Agreement for Sale of Land by Communications

Sometimes the question arises whether a contract for the sale of land has been formed between parties even before they have entered into a formal contract through means such as communications. Section 54A of the Conveyancing Act NSW prohibits an action being brought upon any contract for the sale of land unless the relevant agreement or some memorandum or note is in writing and signed by the party against whom the claim is made. A memorandum or note may include letters and e-mails provided they are evidence of a concluded agreement containing its essential terms being the parties, the property and the consideration (purchase price). In a recent case in the NSW Supreme Court (Hill v Newth [2014] NSWSC 298) it was recognized that in NSW real estate is normally sold by the signing and exchanging of the standard form Law Society and Real Estate Institute contract. Stevenson J stated that although it is possible for a contract to come into existence other than by exchange of this standard form contract, there would need to be clear evidence that the normal practice was not to apply. What this decision means is that, in effect, there is a presumption in NSW that parties to a transaction to purchase real estate intend to use the usual method of exchanging contracts to enter into a binding agreement and communications between them prior to such exchange cannot be used to support a claim by one party against the other unless there is clear evidence that the parties intended to exclude the usual practice.