Mr Chan viewed a flat introduced by an estate agent and liked it. Before he reached any agreement on the terms with the vendor, he signed a provisional agreement for sale and purchase and handed over a deposit of $50,000 to the agent. He thought he could count on the agent to persuade the vendor to accept his offer. Two days later, Mr Chan received a phone call from the agent saying that the vendor had sold the flat to a higher bidder and told him to take back his deposit.
Feeling cheated, Mr Chan thought that the vendor had breached the agreement causing him loss in time and leaving him with no suitable accommodation. He therefore demanded compensation from the vendor. However, the vendor refused on the ground that he had not signed the provisional agreement for sale and purchase. Mr Chan suspected that the agent deliberately withheld the provisional agreement from the vendor while introducing a higher bidder to the vendor. He then demanded compensation from the agent and also lodged a complaint with the Estate Agents Authority.
Since Mr Chan had not reached any agreement with the vendor on the purchase, the provisional agreement for sale and purchase unilaterally signed by him had no binding force on the vendor. Thus, the vendor could not be said to have breached the agreement.
As to whether the agent was to be blamed, it depends on whether he had informed the vendor of Mr Chan's offer immediately. If he had not, then he would have breached the provisions in the Practice Regulation. However, if it was only because the vendor had not made a decision immediately, or had assumed an attitude of wait-and-see, putting off a decision in the hope of a higher offer coming along, then the agent should not be held responsible.
Mr Chan did not suffer financially. He only missed the chance of buying a flat to his liking. Actually, this unpleasant incident could have been avoided if the agent had explained clearly to Mr Chan, before he unilaterally signed the provisional agreement for sale and purchase, that it was only an offer of the purchaser and was subject to the vendor's acceptance. The agreement would only come into force after it was properly executed by the vendor. It will of course be better to arrange for the purchaser and the vendor to sign the agreement simultaneously, a sure way to reduce unnecessary disputes.
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