Omar VEl Wakil 2002

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[2002] P&CR 3. The buyer of a property entered into the usual contract with the seller, under which the buyer was required to provide a deposit, and the deposit was to be forfeit to the seller in the event of the buyer not completing the transaction. The buyer was unable to raise the funds to complete the purchase, and the seller retained the deposit. The Buyer asked the court to order the return of the deposit under s.49(2) of the LPA1925, arguing that the seller had not suffered any financial loss by the default, and the forfeiture clause was thus apenalty clause. The court refused to make the order, on the grounds that purchasers of land are well aware that they will forfeit their deposits on default, and this threat of forfeiture serves an important social objective. The fact that the buyer could not raise the funds was unfortunate, but the forfeiture was not unjust under the circumstances. See also Forfeiture of deposit and TennaroVMajorarch2003.

Contract Law
Land and Property Law