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5. SPA: PA & FA (Signing FA (Construction) (Whether payment of…

- - - - Memorandum must also contain express/implied reference to the agreement.
        
        Cannot say "subject to contract"
        
        "STC" constitutes a condition precedent and parties will not be bound until the agreement has been signed. Might appear in an agreement or in solicitor's correspondence.
        
        If PA/FA already signed and "STC" used in subsequent correspondence, the words will have no meaning/effect
        Au Wing Cheung v Roseric Ltd
    - - Electronic Transactions Ordinance (Cap 553) does not apply to contracts for sale of land
        An SMS msg couldnt be a memorandum within s3 CPO cus it did not purport to be signed
        Distinct Fortune Ltd
- - - - There must be a concluded but unenforceable contract.
        
        Evidence of intention to create legal relations
        
        Sufficient certainty of terms
        
        Act of PP must on the balance of probabilities be sufficient to prove the existence of a contract btw the parties and be consistent with alleged contract
        
        Act might be required to point to existence of a contract of land
        
        Payment of money not usually an act of PP but in Steadman v Steadman, payment of money by H in return for a promise by W to transfer the matrimonial home to him as part of a divorce settlement constituted PP
        
        Entry into possession by P with V's consent would usually amount to PP
        Wu Koon Tai
        
        V makes alterations at the request of P - PP
        Chan Yat v Fung Kwong Rubber Manufactory
        
        Preparatory acts - like instructing solicitors - not PP
      - When a sufficient act of PP is established, parol evidence of the whole agreement is accepted. The court has discretion to award damages in place of SP under s17 LARCO - grant of discretionary damages subject to discretionary principles
- - - - Almost all PAs are binding on the parties
        
        Test as to the intention of the parties
        
        Matter of construction depending on the intention of parties evidenced by words used in the agreement.
        
        Whether the execution of a FA is an essential precondition before parties will be bound or
        
        Whether simply the manner in which the PA which already binds the parties will be carried out.
        
        Agreement did not include the words "V will sell and P will buy" - held to be an agreement to agree: Yeung Siu Hong
        
        Signing of FA might be an essential precondition to the parties binding obligations in which case there is no binding agreement: Branco v Cobarro - not the case in HK
        
        An agreement that omits essential terms it not binding: Yaacov Ozer
        
        Purpose of PA is to ensure estate agents get their commission
        Man Sun Finance
        
        In practice the agreement btw the agent and his clients is usually that commission is payable when a binding agreement is signed.
        
        Hence estate agents have interest in ensuring parties sign a binding agreement ASAP
        Yiu Yau Ping
        
        If PA is not binding, P will be able do recover the deposit
        Darton Ltd
        (Agreement "STC" save for forfeiture clauses - deposit could not be forfeited)
      - Where parties enter into binding PA/open contract (containing only essential terms) but fail to agree terms of formal SPA, courts will imply terms into PAs and open contracts to give effect to this agreement: Link Brain Ltd
        
        Implied terms
        
        V will assign full interest in property - usually the residue of the term of years created by the Gov lease
        
        V will show and give good title to the property in acc w/ s13 CPO: Link Brain Ltd
        
        P may raise requisitions on title within a reasonable time after his receipt of the title docs
        
        V will give the usual covenants for title in the assignment
        
        Completion will be effected within a reasonable time of the V showing good title - not good law in HK
        Yaacov Ozer: If parties have not agreed completion date, no intention to make an agreement
        
        V will give vacant possession on completion
        
        V will hand over all relevant title deeds in so far as they relate solely to the property assigned to P upon completion
        
        At CL, property is at P's risk from date contract is signed. In equity, P is treated as owner of the property from the date a binding agreement is signed provided SP of the agreement is available.
        P should be advised to insure his equitable interest: Yiu Yau Ping
        
        Obligation to answer requisitions on title. Breach for failing to reply even if he has good title: Active Keen
        
        Time is of the essence unless agreement expressly provides otherwise: Chong Kai Tai
        Parties are entitled to formal agreement unless agreement excludes this: Chong Kai Tai
        Completion is the simultaneous exchange of the price for the assignment in favour of P
        
        Time for signing FA of the essence because parties usually proceed on that basis: Wong Wai Chi Ann
        
        When property is sold with vacant possession, P has an implied right to inspect the property once prior to completion: Twinkle Step Investment Ltd
  - - - Parties usually resist new terms in FA that prejudice their interests e.g. limiting clause that states V's title is defective and bar objections from P*
- - - - Remedies can be excluded but drafting must be clear and clause is construed contra proferentem (against person relying on it)
        Wong Lai Fan v Lee Ha
      - On the construction of the agreement, V had until date for signing FA to escape. Time was of the essence
        Man Sun Finance
      - V could not rely on escape clause because he had not returned the deposit and liquidated damages
        Chong Kai Tai v Lee Gee Kee
        Immediately means immediately, not within 24 hours
        Yun Pok Enterprises