Chapter 13: Delayed completion and Remedies

Question 1

Any delay in completion entitles the innocent party to what?

Answer 1

Damages caused by the delay

Question 2

Can an innocent party cancel the contract if completion is delayed?

Answer 2

The innocent party will only have the right to cancel the contract if ‘time is of the essence’

Question 3

Is time of the essence in residential contracts for sale?

Answer 3

Generally time will not be of the essence unless specified in the contract

Question 4

When must money due on completion by received?

Answer 4

By 2pm on the day set for completion

Question 5

If completion is delayed, how much interest is the innocent party entitled to?

Answer 5

Interest at the contract rate on the outstanding balance for the number of days that completion was delayed by

Contract rate = purchase price + contents - deposit

Question 6

What is rental income in lieu of compensation?

Answer 6

If the property being sold / purchased has a tenant in situ, the innocent part can elect to take the rental income until completion instead of compensation

Question 7

If completion is delayed and the innocent party wishes to withdraw or terminate the contract, what must they do?

Answer 7

Serve a notice to complete on the other party. In turn, this will make time of the essence.

Question 8

What are the requirements for notice to complete?

Answer 8

• Party must be ready, able and willing to complete
• The defaulting party must complete within 10 working days (excludes date of serving the notice)

Question 9

If a buyer has received a notice to complete and has only paid a reduced deposit, what must they do?

Answer 9

Pay any remaining balance to bring the deposit up to the full 100%

Question 10

If the buyer does not comply with notice to complete which has been served on them, what can the seller do?

Answer 10

• Rescind contract.
• Retain buyer’s deposit.
• Resell the property.
• Claim damages.

Question 11

If the seller does not comply with notice to complete which has been served on them, what can the buyer do?

Answer 11

• Rescind the contract.
• Reclaim deposit monies with interest at the contract date.
• Claim damages.

Question 12

Which remedies are available to an innocent party following a breach of contract before completion?

Answer 12

• Specific performance
• Claim for compensation by way of damages
• Recission

Question 13

If completion is delayed, what can an innocent party seek damages for?

Answer 13

Losses flowing naturally from the breach plus reasonably foreseeable consequential losses

Question 14

What is the measure of damages?

Answer 14

Standard measure - the innocent party is entitled to be placed, so far as possible, in the position that they would have been had the contract been performed

Question 15

If a buyer has breached before completion, how will the seller be limited in recovering damages?

Answer 15

• The seller will only be able to recover the difference in value between the contract price and the value on the re-sale.
• If the resale price is higher, the seller should retain the buyer’s deposit and not pursue a claim for damages as well.

Question 16

Under the Standard Conditions of Sale, in what two circumstances is recission permitted for misrepresentation?

Answer 16

• Error or omission made fraudulently or recklessly
• If the buyer took the property, it would be substantially different in quality, quantity or tenure from the property they expected to take

Question 17

Which two remedies are available for fraudulent and negligent misrepresentation?

Answer 17

Damages and rescission

Question 18

Which two remedies are available for innocent misrepresentation?

Answer 18

• Rescission or damages in lieu of rescission
• The claimant cannot claim both

Question 19

What remedies are available after completion?

Answer 19

• The only available claim would be for breach of title guarantee or misrepresentation
• The only available remedy is damages