Seller seeking to rely on liquidated damages clause after due date for completion had passed

In Earnest Enterprises Ltd v Yip Fung ([2012] HKEC 1096, CFI) B entered into a provisional sale and purchase agreement to buy a flat from S. As provided for in the agreement B paid HK$200,000 by way of deposit and then a further deposit of HK$210,000. No formal agreement was entered into other than the provisional agreement. B gave several extensions of time for completion but the date was eventually fixed.S failed to complete.  B sought specific performance and / or damages in lieu. S offered to refund the deposits paid and a further HK$200,000 by way of liquidated damages. S sought to invoke the liquidated damages clause in the sale and purchase agreement. S failed for two reasons. First, it was no longer possible to rely on the liquidated damages clause as drafted once the completion date had passed. Second, in any event S would have to offer liquidated damages of HK410,000 (the total of the deposits paid) and not merely an amount equal to the first of the deposits. B was entitled to specific performance and damages.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: