Fay v Sheridan

The case of Fay v Sheridan was heard in the Supreme Court of New South Wales. The dispute involved the sale of a property, with the vendor, Fay, seeking to enforce a contract against the purchasers, Sheridan, who had failed to complete the sale. The crux of the dispute was the enforceability of a contract that included a 'subject to finance' clause, and whether the purchasers had fulfilled their obligation to use their best endeavours to secure finance. The purchasers contended that they had done so, while the vendor argued that they had not made sufficient efforts to obtain finance, and thus the contract could be terminated.

The court was required to determine the standard of effort required for the purchasers to demonstrate that they had used their best endeavours to secure finance under the 'subject to finance' clause. This involved interpreting the nature of the obligation imposed by such a clause and assessing the adequacy of the purchasers' efforts. The court needed to weigh the onus of proof on the purchasers to show they had genuinely attempted to obtain finance and whether they had discharged this burden.

In reaching its decision, the court emphasised the importance of the 'subject to finance' clause in the context of property sales. The court found that the onus of proof rested on the purchasers to demonstrate that they had used their best endeavours to secure finance. The court considered the evidence presented by the purchasers and concluded that they had not adequately shown that they had made sufficient efforts to obtain finance. The court found that the purchasers' attempts were insufficient and did not meet the standard required by the clause. Consequently, the contract was not enforceable against the purchasers, and the vendor's claim was dismissed.

The Supreme Court of New South Wales held that the purchasers had failed to discharge the onus of proving they had used their best endeavours to secure finance, and therefore the contract was not binding on them. The court dismissed the vendor's claim for specific performance and awarded costs to the purchasers.