A recent decision in the Supreme Court of New South Wales has
highlighted the importance of paying attention to detail for both
vendors and purchasers alike. In the case of Jaswil Property Pty
Ltd ATF Jaswil Unit Trust v Barrak Corporation Pty Ltd,1
the Court considered the implications for vendors and purchasers of
an inappropriately executed transfer.
In this case, the purchaser entered into a contract with the
vendor for the purchase of land. One responsibility of the
purchaser was to prepare a transfer that was to be signed by the
vendor. The transfer prepared by the purchaser did not refer to the
method of execution and failed to include the appropriate
transferor execution clause required for a vendor corporation. The
incorrect transfer was signed by the vendor.
At settlement the purchaser's mortgagee rejected the
transfer in its existing form and requested that the transfer be
rectified. Consequences followed on from the incorrect transfer
that ultimately led to the parties failing to reschedule a timely
settlement date. The vendor then served a notice of termination on
the basis that settlement was not made on time and the purchaser
commenced proceedings on the grounds that the contract was
invalidly terminated and sought relief against forfeiture.
It pays to be detailed
The Supreme Court of New South Wales held that although it was
the purchaser's obligation to include in the transfer the
proper form of execution, the failure of the vendor to realise the
errors in the transfer played a significant role in the purchaser
failing to complete the contract on time and hence breach the
contract. This entitled the purchaser to proceed with the purchase
and precluded the vendor from terminating the contract.
It takes two to tango
Other jurisdictions may choose to follow the New South Wales
decision given its guidance on the responsibilities of both vendors
and purchasers when it comes to a transfer. Importantly, vendors
must play their part in punctually advising the purchaser of any
mistakes in the transfer once the purchaser prepares and serves the
transfer at a reasonable time prior to completion.
1 NSWSC 391
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Warranties can be risk-shifting mechanisms when the party giving the warranty is not the party at fault for the defect.
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