Gee v Rea

The New South Wales Court of Appeal considered a dispute between Gee and Rea concerning the interpretation and enforceability of a contract for the sale of land. The central issue revolved around whether the contract, which contained a clause requiring the purchaser to obtain finance, had been validly terminated by the vendor.

The court was required to determine whether the vendor had acted in good faith in terminating the contract, given the purchaser's efforts to secure finance. Specifically, the court had to consider the extent of the purchaser's obligations under the finance clause and whether the vendor was entitled to rely on the purchaser's failure to obtain finance as a ground for rescission.

The Court of Appeal held that the vendor had not acted in good faith. It found that the purchaser had made reasonable efforts to obtain finance, and the vendor's termination of the contract was premature and motivated by a desire to sell the property to another party at a higher price. The court applied the principles of good faith and fair dealing in contractual performance, emphasizing that a party cannot rely on a contractual condition to terminate an agreement if their own conduct has prevented its fulfilment or if they are acting in bad faith. The appeal was allowed, and the contract was found to be valid and enforceable.