The formal legal requirements of a property sale contract were examined by the Court, and in summary are as follows:
- “The whole contract - or at least all the material terms - must be reduced to writing” (and signed by the parties), and
- “The Court must be able to ascertain with reasonable certainty the terms of the contract”, and
- All material terms must be finally agreed upon – no material term can be “left open for further negotiations”.
(Bear in mind that the above are the basics only – a properly-drawn sale agreement will also cover a multitude of other important issues!)
Where grey areas normally come into play is in deciding what is – and what isn’t – a “material” term in each particular set of circumstances. Clearly, the parties and the property must be clearly identified. And the Courts have held that the “manner of payment” of the purchase price “is ordinarily a material term”, whilst our common law provides that – unless the parties agree otherwise – payment must be made in cash against transfer of the property.
In this case, held the Court, the ‘payment against transfer’ rule could not be applied, because the parties had specifically agreed otherwise, namely (a) that transfer could only take place after full payment, and (b) that the purchase price payment details “were to be agreed upon in writing between the two relevant parties by not later than the 30/04/2005.” As the parties fell out before they had reached that subsequent agreement, the whole sale was void. This despite the fact that the buyer in this case had already paid the agreed purchase price and costs in full to the seller’s attorneys - in other words, this is a classic case of a party to a sale being able to escape it through a technicality. Don’t expose yourself to the same fate!