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Why It's Important to Always Read Contracts

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Litigants in a dispute over Gold Coast off-the-plan contract problems have successfully convinced a local court that misrepresentations did occur during sales. The litigants, however, failed to prove 'reliance' to the satisfaction of the court, unable to show that the agent's statements taken separately were not the sole motivator for clients signing contracts.

Admittedly, few buyers would be so rash as one New Zealand couple, who signed up for a $930 off-the-plan deal to buy an apartment at the Hilton Surfers Paradise complex in July 2009. The couple admitted that they had believed the agent's sales spin at the time of the sale, who told them that the apartment would be "worth $1.1 million when complete" and that the couple could easily expect to receive "$1000 a night" at a very high 80% occupancy rate.

The couple, Paul Goode and Christine Barber, shelled out $5,000 for a deposit on the apartment during a holiday visit to the area, anxious to get their hands on what they were told was "the last 2-bedroom apartment available at such a low price" inside the Orchid Tower. According to the couple, the following day, the sales agent took them to a local lawyer who confidently proclaimed he had written a "buyer's guide" for Orchid Tower. Surprisingly, the lawyer warned the couple that the tower had "been prepared for the developer", hinting at problems.

Neglecting to read through the contracts, and not having discussed anything of note included in the contract, the couple signed the papers to buy the apartment. Bad news struck in August 2011 when a post-construction inspection revealed that the apartment would never be in a condition to command $1,000 a night rental fees. The couple decided to hire new lawyers, telling the court that they had been misled into signing the contract through deceptive conduct on behalf of the sales agent.

Further complicating things, a year later the developer re-sold the apartment for $620,000 after having earned just $3,900 in rent. Consequently, the developer then sued the buyers for their loss on the apartment's re-sale value.

Other litigants in similar off-the-plan contract disputes on the Gold Coast have successfully been able to prove to the court that deliberate misrepresentations occurred during some sales, but was unable to provide enough evidence to show "reliance", or prove that the litigants were relying solely on the agent's statements when deciding whether or not to sign the contract.

After hearing arguments, the court ordered the original contract to be voided "ab initio", or wiped out as if it had never been sign, and ordered that the developer return the couple's deposit.

Legal experts say that this case further demonstrates the court's position that these and other similar litigants on the Gold Coast were "foolish and naive" buyers who did not do enough research on their own before signing contracts. Furthermore, the court has shown that the plaintiffs also failed to secure legal representation before signing. The court concluded by admonishing the litigants for waiting to be sued by the developer instead of taking the more pro-active and sympathetic approach of filing a complaint as the plaintiff.

Read the original article by Peter Carter here.

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