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Repudiation of contract refers to conduct which demonstrates an unwillingness or inability to perform the obligations under the terms and conditions of the contract, it can also be conduct that demonstrates an intention to no longer be bound by the contract. Repudiation is a serious matter and requires a clear indication of the lack of readiness and willingness to perform the contract.
Repudiation of contract in the current economic climate may be something that occurs when a purchaser is no longer able to obtain finance for their purchase and therefore are unable to pay the money owing to the vendor on settlement. An example of a vendor repudiation would be a vendor entering a contract to sell the land to another party after that same vendor has already exchanged contracts to sell that same property.
Intentionally or inadvertently repudiating a contract can be a costly occurrence in the conveyancing process. The innocent party will usually have a claim for damages available against the repudiating party.
The objective of contract damages is to place the innocent party in the same position as if the contract had been performed and settlement had occurred pursuant to the terms of the contract. Damages for a purchaser’s inability to perform their obligations under the contract could be the difference between the value of the property at exchange and what a vendor can subsequently sell it for plus all holding costs incurred by the vendor.
Calculation of damages for a vendor repudiation could be a complex exercise with potential loss being transaction costs such as legal costs, interest on the deposit and in certain cases, loss of bargain damages (being the loss of profit a purchaser may have suffered as a result of not completing the purchase of the property).
Our property team are available to advise and assist at all stages of a property transaction, including when things aren’t going to plan and potential repudiation becomes an issue.
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Key legislation:
Lisa is a Licensed Conveyancer and Justice of the Peace. Over the last 9 years, Lisa has assisted countless clients to secure their forever family home or downsize to a small property that better suits their needs. Lisa prides herself on providing solid and straightforward advice and guidance to her clients whether seasoned property investors or first home buyers.
