A contract for the sale of land required the purchaser to pay andpound;500 ‘as a deposit and in part payment of the purchase money’, and that if the purchaser failed to complete on time the vendor should be free to resell and recover any deficiency in price as liquidated damages. The purchaser failed to complete and the vendor resold the property for the same price. The question for the Court of Appeal was whether the vendor was entitled to retain the andpound;500, having suffered no loss.
Held: The court considered the contract and, in particular, what was meant by the words ‘as a deposit and in part payment of the purchase money’. The contract meant that the payment was not to be merely a part payment but also a guarantee of performance, entitling the vendor to forfeit the payment if the purchaser failed to complete.
Bowen LJ said: ‘The question as to the right of the purchaser to the return of the deposit money must, in each case, be a question of the conditions of the contract. In principle it ought to be so, because of course persons may make exactly what bargain they please as to what is to be done with the money deposited. We have to look to the documents to see what bargain was made.’
Judges:
Bowen, Cotton, Fry LJJ
Citations:
(1884) LR 27 Ch D 89
Cited by:
Cited – Chillingworth v Esche CA 1923
The purchasers agreed in writing to purchase land ‘subject to a proper contract to be prepared by the vendors’ solicitors’ accepting andpound;240 ‘as deposit and in part payment of the said purchase money’. A contract was prepared by the vendor’s . .
Cited – Sharma and Another v Simposh Ltd CA 23-Nov-2011
The parties created an oral (and therefore void) contract for a development, the claimants paid a deposit, expressed to be non-refundable, and the defendant builders completed the building work. The buyers backed out. The developer now appealed . .
Lists of cited by and citing cases may be incomplete.
Contract, Land
Updated: 15 May 2022; Ref: scu.451288