Legal comment by Mark Illidge of Hinterland Lawyers

August 2005

In recent times it has become standard practice to enter into a binding contract for the sale of residential property by facsimile by using counterpart facsimile clauses in the contract to create binding obligations.
A recent Queensland Court of Appeal decision has significant implications for sellers and of residential property (and their agents) and highlights the need for strict compliance with the Property Agents and Motor Dealers Act provisions relating to the formation of contracts.  The Act provides that a contract for sale of residential property (other than by auction) must have a Form 30c Warning Statement attached to it as its first or top sheet. 

In this case, the sellers agent sent to the buyer a continuous fax consisting of a covering letter, a Form 27b (Selling Agents Disclosure to Buyer), the Form 30c Warning Statement and the contract, in that order.  Prior to settlement the buyer purported to terminate the contract on the basis that the Form 30c was not attached to the contract.  The court found that faxing the Form 30c with the contract, as a continuous fax did not constitute attachment.  As a consequence, counterpart facsimile clauses used in contracts to create binding obligations will not satisfy the requirements of section 366 of the legislation.  An enforceable contract for residential property cannot be created by faxing signed counterparts.  A Form 30c Warning Statement must be attached physically to the contract and binding contractual obligations can only be created by the presentation and acceptance of executed originals. 

Various industry groups are lobbying Government for amendments to ensure that the use of counterpart facsimile clauses in contracts can be accommodated and so that the commercial convenience of being able to fax a contract after its execution is not diminished.

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