Attwells v Harris

The New South Wales Court of Appeal considered a dispute between Attwells and Harris concerning a contract for the sale of land. The central issue revolved around the interpretation of a special condition within the contract that purported to allow the purchaser to terminate the agreement if they were unable to obtain finance on terms satisfactory to themselves.

The court was required to determine whether the special condition was void for uncertainty or whether it imposed an enforceable obligation on the purchaser to act reasonably in seeking finance. Specifically, the court had to consider whether the phrase "on terms satisfactory to themselves" rendered the condition illusory or whether it implied a requirement of good faith and reasonableness in the purchaser's efforts to secure financing.

The Court of Appeal held that the special condition was not void for uncertainty. Applying established principles of contract law, the court reasoned that such a condition, while granting a degree of discretion to the purchaser, implied an obligation to act honestly and reasonably in their attempts to obtain finance. The purchaser could not arbitrarily refuse finance that was offered on reasonable terms. The court found that the purchaser had not acted reasonably in their attempts to secure finance, and therefore, the condition did not provide a valid basis for termination.

Consequently, the Court of Appeal dismissed the appeal, upholding the primary judge's finding that the contract remained on foot.