This section is from the book "Dart's Treatise On The Law And Practice Relating To Vendors And Purchasers Of Real Estate", by J. Henry Dart . Also available from Amazon: A treatise on the law and practice relating to vendors and purchasers of real estate.
When the vendor may rescind.
(u) Re Spindler and Mears, 1901, 1 Ch. 908; 70 L. J. Ch. 420.
(x) Re Higgins and Hitchman, (1882) 21 Ch. D. 95; 51 L. J. Ch. 772.
(y) Buddell v. Simpson, (1866) 2 Ch. 102; 36 L. J. Ch. 70. But see Procter v. Pugh, 1921, 2 Ch. 256.
(z) Mawson v. Fletcher, (1870) 6 Ch. 91; 40 L. J. Ch. 131; Ash-burner v. Sewell, 1891, 3 Ch. 405; 60 L. J. Ch. 784; and see Re Terry and White, (1886) 32 Ch. D. 14; 55 L. J. Ch. 345; Merritt v. Schuster, 1920, 2 Ch. 240.
(a) Bowman v. Hyland, (1878) 8 Ch. D. 588; 47 D. J. Ch. 581; Re Deighton and Harris, 1898, 1 Oh. 458; 67 L. J. Oh. 240.
(b) Nelthorpe v. Holgate, (1844) 1 Coll. 203.
(c) See Price v. Macaulay, (1852) 2 D. M. & G. at p. 347.
(d) Engel v. Fitch, (1868) L.. R. 3 Q. B. 314; 37 L. J. Q. B. 145; and see Greaves v. Wilson, (1858) 25 Beav, 290; 27 L. J. Ch. 546.
(e) Greaves v. Wilson, sup. ,and see Re Jackson and Oakshott, (1880) 4 Ch. D. 851; 49 L. J. Ch. 523.
(f) Re Starr-bowkett, etc, (1889) 42 Ch. D. at p. 387; 58 L. J. Ch. 651; Quinion v. Home, 1906, 1 Ch. 596. Cf. Merritt v. Schuster, 1920. 2 Ch. 240: Re lies Reaux and Setchfield. 1926. Ch. 178.
It is usual, and proper, to insert a condition providing for a resale of the property and forfeiture of the deposit, in case the purchaser fail to comply with the conditions (i);, and that any deficiency upon such resale, together with the costs thereof, shall be borne by the purchaser. But even without such condition, the vendor will be entitled to retain the deposit if the purchaser's conduct amounts to repudiation of the contract (k); the deposit being not merely a part payment, but also an earnest of the performance of the contract; or he may resell and bring an action for damages, i.e., the amount of the loss on the resale, against the purchaser(l).
As to resale, and forfeiture of deposit; how far binding.
If, upon a resale, the estate were to produce more than the original purchase-money, the purchaser who had violated his agreement could not call for an account of the surplus (m . A stipulation that the purchaser making default should pay a specified sum ((exceeding the amount of the deposit) as liquidated damages (n), was held at Law not to amount to a condition for the forfeiture of the deposit (o); nor is the usual condition for forfeiture of the deposit any bar to an action for general damages, if the purchasers refuse to complete (p). Where the deposit has been forfeited, and the vendor claims for the deficiency on the resale, the deposit will be taken into account in assessing the damages (q). But where the vendor does not succeed in effecting a resale, he is entitled to retain the deposit paid by the defaulting purchaser, and to the costs of the abortive sale (r).
Condition for payment of penalty distinguished.
(g) Smith v. Wallace, 1895, 1 Ch. 385; 64 L. J. Ch. 240.
(h) Re Starr-bowkett, etc, sup.
(i) See Gee v. Pearse, (1848) 2 De G. & S. 325, 341; and see Dcwar v. Mintofi, 1912, 2 K. B. 373, 387.
(k) Howe y. Smith, (1884) 27 Ch. D. 89; 53 L. J. Ch. 1055; Hall v. Burwell, 1911, 2 Ch. 551. Cf. Harrison v. Holland, 1921, 3 K. B. 297; 1922, 1 K. B. 211; Sprague v. Booth, 1909, A. C. 576.
(l) Noble v. Edwardes, (1877) 5 Ch. D. 378.
(m) Ex p. Hunter, (1801) 6 Ves. at p. 97.
(n) As to the difference between liquidated damages and a penalty, see Wallis v. Smith, (1882) 21 Ch. D. 243; Barton v. The Capewell Co., (1893) 68 L. T. 857; Dunlop v. Selfridge, 1915, A. C. 79.
(o) Palmer v. Temple, (1839) 9 A. & E. 508; 8 L. J. N. S. Q. B. 179; but see the remarks on this case in Howe v. Smith, (1884) 27 Ch. D. 89, 100; 53 L. J. Ch. 1055.
(p) Icely v. Grew, (1836) 6 N. & M. 467.