Property Law – Due Diligence Clause in your Sale and Purchase Agreement.
In a recent High Court case, the decision clarified when a property purchaser may lawfully exercise the right of cancellation in a conditional sale and purchase agreement pursuant to a due diligence clause.
The Court held that an agreement can be worded so as to make the satisfaction of a condition entirely a matter for subjective determination of a property purchaser.
This case is based on what the parties had done using a similar phrase to those below in their property agreement:
“.. the Purchaser being satisfied that…”
“In the event that the Purchaser is not satisfied with any aspect…”
“… the Purchaser shall not be obliged to give reasons …”
The Court stressed that it is a matter of wording in respect of the individual agreement. If a clause provides for a subjective determination without any obligation to disclose reasons, it is difficult to see how it can restrict the matters that the property purchaser can take into account.
This case highlights the importance of fully understanding and being aware of the implications of any legal contract and reinforces the importance of taking legal advice before signing a legally binding contract.
For further conveyancing information on your Agreements or Contracts contact Auckland law firm, Quay Law in Remuera.
Ph: (09) 5232408
Posted by Auckland Law Firm, Quay Law on 13/12/2011
Why do you need a lawyer and when do you need a lawyer?
Selecting a good lawyer is crucial to any successful business.
During the normal day to day operations undertaken by any business or when starting a new business, it is paramount that there are two professionals essential service providers working with alongside you. The first is an accountant but the second is your solicitor.
Why would you require a lawyer?
- Your contracts: You would need your lawyer to understand your business and prepare standard forms / contracts that you would need when dealing with customers, clients and suppliers.
- Type of Business entity: You would need a lawyer who could assist you with choosing the most appropriate entity to best suit your specific legal and tax requirements. This could be a limited liability company, a LAQC to name but a few legal entities.
- Your premises: Perhaps you are in the fortunate position of owning commercial space. If this is not so, your lawyer would assist you with reviewing any contracts pertaining to such a commercial property purchase. On the other had the leases pertaining to commercial space used for offices or retail can be complex and these leases are usually drafted by the landlord. Your solicitor can facilitate this process and often point out areas within the contract that you may want to negotiate.
- Tax, company setup and business registration with the companies’ office. Although your accountant would usually prepare and file your business / personal tax returns each year, your lawyer should know how to register your business, advise you as to the best asset protection and other mechanisms suited for your affairs and the typical business transactions you undertake.
- Establishment of any employee contracts and support during any ongoing items that required attention during the normal course of business.
The team at Auckland law firm, Quay Law hopes that our legal tip has provided you with some helpful ideas. If you require any further assistance or advice please do not hesitate to contact us. We understand that your choice of lawyer is an important decision? For more detail regarding our services please view our Quay Law website or to contact us call +64 9 5232408.
Posted by Auckland Law Firm, Quay Law on 21/10/2010