Remedies and Risk Flashcards
(2 cards)
Who bears risk between exchange and completion?
COMMON LAW POSITION
- risk passes from buyer to seller on exchange (buyer still has to proceed!)
SCS 5.1
- risk passes to the buyer upon exchange of contracts
- seller under no obligation to insure property unless contract specifically requires
- SCS 5.1.3 sets out obligations where seller is obliged to insyre.
SCPC 8.1
- risk passed to buyer upon exchange.
- again, seller under no obligation to insure property unless cotnract specifically requires
- even less than SCS
Seller does however owe buyer duty of care to act reasonably to keep property in same state as at exchange
THUS, ADVICE BUYER TO MAKE SURE IT HAS INSURANCE POLICY PRE-EXCHANGE, as it will bare the risk!
Misrepresentation
Is discover a misrep. after exchange but before completion - still locked in contract buy the propery!
Thus, can seek damages, but NOT reduction in purchase price (as already bound by purchase price in contract)
SCPC 10
- if ‘MATERIAL DIFFERENCE’, buyer entitled to damages.
But, if error is a result of:
- fraud
- recklessness
- or there is a SUBSTANTIAL DIFFERENCE in quality, quantity or tenure between the actual property and that represented by the seller, then buyer is entitled to RESCIND.
(however, case law has reinterpreted SCPC 10 - in commercial situations - only allows rescission on the substantial difference ground - MUST BE SOMETHING THAT CAN’T BE FIXED WITH CASH!
Same applies in SCS 7.
Preferable to pursue a remedy under the Standard Conditions than in common law misrep., as Buyer does NOT need to prove that it was induced into the contract by the information - only have to prove there was an error/omission in that information.
