When has a deposit been paid?

In Wise Think Global Ltd v Finance Worldwide Ltd ([2012] HKEC 1432, CA – subsequently reversed by the Court of Final Appeal) S agreed to sell property to P. A deposit of HK$500,000 was paid on the signing of the provisional agreement. A further HK$3.1m was to be paid on the signing of the formal agreement. The terms of the formal agreement were agreed and P sent the agreement signed on behalf of P and a cheque for HK$3.1m. P’s solicitors’ accompanying letter declared that the agreement and cheque were sent against S’ solicitors undertaking to send in return the part of the formal agreement signed on behalf of S within three days. S’ solicitors did not expressly give this undertaking. They cashed the cheque but did not send a part of the formal agreement signed on behalf of S. Instead, more than three days later, S purported to terminate the provisional agreement by paying liquidated damages in accordance with the terms of the provisional agreement. S refunded both of the deposits and paid a further $500,000 (equal to the initial deposit). The question was whether it had also to pay further liquidated damages equal to the HK$3.1 m further deposit.

The Court of Appeal held that, on its true construction, the provisional agreement required S to refund all deposits that had been paid. So the question was whether the HK$3.1m further deposit had been ‘paid’. The Court of Appeal (Yuen JA dissenting) held that the further deposit had not been paid. It would only have been paid had the formal agreement been entered into (since the obligation to pay the further deposit was linked to the obligation to enter into the formal agreement ([57])).

Yuen JA urged the property industry to promulgate a standard provisional agreement that ensured consistency between the English and Chinese versions ([62.5]).

Michael Lower

2 Responses to “When has a deposit been paid?”

  1. cjr666 Says:

    Name of case is Wise Think Global Ltd – not “Widethink….” Regards, Chris R

    Chris Robinson

    >________________________________ > From: Hong Kong Land Law Blog >To: chrisrobinson_hk@yahoo.com >Sent: Sunday, October 28, 2012 7:11 PM >Subject: [New post] When has a deposit been paid? > > WordPress.com >Michael Lower posted: “InWidethink Global Ltd v Finance Worldwide Ltd ([2012] HKEC 1432, CA) S agreed to sell property to P. A deposit of HK$500,000 was paid on the signing of the provisional agreement. A further HK$3.1m was to paid on the signing of the formal agreement. The” >

Leave a Reply

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

WordPress.com Logo

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

Google photo

You are commenting using your Google 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: