Signing a contract before you are sure you are willing to complete it can be a huge mistake: judges do not flinch from enforcing valid contracts, as a recent case shows.
It involved a man who reneged on a deal to buy a family home for £5 million. He had not viewed the property before contracts were exchanged and had dealt with the vendors through an intermediary whom he had never previously met. However, he had signed the contract in person and a judge rejected claims that the intermediary had acted without his authority or that the contract was rendered void when the intermediary agreed to accept a secret commission. The result was that the man was ordered to pay a seven-figure sum in compensation to the disappointed vendors.
After the buyer pulled out and the deal was aborted, the vendors eventually sold their home for the lower price of £4.2 million. They launched proceedings for the difference between the first putative buyer's agreed purchase price and the sum they eventually received. They were awarded £800,000 to reflect the difference between the two figures and further substantial sums to cover their additional expenses, including the cost of bridging finance occasioned by the breach of contract. Although the precise amount of compensation has yet to be calculated, this is estimated to be in the region of £1.5 million.
Says Adam Oleskow, Conveyancing Partner at Sydney Mitchell:
Although the circumstances in this case were very unusual, the principle that you should only sign a contract if you are willing to be bound by it is clear. If there are any potential issues, legal advice should be taken to ensure your interests are fully protected.
Speak to Adam or a member of his team if you are considering signing a contract with a view to purchasing a property.
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