Sale and Purchase Special Conditions – Pitfalls

July 10, 2013

in Property

Property: HousingThe Court of Appeal has just confirmed the decision of the High Court, enforcing a conditional contract which was carelessly drawn up. This case [Arcadian Homes Limited (in liquidation) v More to this Life Limited & Others] involved a Sale and Purchase Agreement for a Wanaka property and was conditional upon the “Directors” of the purchasing company “approving all aspects” of the purchase. The Court held that in the case where there was only one Director of the company at the date of the contract, the clause did not give the Purchaser the right to treat the condition as an “option” and it could not walk away from the Agreement even though it purported to terminate the contract on the basis that the clause would not be confirmed.

The Court outlined the importance of a well drawn due diligence clause that is required if it is intended to treat the contract as an option in order to avoid confirmation. This case reiterates the long standing principle that conditional contracts to purchase property must be carefully considered and cannot be treated as a means of securing a property off the market whilst the Purchaser considers the merits of the purchase.

The lesson is; obtain sound legal advice prior to signing a Sale and Purchase Agreement and ensure the conditions are worded with sufficient certainty to enable the contract to be ended if you are not satisfied with all aspects of the property.

If you require any advice or further information on the matters dealt with in this publication please contact the lawyer at Farry and Co. who normally advises you, or alternatively contact:

Michael Nidd

03 477 8870 or 09 379 0055


The information contained in this publication is intended as a guide only.  It does not constitute legal advice and should not be relied upon as such.  Professional advice should be sought before applying any of the information to particular circumstances.  While every reasonable care has been taken in the preparation of this publication, Farry and Co. does not accept liability for any errors it may contain.

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