Blanco v Wan

The case of Blanco v Wan involved a dispute over the sale of land in New South Wales. The purchaser, Blanco, agreed to purchase the land for a total price of $2,055,000. As part of the agreement, Blanco paid a deposit of $80,000, with the remaining $125,500 to be paid on or before settlement. Blanco later failed to complete the purchase, and the vendor, Wan, sought to recover both the $80,000 deposit and the remaining $125,500. Blanco argued that the $125,500 was a penalty and not a true deposit, and that the contract should be set aside as being unjust.

The court had to determine whether the $125,500 was a deposit or a penalty, and if the contract should be set aside under the Contracts Review Act 1980 (NSW) as being unconscionable or oppressive. The court also considered whether there was an inequality of bargaining power between the parties.

In its reasoning, the court found that the initial $80,000 was a genuine deposit, to which the principles of the penalty doctrine did not apply. However, the remaining $125,500 was not payable at a time when it would serve as an earnest of performance, and was instead payable on or before settlement or upon default. The court held that this obligation was penal because the amount was extravagant and disproportionate to the vendor's interest in being protected. The court also found that there was no material inequality of bargaining power between the parties, and that Blanco had entered into the contract with an adequate appreciation of its main terms. Therefore, the contract should not be set aside as being unjust.

In conclusion, the court ordered that Blanco was to return the $80,000 deposit, but that Wan was not entitled to recover the $125,500. The court also found that the contract should not be set aside as being unconscionable or oppressive.