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.
|