5. SPA: PA & FA (Signing FA
(Construction) (Whether payment of…
5. SPA: PA & FA
(Prepared by solicitor, usually V's)
Form 2, Sch 3 CPO
Clause 1: HK law does not recognise absolute ownership of land - owner owns an estate in land, usually legal estate for a term of years (s2 CPO)
Clause 2+3: Deposit could be paid to stakeholder whose role is to apply deposit acc to contract - V on completion or P if V defaults. This stakeholder provision protects P in case of insolvency of V or if V has -ve equity
Clause 4: Place and date of completion
Clause 5: Vacant possession or subject to a lease. De minimis rule applies.
Clause 6: Time is of the essence. Equity will not grant relief in respect of any delay. De minimis doesn't apply.
Clause 8: Docs V will show P to prove title
Clause 9: If property is sold subject to encumbrances, must be expressly referred to
Clause 10: Terms set out in Part A Sch 2 are incorporated by reference - provisions regarding title and remedies
Parties not obliged to sign FA if introduced a new term, but P successfully applied for SP of PA
Link Brain Ltd
V's solicitors sent agreement to P's solicitors very shortly before time for signing. V could not complain P was late in signing even though time was of the essence
Wong Wai Chi Ann
PA may not contain an obligation to sign FA (Luxebond Inv Ltd; Wise Think Global Ltd but parties must attempt to agree the terms of FA Yun Pok Entreprise v Valle
Whether payment of deposit linked or independent of signing depends on wording used
Yiu Yau Ping: linked to signing
"on the signing of a FA..."
See To Keung: Chinese version of agreement prevailed and payment of further deposit independent of signing
"will be paid on... that date being on or before the signing of the FA..."
V's Double Deposit Escape Clause
V can terminate agreement by returning initial deposit to P + sum equivalent to initial deposit. This excludes P's remedy of SP.
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
- Further deposit already paid but PA only provided for initial deposit to be refunded with an equivalent sum
- Deposit paid and had to be refunded w/ an equiv sum, whether further deposit has been paid or not
Wise Think Global Ltd