Special conditions included in either commercial or residential contracts may not correctly set out the intentions of the parties if they are not worded carefully. This can lead to the solicitors for either the Seller or the Buyer having no alternate option but to:
- apply the special conditions within the constraints of how it is worded, or
- request that the special conditions be redrafted, amended or corrected to properly reflect the party’s intentions.
This can lead to increased legal fees and the risk that the other party may not agree with the proposed amendment.
The Queensland Supreme Court in Woodward & Anor v Nagel [2003] QSC 100, highlighted the importance of ensuring that clear and concise language is used in special conditions.
In this case a special condition was inserted providing that the contract was subject to and conditional upon the completion of the sale of the buyers’ house on or before a specified date and if the sale was not completed through no fault of the buyers, the contract would be at an end and all moneys paid by way of deposit would be refunded.
The Court stated that the condition was for the benefit of the buyers and they were entitled to waive it. The buyer did not complete the sale of the house before the specified date and sent a fax to the seller stating that “the sale has been extended to 24th of April to coincide with the completion of this matter”. Later on the same date the seller sent a fax to the buyers solicitor terminating the contract for non-compliance with the special condition.
The question for the court to answer was the fax from the buyer’s a waiver of the special condition.
The court found the use of the words “the completion of this matter” in the fax from the buyer to the seller showed the buyers had the intention to complete the contract and those words effectively waived the special condition.
The court therefore held that the contract was unconditional, and the seller’s fax of termination was of no effect. The seller was ordered to complete the contract.
This case demonstrates the importance of having the special conditions reviewed prior to being signed to ensure that clear, concise language is used.
If a party to the contract drafts their own special conditions, they should be aware that this could have unintended consequences and they should always have the special condition reviewed by a solicitor, before the contract is exchanged.
If you have a special condition or other contract questions, feel free to contact us.
