Liability for breach of property contract after completion

The following Property practice note provides comprehensive and up to date legal information covering:

  • Liability for breach of property contract after completion
  • The general rule
  • Exceptions to the general rule
  • Non-merger clauses
  • What remedies are available for breach of an obligation which has not merged?
  • Post completion obligations
  • Conditions which become operative on completion
  • Alternative post completion remedies

Liability for breach of property contract after completion

This Practice Note considers when contractual obligations merge on completion of a property contract and remedies that may be available after completion.

For contractual remedies in relation to property contracts generally, see Practice Notes:

  1. Specific performance of property agreements

  2. Notice to complete

  3. Termination for breach of property contract

  4. Repudiation of property sale contracts

  5. Return or forfeiture of a deposit

  6. Misrepresentation, misstatement and non-disclosure in property matters

  7. Rectification—mutual mistake, and

  8. Rectification—unilateral mistake

The general rule

At common law, there cannot be two agreements that cover the same ground. When a contract is completed by deed, insofar as they cover the same ground, the provisions of the contract merge into the completed deed and the terms of the contract are discharged. For example, a contract for the sale of land merges into the transfer or conveyance and a contract for an agreement for lease merges into the lease.

This means that following completion the parties cannot bring an action for breach of a contractual provision which has merged into the deed—as from completion the rights of the parties are entirely governed by the completed deed.

Exceptions to the general rule

The common law rule does not apply to contractual obligations:

  1. which are kept alive by a ‘non-merger’ clause which provides that the provision will not merge on completion (see section below: Non-merger clauses)

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