Court not 'shocked' by breach!

Posted: 8th February 2012

Light Industrial UitContracts involving property are often ‘messy' with obligations on the seller (and sometimes the buyer) extending beyond the completion date. This can cause problems when one of the parties fails to meet their liabilities.
When a contract is breached, the innocent party can pursue various remedies. Normally, it will be financial compensation in the form of damages. Alternatively, they may seek an order of the court requiring the other party to do what they have contracted to do - specific performance in legal terminology.
If the breach is serious, the aggrieved party may look to rescind the contract, effectively meaning that the contract is cancelled and they are restored to the position they were in before the contract was made.
Recently, the buyer of a warehouse sued for rescission of the purchase contract because the seller had not (as agreed in the contract), arranged for the property to be provided with a directly-metered electricity supply. A covenant that he should supply a separately-metered water supply had been complied with.
The court considered that to set aside the whole contract over the failure to provide the electricity supply was not warranted. The buyer had been able to make use of the building and an award of damages would provide sufficient compensation.
The courts are not normally willing to see a contract fail over what might be regarded as relatively minor matters. If you enter into a contract and regard a specific aspect of it as crucial, you should have the contract written to reflect this.