Most standard form contracts for the sale of land require the deposit to be paid on the day the buyer signs the contract, unless another time is specified. But what is the position when a contract is signed in advance of the day it is to be presented to the vendor? Upon acceptance of the contract by the vendor, will the buyer immediately be in breach for failing to pay the deposit on the day they signed the contract? The Supreme Court has recently addressed this question in the case of DN Holdings Qld Pty Ltd v 2620 Ipswich Road Pty Ltd & Ors [2021] QSC 308.
The facts
The respondents granted the applicant a right to exercise a call option to purchase land at Darra, Queensland. The exercise of the option required the applicant to deliver an executed copy of the call option notice together with two copies of the signed contract and a bank cheque for the deposit, at any time before 5pm on 30 September 2021. The contract was the standard Contract for Commercial Land and Buildings approved by the Queensland Law Society and the Real Estate Institute of Queensland, and provided that the deposit was payable on the day the buyer signed the contract.
It was common ground that before 5pm on 30 September 2021, the applicant delivered the call option exercise notice duly executed, two copies of the signed contract and a bank cheque for the deposit. Relevantly, the contract had been signed in advance and was dated 29 September 2021.
The respondents purported to terminate the contract on the basis that the deposit was payable on the day the contract was signed. Because the contract was signed in advance and dated 29 September 2021, the respondents contended that the applicant was in breach for failing to pay the deposit on that day, even though the option did not expire until the following day and the contract had not yet been presented to the respondents.
The Courts's decision
Bradley J construed the relevant provision of the standard form contract as requiring the deposit to be paid on the day the buyer signs the contract and provides it to the vendor. Weight was given to the approach the High Court took in Brien v Dwyer 141 CLR 378, being that the clause, in speaking of the signing of the agreement, refers to when the form of the agreement is signed by the purchaser for transmission to the vendor. Bradley J observed that a construction that contemplates only the act of signing, without presentation to the vendor, seems a perverse way to read a standard contract and makes no commercial sense.
The applicant was declared to have duly exercised the call option on 30 September 2021 and the purported termination of the contract was declared invalid.