Louinder v Leis

The High Court of Australia considered a dispute between a vendor and a purchaser concerning a contract for the sale of land. The purchaser failed to tender a transfer to the vendor by a specified date, a date which was not stipulated as being of the essence of the contract. The vendor sought to rely on this failure to issue a notice to complete.

The central legal issue before the Court was whether a vendor is entitled to issue a notice to complete when the purchaser has failed to comply with a contractual stipulation, even if that stipulation is not of the essence and the purchaser has not been guilty of unreasonable delay. The Court also had to determine the circumstances under which a vendor may validly serve a notice to complete on a purchaser.

The Court held that a vendor is not entitled to serve a notice to complete on a purchaser merely because the purchaser has failed to meet a date for performance which is not of the essence. A notice to complete can only be validly served when the time for performance has passed and the party serving the notice is not itself in breach of the contract, and where the other party has failed to perform within a reasonable time or has committed a breach that would justify rescission. The Court reasoned that the right to serve a notice to complete is a mechanism to expedite performance when there has been an unreasonable delay, not a penalty for a minor or non-essential breach.

The appeal was allowed, and the notice to complete was held to be invalid.