WHERRY v WATSON [1991] NSWCA 301

WHERRY v WATSON

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

MAHONEY, PRIESTLEY, and HANDLEY JJA 5 December 1990, 14 March 1991

[1991] NSWCA 301

APPEAL FROM: POWELL J — EQUITY DIVISION SALE OF GOODS — cheque for "deposit" accepted on sale of Bentley motor car — cheque not honoured on presentation seller treats dishonour as entitling him to rescind — purchaser brings proceedings for specific performance — whether payment of "deposit" sufficiently important feature of contract to justify seller's rescission — court holds it was. UNPAID SELLER — purchaser argues that seller was an unpaid seller within s41(1)(a) of Sale of Goods Act and that as such, rights limited to those stated in s42 — held s42 rights additional to whatever other rights arose under contract of sale.

Mahoney JA I agree with the judgment of Priestley JA.

In this case, what the seller purported to do was to terminate the sale or agreement for sale for breach. His letter of 22 August 1990 made clear to the buyer that the contract was at an end. The essential question is therefore whether there was a breach which entitled to seller so to do.

In principle, such a breach may arise in the present context either if the due payment of the deposit is a condition of the sale or agreement or if the failure to pay it may be treated as a fundamental breach or a repudiation of the sale or agreement: see generally Benjamin's Sale of Goods paral 137 et seq.

I agree with Priestley JA that in the circumstances of this case, the due payment of the deposit, by the meeting of the cheque in due course, was a matter of basic importance in the transaction. It is not necessary to determine whether the due payment of a deposit on the sale of goods is, in general, a condition of the transaction, in the sense referred to in Brien v Dwyer (1978) 141 CLR 378. In the present case, the failure in that regard was either a failure of a condition or a fundamental breach of the sale or agreement. On that basis, the seller was entitled to do what he did.