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25.02.2022

News

Sale of hotel not frustrated by Covid

In our August 2021 edition of Fundamental, we highlighted the NSW Supreme Court case about the sale of the Quarrymans Hotel in Pyrmont as a going concern. Due to the COVID-19 pandemic and public health orders issued by the government, the business lost substantial income. The purchaser tried to avoid completing the contract by arguing it had been frustrated.

Initially, the Court said the contract had not been frustrated by the health orders as the seller had not warranted the future income of the business. The Court said the purchaser wrongly terminated the contract entitling the seller to keep the deposit.

However, the NSW Court of Appeal overturned this decision, finding in favour of the purchaser. While agreeing the contract had not been frustrated by the public health orders, the Court concluded the seller had issued a notice of termination which was accepted by the purchaser. This means the contract had been terminated by agreement and the seller was required to return the deposit to the purchaser.


Authors

Sarah Sherman

Sarah Sherman

Lawyer

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