Diao v Cohen

The case of Diao v Cohen involved a dispute regarding a contractual agreement for the sale of a property. The plaintiff, Diao, claimed that the defendant, Cohen, had entered into a binding contract for the sale of a property at a specified price. Cohen argued that the agreement was only subject to the preparation of a formal written contract and that no binding contract had been formed. The matter was heard in the Supreme Court of New South Wales.

The primary legal issue the court had to determine was whether the parties had intended to be immediately bound by the terms of the oral agreement, or if the agreement was merely a preliminary step pending the execution of a formal written contract. The court examined the conduct of the parties and the language used in their communications to ascertain their intentions. The court also considered whether there was any evidence of a written contract being contemplated and executed.

The court found that the parties had not intended to be immediately bound by the oral agreement. The absence of a signed written contract, as well as the conduct and communications of the parties, indicated that the agreement was subject to the preparation of a formal written document. The court further held that, in the absence of a binding contract, Cohen was not required to pay the purchase price to Diao. The court rejected Diao's claim for restitution based on the failure of consideration, finding that Cohen had not unjustifiably enriched himself at Diao's expense.

The court ordered that Diao's claim for specific performance and damages be dismissed, and that Cohen's cross-claim for the return of the deposit paid by Diao be allowed. The court held that it would be inequitable to require Cohen to return the deposit, given that Diao had occupied the property for a period of time and had derived some benefit from it. The court ordered that Cohen was entitled to retain the deposit as compensation for the use and occupation of the property by Diao.