Australia: Pitfalls of instalment land contracts in Queensland: can the purchaser refuse to settle?

Instalment contracts for the sale of land in Queensland have traps for unwary vendors.

Instalment contracts can arise automatically in some situations, even where the parties may not intend to create an instalment contract.

An instalment contract is defined in section 71 of the Property Law Act 1974 (Qld) (PLA) as an executory contract for the sale of land in terms of which the purchaser is bound to make a payment or payments (other than a deposit not exceeding 10% of the purchase price) without becoming entitled to receive a conveyance in exchange for the payment or payments.

Importantly, any payment made before settlement of the contract may result in the contract being an instalment contract.


If a contract is an instalment contract the following will apply:

  • The contract cannot be terminated by the vendor because of a default in the payment of any instalment or sum of money (apart from the deposit) until 30 days after notice in the approved form is served on the purchaser (section 72 PLA).
  • If the vendor sells or mortgages the land the subject of the contract without the purchaser's consent, the contract is voidable by the purchaser at any time before completion (section 73 PLA).
  • A purchaser may, in some situations, require the vendor to convey the land to the purchaser (section 75 PLA).


In MSD Securities v MFB Properties (NQ) Pty Ltd (No 2) [2017] QSC 168, the broad facts were as follows:

  • There was a suite of contracts for the purchase of land and an associated resort business for $4 million.
  • The contracts were to settle contemporaneously.
  • There was a variation to the contracts whereby the purchaser transferred to the vendor a Gold Coast house and vessel, which was treated as a payment of $2 million in reduction of the purchase price for the resort.
  • Before completion of the resort contracts, the vendor granted a mortgage to its bank over one of the lots in the resort land as security for an unrelated transaction.
  • The vendor claimed it had obtained the purchaser's consent to the mortgage.
  • The purchaser asserted that it did not consent to the mortgage.
  • Before completion the purchaser gave notice terminating the resort contracts.
  • The purchaser applied to the Court contending that the resort contracts were voidable at its election because the contracts were instalment contracts and the land had been mortgaged without its consent.
  • The purchaser sought recovery of $2 million from the vendor for the Gold Cost house and vessel.


The Court did not accept the vendor's evidence about the purchaser consenting to the mortgage.

Consequently, the Court had to consider these questions:

  • Were the contracts instalment contracts?
  • If so, were they voidable due to the vendor granting a mortgage over one of the properties without the purchaser's consent?
  • Was the purchaser entitled to the refund of the $2 million part payment?

The Court held that:

  • as a result of the $2 million part payment, the contracts became instalment contracts;
  • even though the payment was by way of transfer of property, the Court was satisfied that it was still a payment that had the effect of partially discharging the purchaser's obligation to pay the purchase price; and
  • as the contracts were instalment contracts, they were voidable by the purchaser before completion because the purchaser's consent to the mortgage was not obtained.

The Court then considered whether the part payments already made were to be repaid by the vendor.

The Court referred to the decision by Mason CJ in the High Court case of Baltic Shipping Co v Dillon (1993) 176 CLR 344. The Court considered that the claim to recover payment made under a discharged contract could succeed on one or two bases: the intention of the parties or failure of consideration.

In considering these two matters the Court had to decide, as a matter of construction, whether the $2 million part payment, was absolute or conditional.

The Court concluded that the payment was made conditionally on the performance of the vendors of their promise to convey the resort property at completion.

As that condition had failed, the payment was recoverable.

Accordingly, the Court was satisfied the purchaser was entitled to recover the part-payment of $2 million, being the accepted value of the Gold Coast house and vessel.


Vendors to a land sale contract in Queensland need to be aware of the circumstances that will cause a contract to be an instalment contract.

A 'deposit' greater than 10% will be caught but other 'payments' could potentially be caught.

Non- refundable deposits are also problematic for a vendor.

Variations made to a contract requiring 'payments' to be made before completion may result in the contract being converted into an instalment contract.

An astute purchaser seeking to avoid having to settle may be able to terminate because it is an instalment contract where the vendor has failed to comply with the requirements of the PLA.

© Cooper Grace Ward Lawyers

Cooper Grace Ward is a leading Australian law firm based in Brisbane.

This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please contact Cooper Grace Ward Lawyers.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Colin Biggers & Paisley
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Colin Biggers & Paisley
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions