Contract; remedies; termination; when valid and effective
Facts: Willis entered a contract to purchase land in Bacchus Marsh from Crosland. The contract gave Willis the right to have the main building on the property inspected, and to terminate performance of the contract if the inspection report disclosed a major building defect. The right to terminate depended on the buyer not being in default at the time of such termination.
A major building defect was disclosed by the inspection. The buyer notified the seller of their decision to terminate at 8 pm on 18 December. There was a balance of $2,500 owing on a deposit payable by the buyer before midnight on 18 December. The seller claimed that since the decision to terminate was communicated after close of business on that day, the money owed by midnight could not be paid, and the buyer was therefore in default when they elected to terminate. This would have made the notice to terminate unjustified, and thus an act of repudiation.
Issue: Was giving notice termination at 8pm on the day the balance of the deposit was due an act of repudiation?
Decision: The notice of termination was given in accordance with the terms of the contract and was not an act of repudiation.
Reason: The court found that the building inspection disclosed a sufficient defect in the building to justify termination by the buyer. Although the termination took place after business hours, at 8 pm, and just four hours before the deposit was finally due, the buyer was not yet in default at that time and was entitled to terminate.