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Sale Of Land On Conditional Contract Notes

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This is an extract of our Sale Of Land On Conditional Contract document, which we sell as part of our Property Law Notes collection written by the top tier of University Of Otago students.

The following is a more accessble plain text extract of the PDF sample above, taken from our Property Law Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Sale of Land on Conditional Contract

Conditional Contracts

Allows party to get out of contract if a certain condition occurs (condition subsequent) e.g. purchaser can exit if builder's report comes back too negative, vendor can exit if they don't sell the house, one the parties needs consent from a third party.
o Question raised - does equitable interest pass with signing of conditional contract?
Bevin v Smith

Facts
- Bevin selling his land to Smith
- A paper road (legally recognised but undeveloped) went through Bevin's land - Bevin had license to occupy
- Smith was unaware of this road
- Signed a contract that was conditional on Smith getting consent of the
Land Valuation Tribunal
- After contract had been signed, Bevin bought the paper road and became registered owner - refused to sell it to Smith

Issue
- Had Smith gained equitable interest under this conditional contract?
(which would impose duties on B and allow S to protect interest)
- If Bevin owed fiduciary duties, they would extend to not taking advantage of the fact he has acquired the paper road

Judgement
- NZ authority - equitable interest only passes if there was availability for specific performance (which only occurs under unconditional contracts)
- Not directly relevant NZ cases to support equitable title passing
- Australia becoming looser on this rule
- Nicolson v Fowler (1981 NZ case) - if a purchaser could waive the condition (because it was solely for their benefit) they would be able to seek specific performance - and therefore they would get equitable title
(but facts not the same as this case)
- English authorities stated that conditional contracts did transfer equitable interest where vendor had placed fulfilment of contract outside their control i.e. required consent of third party
- Policy Considerations - equitable interest no passing is unsatisfactory for a number of reasons (B's behaviour wrong and law should be fair)

1. Many NZ contracts are already conditional upon consent of statutory board, and even unconditional contracts are technically conditional on purchaser paying money - would be absurd this didn't transfer equitable interest

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