19-03-2020 09:55 AM
Re-post from @SophieLever Lever Law Facebook page:
An interesting matter on Monday where we had another firm use the ‘Suspension of Time’ clause in a residential sale contract to delay settlement due to COVID19.
The Suspension of Time clause was introduced to the REIQ contract after the 2011 floods. People were prevented from being able to settle (ie get to the physical settlement) solely due to the floods.
Suspension of Time means that time is no longer of the essence (for a short period until the Natural Disaster no longer prevents performance) in relation to settling a conveyance, but time is essential to all other provisions of the Contract (finance, special conditions etc). You cannot suspend time on the settlement day because your company’s fiscal forecast has changed nor because credit markets have tightened. The reason you cannot settle is not SOLELY due to COVID19, as required by clause 6.2 of the Contract.
In this case, the buyer is attempting to suspend time until the market conditions improve! Put simply, they can physically get to settlement, but don’t want to get there. Fortunately this was a settlement in the PEXA environment so it was easy for us to demonstrate as the seller that we were ready, willing and able and impossible for them to demonstrate that Suspension of Time was appropriate.