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Question: australian equity law question 2 raelene is a real estate...

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Australian Equity Law

 

Question 2

 

Raelene is a real estate agent engaged to sell twenty units in Perth – ‘the Units’. Shonky Pty. Ltd. owns the Units, which had been rented out but were now vacant.

 

Given that there are many meanings of ‘unit’, a ‘unit’ for present purposes is a separate residential dwelling, several of which are typically comprised in the one multi storey building.

 

In this instance, the Units are comprised in the one multi-storey building and are all the same size and colour. Raelene has instructions from Shonky to sell the Units for $650,000.00 each, ‘not a dollar more, or less’.

 

To market the Units overseas, Raelene conducts what are known as real estate ‘road shows’. At one such road show, in Asia, she meets Adam, who shows interest. Adam is planning to migrate to Australia and live in Perth. He has no knowledge of the Units and is not very familiar with Perth.  Raelene describes the Units as being ‘a great investment, in the middle of a booming suburb, certain to appreciate in a short while’. That is the extent of their conversation concerning the Units.

 

Adam subsequently executes a contract to buy one of the Units for the ‘fixed’ price of $650,000.00. – call these ‘the Contract’ and ‘Unit X’ respectively. No issue arises out of the validity of the Contract. Adam has given no thought to whether he would stay in Unit X, rent it out, or leave it vacant, until he is ready to sell it, and says that after looking at Unit X, he will have a better idea of what he would like to do with it. He however acknowledges that he bought Unit X because he believed on the basis of what Raelene told him that its value would appreciate.

 

Adam tells Raelene he intends to visit Perth the following week and asks if she could take him to look at Unit X. Raelene agrees.

 

The following week, Adam visits Perth. He meets Raelene, who takes him to see Unit X. Adam is let in by Raelene and once inside notices that a previous tenant of Unit X had installed some expensive fixtures, including a mahogany floor. Unit X is in pristine condition. This is not apparent from outside. Raelene remarks: ‘you really got lucky, none of the other units is as nice as this one’.

 

Adam decides that he wants to live in Unit X and said to Raelene, ‘it is lovely, I might never even sell it’.

 

Shortly before settlement, Shonky receives an offer to purchase the Units, including Unit X, for a uniquely high price, which it wishes to accept. Whilst freely conceding the validity of the various contracts for their sale, Shonky refuses to proceed to settlement on the Units, including Unit X, arguing that the respective purchasers are confined to an action for damages for breach of contract.

 

Adam seeks specific performance of the Contract.

 

 

 

Now answer the following question, and discuss the legal reasoning and authorities to support your answer:

 

 

 

Discuss Adam’s entitlement to specific performance of the Contract. The law of fixtures is not in issue – assume that Shonky was at liberty to treat the fixtures referred to in the question as though they were Shonky’s own, to sell as part of Unit X.

 

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