In brief - Purchaser's contract breach does not entitle
vendor to terminate
Where a term negotiated for inclusion in a contract is essential
so that breach of or non-compliance with the essential term
entitles you to withdraw from the transaction, it is clear from the
decision of Fuentes v Bondi Beachside Pty Ltd  NSWSC 531
that the contract must specifically state this.
Order for specific performance of purchase contract sought by
This case related to a 2012 off-the-plan sale of a unit at Bondi
One of the provisions of the contract precluded the purchaser
assigning, novating or otherwise disposing of its interest in the
sale contract before completion without the consent of the
The purchaser, prior to completion of the units, entered into a
contract for the on-sale of the unit to a third party at a higher
price. The purchaser did not obtain the consent of the vendor to
the on-sale and the vendor purported to terminate the contract.
The purchaser sought specific performance of his purchase
Contract provisions regarding disposal of property found not to
The Court held that the use of the wording in the contract was
sufficiently broad to cover an on sale of the property. The Court
held that the reference to "dispose" related to any
dealing with the interest of the purchaser in the initial contract,
and the on-sale was in fact a disposal.
However, the Court held that the provisions of the clause were
not essential and therefore the vendor was not entitled to
terminate the contract due to the purchaser not complying with this
Vendor awarded nominal damages but must pay cost of
The Court was influenced by the fact that the vendor's main
concern under the contract was to receive the agreed purchase price
for the unit and the on-sale did not diminish the vendor's
rights in this regard.
Further, the Court found that the purchaser did not repudiate
the initial contract by entering into the on-sale because the
purchaser was prepared to comply with all of its obligations with
regards to the purchase of the property under his purchase
The breach of the condition only entitled the vendor to nominal
damages. However, the vendor had to pay the purchaser's costs
of bringing the proceedings for specific performance as an order
for specific performance was made.
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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