Potential for problems when renegotiating signed Agreements

July 22, 2015

in Property

Property: HousingWe are often involved in situations where conditional contracts between vendor and purchaser require the purchaser to confirm a contract in respect to certain conditions, for example finance, due diligence etc.

It is also not uncommon that before going unconditional the purchaser may wish to vary the contractual terms before declaring the contract unconditional so the  purchaser confirms a condition as unconditional subject to the vendor agreeing to an amendment.

A recent High Court decision shows the risks of taking this approach.

The contract between the vendor and purchaser was subject to due diligence.  The purchaser wished to declare the contract unconditional after completing their due diligence but at the time of writing to the vendor confirming the due diligence clause as unconditional the purchaser also advised that confirmation of due diligence was subject to the vendor agreeing to change the settlement date.  The vendor did not respond and chose to cancel the contract rather than proceed.

The purchaser sued for specific performance but the Court held that the additional change was a renegotiation and not withstanding that the purchaser had even paid the deposit the vendor was not obliged to accept the change in conditions.  As such the vendor was not obliged to complete the sale.

This shows that there is always the potential when conditions are modified or additional terms requested that the other party can decline.  Basic contractual law in terms of offer and acceptance means that if the contract is not accepted as provided that constitutes a renegotiation which the other party is not bound to accept unless specifically provided for in the contract.

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:

Paul Farry
09 379 0055 or 03 477 8870


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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