclusion of common law remedies – similar to the rules governing exclusion of the remedy of specific performance, common law remedies, for example damages, can be excluded by the insertion of an express and clear provision in the SPA.
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| Lisa Reese |