Vendor’s Refusal of Sub-Sale Repudiates Contract

When the buyer of a town house decided, after exchanging contracts for its purchase, to sub-sell the property, he requested the vendor to convey it directly to the person who was buying it from him. However, the vendor refused.

The purchaser claimed that because the vendor had refused to allow the contract to be assigned, the contract had been repudiated. He then withdrew from the purchase.

The result was a court appearance for the vendor and the purchaser. The vendor argued that he was within his rights not to allow the purchaser to assign the contract for sale because the Standard Conditions of Sale (SCS) that apply to residential sales contracts state specifically that 'the buyer is not entitled to transfer the benefit of the contract'.

The court compared the SCS rules with those that apply to commercial properties. In the latter case, the wording of the corresponding clause is much more restrictive than that which applies to residential sales. The court concluded that the wording of the SCS did not exclude sub-sales and the purchaser was therefore within his rights to refuse to complete once the vendor had refused to assign the contract.

The buyer's victory in court was doubly fortunate as the proposed sale to his purchaser fell through. Had the vendor not refused the sub-sale, the buyer would have had to complete the purchase of the property.

Vendors wishing to avoid the possibility of a sub-sale arising will need to ensure that appropriate wording is added to their sale agreement.

For more advice please contact Clare Magill on 01752 292354


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