In brief - Plaintiff fails in bid to enforce commercial
property option arrangement
The recent decision in Perception Investire Pty Limited v Bassal
Holdings Pty Limited  NSWSC 1954 shows that you need
to make sure that you always have documented changes to
arrangements. Relying on previous course of dealings or the
goodwill parties have engendered throughout a transaction may not
be sufficient when things do not go as all parties expect. You also
need to ensure that the correct people sign so as to bind other
parties to the transaction.
Option arrangement on commercial property fails
Perception Investire Pty Limited v Bassal Holdings Pty
Limited involved an option arrangement with respect to a
commercial property at Campbelltown, in New South Wales.
In brief, there was a contract which was rescinded and then a
new option was entered into. One of the parties alleged that a
number of subsequent variations were agreed to, but these were not
The decision looked in detail at the conflicting evidence given.
It is true to say that the judge did not find the evidence of any
of the witnesses compelling and found that each party's
recollection of discussions, conversations and alleged agreements
somewhat favoured the outcome that the respective parties were
seeking at this hearing.
In this case, the plaintiff who sought to enforce the option
failed for two significant reasons.
Documentation was not binding on Saxon Developments
The first reason was that the documentation was not properly
executed by each of the landowners. There were three companies that
owned the property, but Mr Bassal really only represented two of
the landowners. The third was an independent company which was
"associated" with Mr Bassal, but he was not the
The developer's failure to do a company search to ascertain
who the correct parties were who should sign to bind each of the
entities which own the property was critical in the Court finding
that the documentation did not bind one of the parties, Saxon
Developments Pty Limited, and therefore the option and subsequent
variation documentation were invalid.
Variations not properly documented and not signed by all
The second reason was the issue of not documenting all of the
changes alleged to have been agreed and having it signed (properly)
by all of the parties.
Effectively, as both parties were legally represented, it was
expected that there would be proper documentation to evidence the
alleged variations to the original option document.
Document all arrangements and ensure all parties are bound to
It is essential that you check that all arrangements are
properly documented and that whoever signs the documents has the
authority to bind all other parties.
Do not depart from the contract terms, or encourage the other party to do so, unless you plan to alter the contract.
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