Provisional sale and purchase agreement: binding if that was the parties’ intention

In Lam Tam Yi v Chak Wai Man ([1993] 1 HKC 537) the parties had entered into a provisional sale and purchase agreement in respect of a flat. The parties’ respective solicitors then exchanged subject to contract correspondence in respect of the anticipated formal agreement. Then the seller backed out claiming either that there was no enforceable contract or that it had been rescinded by the later subject to contract correspondence. These arguments failed. The provisional agreement was sufficiently detailed and evinced an intention to be bound. This was not rescinded by the later correspondence. Specific performance and damages were awarded to the buyers. The damages were not to be calculated by simply taking the liquidated damages sum from the provisional agreement. This covered a different event, non-performance, rather than late performance.

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