Tropical Traders v Goonan

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Citation: Tropical Traders Ltd v Goonan (1964) 111 CLR 41

This information can be found in the Casebook: Paterson, Robertson & Duke, Contract: Cases and Materials (Lawbook Co, 11th ed, 2009), pp. 591-4 [25.55]

Contents

Background facts

  • Appellant [Tropical traders, vendor] were selling land to Respondent [Goonan, purchaser].
    • Contract provided a time for completion and specified that time is of the essence.
  • Contract provided a payment method and that if money wasn't paid properly, the Appellant can rescind the contract and keep all money already received.
  • Many payments were made late and one wasn't made at all.
  • The Respondent asked for a 3 month extension to pay his debts, the Appellant gave him a couple of days extension, but specified that it is doing it out as an act of grace and without forfeiting its rights under the contract.
  • Payment was not made, the contract was terminated.
  • The Appellant seeks an declaration that the termination was valid, whilst the Respondent claims wrongful termination.

Argument

  • The Respondent claims that:
    1. By accepting the late payment, the Appellant either waived the 'time is of the essence' clause or induced an assumption that he would not terminate because of lateness
    2. By accepting the interest due on the deadline date, or by giving the extension, the Appellant has elected not to terminate.

Legal issues

Judgement

Acceptance of late payments

  • The acceptance of late payment did not result in the waiver for the 'time is of the essence' clause neither does it give rise to an estoppel.
  • Each time the Appellant accepted a late payment was a separate election not to terminate for that particular breach of a condition.
    • "...it does not follow that in respect of the final payment of...the appellant was giving the respondents to understand that they might safely rely upon its treating of cl 12 of the contract as no longer in force...Each acceptance of a late payment operated, of course, as an election by the appellant not to rescind the contract for non-payment of the relevant amount on its due date[1]"

Granting of the extension

  • Granting an extension does not nullify a 'time is of the essence' clause - it can, but does not do so generally.
  • More likely, it usually merely substitutes the original time with a new one, which is still 'of the essence'.[2]
  • The granting of an extension in no way waived the Appellant's right or affirmed the contract.
  • "On the contrary, the extension was granted with a plain intimation...that the appellant was insisting upon its strict rights under the contract except to the extent of the indulgence it was offering. In the face of the letter the respondents had no reasonable ground for a belief that if they should fail to pay...they could still count on being allowed further time[3]."

Election in general

  • A party is not required to elect at once.
    • "It might keep the option open, so long as it did nothing to affirm the contract and so long as the respondents' position was not prejudiced in consequence of the delay[4]."
  • In this case, the Appellant merely decided to defer its election until the new deadline, after which it elected to terminate. This is perfectly fine.
  • The Appellant wins.

References

  1. (1964) 111 CLR 41, 52
  2. Barclay v Messenger (1874) 43 LJ Ch 449
  3. (1964) 111 CLR 41, 53
  4. (1964) 111 CLR 41, 55
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