Contract Law Problems - Case Study Example

Contract law problems Question In the case between Sheldon and Gary, the fact that either parties did not consent to legal advice by professionals such as a lawyer or agent like in the case of Gary makes the situation very complicated. It would be advisable for him to seek the help of a professional lawyer to go over the documents and ascertain; the fact that Sheldon had provided false report by not signing the required documents. Still there is a possibility that of him loosing the case because to start with on his part he did not follow the appropriate procedure of acquiring property in NSW. In Australian law, the legal transaction involving selling or buying of property is referred to as ‘conveyancing’ (Civil Law ‘Sale of Residential Property’ Act 2003). This law deals with transfer of property ownership and the process to be followed by buyer and seller. The process is more involved with the buyer than the seller. The seller’s duty is mainly to make sure that the buyer receives good title, ensure any mortgage payout over the property is settled, and making sure the agreement cost is settled. The buyer on his part has to ensure clarity of the title, prepare documents required for the transfer, and organize the funds required for the transaction. For the situation, the buyer (Gary) should sue Sheldon for providing false documents in the contract. He is therefore, entitled to compensation as stated in section 19 of the sale of residential property. Under this section, where it is a requirement that the buyer be compensated if the statements or reports provided as per section 9, are false or misleading or are not prepared with exercise of practical skill and care, and as a result, the buyer is subjected to loss. Gary may also lose the case if it is found that it is through neglect that he got involved in the situation at hand. Gary was supposed to be extremely cautious in getting into the contract by fulfilling some of the most decisive legal requirements that would make Sheldon obligated to him. These would involve him, ensuring that all the special conditions are inserted pertaining the agreement. This would have been best if he hired a solicitor to check the contract before agreeing to sign. Through this, he would have been aware of defects in the contract such as Sheldon’s missing name and signature. It is a requirement by the sale of property in NSW, for any deposit made to be held by the seller’s agent or solicitor. The deposit is protected by legislation in the hands of solicitor or agent from any form of misuse. The deposit should not be released unless with the consent of both the buyer and seller. In the case where the seller receives deposit prior to completion by buyer, it will be a charge upon the property in favor of the buyer. As much as it is a comfort to buyers, there are many reasons for the charge cannot be applied like in a situation such as if the contract was rightfully terminated by the seller. In this case for Sheldon and Gary, Gary has a good chance of winning the case resulting to either Sheldon being ordered by a court; to sell the house to Gary or will be able to receive back his deposit with accrued interest also be compensated for damages. For this case if Gary refuses to rescind then interest continues to accrue until the case is finalized. For the $50,000 he used in repair and maintenance, he is entitled to full compensation since this is seen as damage on behalf of Gary resulting from a void contract sale of residential property Act 2003 section 19 (2). Question 2 According to NSW sale of residential property Civil law Act 2003, Gary and Sheldon were supposed to undergo a process that would see them validate their contract under legal requirements. To begin, with Sheldon was required to prepare the contract deed; which was to be attached with up-to-date copies of the necessary disclosure documents. Second Sheldon was to exchange the sale of property contract with Gary. Then he was required to sign transfer documents prepared by the Gary; including answering any questions stated by Gary about the property. After that Sheldon was obligated to provide a ‘clear title’ fee from any encumbrances, unless stated otherwise in the contract. Gary is then allowed to have possession of the property after the settlement, at the same time receive all necessary documents on the house and settle the balance remaining to Sheldon. Assuming that second scenario of Gary and Sheldon case it is clear that they had entered a contract. All the legal requirements were met and, it was only remaining the final payment, then it is possible for Gary to sue Sheldon and demand under the law for the house to be sold to him on the grounds that he was being gazumped. It is clear that the two had entered the contract and the time for Sheldon to rescind the contract had already passed. For this instance, he was already obligated to sale the house to Gary and if he does not fulfill the contract he is bound to incur legal penalties. According to property law of New South Wales it is only the buyer who has the privilege to terminate the contract. Under the sale, of property law section 12 there is a cooling off period that is imposed on every contract dealing with the sale of residential property. It is during this period that the buyer and not the seller may exercise the right under section 14 to present a rescission notice. The cooling off period is within the first five working days after the both parties enter into the contract. In this case, Gary has the right to take Sheldon to court and demand that either Sheldon complies with the earlier agreement or he gets compensated for breach of contract. If Gary presents sustainable proof, which includes all the required documents filled as per the sale of residential property section 9, then the law will be in his favor. Because Gary had already paid Sheldon the deposit for the house on top of it, he had incurred a large cost in repair to house, all of this with Sheldon’s consent then he is bound win the case by suing Sheldon. The seller is only allowed to cancel his decision to sell the house before they enter into a contract with the buyer. Failure to do so leads to both parties entering the contract which makes the seller obligated to sell the house to the buyer. At this point if the seller rethinks his decision and decides to have possession of the house back then it will be termed as a breach of the contract agreement. It is, therefore, possible for Gary to enforce the contract against Sheldon on the grounds that the period for cancelling the contract had already passed. It was, therefore, naturally implied that Sheldon should fulfill his part of the contract. Looking at the facts the whole period of five weeks Sheldon was present and consented to Gary taking possession of the house including giving consent to repairs on the house. Gary is most likely to win the case forcing Sheldon to sell him the house or get the deposit back with accrued interest plus compensation for damages; this involve the costs incurred in the arrangement of the contract. Work Cited: Gibson, A., Rigby, S. and Tasmitt, G. 2005. Commercial law: in Principle, 3rd Ed. Thompson Law Book Co. Australia. Civil Law (Sale of Residential Property) Act 2003 . Authorised by the ACT Parliamentary Counselret March, 2011. Retrieved from www.legislation.act.gov.au Read More