Inconsistency Defeats Right to Rescind

In a recent case involving an attempt to rescind a contract to purchase a leasehold property, the High Court ruled that where a special condition of sale is written into a contract and this is inconsistent with the usual standard conditions of sale, the standard conditions of sale will prevail unless the relevant clauses are specifically excluded.

In the case in point, the buyer of a leasehold issued a notice rescinding the purchase some weeks after the completion date in the contract. The contract itself had been put ‘on hold’ while the vendor sought to obtain the consent of the landlord to the assignment of the lease. The buyer pulled out of the contract without giving any notice.

The vendor argued that the presence of a condition in the contract invalidated the purchaser’s right to rescind, but because the term was inconsistent with the standard conditions of sale, this argument was rejected.

However, the behaviour of the purchaser, which was pushing for completion only days before issuing its rescission notice and which delayed taking action for a long period after the completion date, meant that it had lost its right to rescind the contract. To be valid, the right to rescind should be exercised promptly once the contractual completion date has passed.

 

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