In the recent decision of Coast Corp Pacific Pty Ltd v Stockland Development Pty Ltd  QSC 305 Justice Jackson dismissed a collateral contract due to an entire agreement clause.
The Plaintiff signed a contract with Stockland to purchase a town house in Pacific Pines on the Gold Coast. Prior to signing the Contract, an agent for Stockland advised him that they would be constructing wetlands adjacent to his property which would give a lovely view and arguably increase the value of his property. It was upon that promise that the buyer purchased the town house.
After purchasing the town house, it became apparent that Stockland was no longer going to construct wetlands and the buyer sued due to a breach of collateral contract.
The buyer argued that the promises made by Stockland (which were backed up with copies of drawings, designs and emails confirming the proposal would not alter significantly) was a collateral contract, which Stockland had breached.
Stockland argued that the only binding contract was the one signed (which did not mention the wetlands) and that contact had an entire agreement clause contained, therefore any previous agreements or proposals were void.
Justice Jackson held that because Stockland had an entire agreement clause in the contract, the buyer could not rely on any previous representations made by Stockland regarding the wetlands.
The harsh lesson buyers need to take from this decision is that any additional promises or representations (no matter if they are oral or in writing) that are not written into a sales contract are most likely not binding. Buyers need to be aware that anything that is vital to the agreement, such as the promise of a construction of a park or school or even a wetland must be in writing and part of the sale contact to be relied upon.
If you are thinking of buying or selling a property it is crucial to ensure you get a lawyer to read the contract before signing it. Once a contract is signed, it is almost impossible to renegotiate or add in necessary clauses for buyers and seller’s protection.
At BTLawyers, we offer a complimentary review and advice regarding contracts as part of our conveyancing services.