EAA Publications
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| The Freshman |
Content
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| Contract-hopping for more
profit may not lead to any gain |
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Mr Wu sold a property of
his situated in the Kwun Tong district through an estate agent.
He received a deposit of $100,000 from the buyer and signed
a provisional agreement for sale and purchase, in which there
was a clause stipulating that if Mr Wu failed to complete the
transaction, he would have to, in addition to returning the
deposit to the buyer, compensate the buyer to the amount of
$100,000 and pay the commissions he and the buyer owed the agent.
The day after the agreement was signed, Mr Wu received a phone
call from the agent and was told that there was another buyer
who was willing to pay $500,000 more for his property. The agent
asked him whether he would consider changing his mind and selling
the flat to the second buyer instead. Mr Wu reckoned that, if
he did not complete the deal, he needed to pay $100,000 in compensation.
But if he sold the flat to the second buyer, he could receive
$500,000 more. With the compensation and commissions due to
the agent deducted, he could still make a profit of over $200,000.
As he could see no reason why not, he agreed readily.
A few days after returning the deposit, making compensation
and signing a new agreement, Mr Wu received a notice from the
bank that the cheque drawn by the new buyer to pay the deposit
was dishonoured. It turned out that the new buyer, a limited
company, was being liquidated, and the cheque could not be cashed
nor the transaction be concluded.
Mr Wu paid $100,000 in compensation and also the agent's commissions.
What was more important was that there was no telling when the
next buyer would come along. His desire for profit has cost
him a lot of money.
Although Mr Wu might institute legal proceedings against the
second buyer for losses sustained by him due to its breach of
agreement, as it was being liquidated, the chance of getting
any damages was very slim. As for the agent, as he also acted
for the first buyer, his making offers for the second buyer
after Mr Wu had signed a provisional agreement for sale and
purchase with the first buyer had also put him in a conflict
of interest situation.
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