Dodds v Kennedy (No 2)

The case of Dodds v Kennedy (No 2) involved a dispute regarding the sale of land under a contract that contained a subject to finance clause. The buyer, Dodds, had entered into a contract with the seller, Kennedy, for the purchase of land. The contract included a clause stipulating that the sale was subject to the buyer obtaining finance approval from a lender nominated by the seller. The buyer failed to make an application to the nominated lender for finance, leading to a dispute over whether the buyer had complied with the terms of the contract. The court was tasked with determining whether the buyer's failure to make an application to the nominated lender constituted a breach of the contract's terms and whether the contract was thereby void.

The primary legal issue before the court was whether the buyer's failure to make an application to the nominated lender was a breach of the contract's terms. The court needed to assess the obligations of the buyer under the contract and determine the consequences of the buyer's non-compliance. The court considered whether the contract's terms required the buyer to actively seek finance from the nominated lender or if merely failing to make an application constituted a breach. The court also needed to decide whether the breach was fundamental, which would void the contract, or if it was a condition precedent that, if not met, would entitle the seller to terminate the contract.

The court held that the failure to make an application to the nominated lender was a breach of the contract's terms, as the contract required the buyer to take all necessary steps to obtain finance from the nominated lender. The court found that the obligation was not limited to merely making an application but included taking all reasonable steps to secure the finance. Since the buyer did not take any steps to apply for finance, the court concluded that this was a fundamental breach of the contract's terms. Consequently, the contract was void, and the buyer was not entitled to specific performance. The court also found that the seller was entitled to retain the deposit paid by the buyer.

The final orders of the court declared that the contract for the sale of land was void due to the buyer's failure to comply with the contract's terms. The court ordered that the deposit paid by the buyer be retained by the seller as compensation for the breach of contract. The court did not order specific performance of the contract, and the buyer was not entitled to any refund of the deposit. The court's decision clarified the obligations of the buyer under a subject to finance clause and the consequences of non-compliance with such terms in a contract for the sale of land.