Carrie and her husband Harry sign a contract to sell their suburban cottage to Sam for $750,000. Sam pays $75,000 to their agent by way of deposit. One of the terms of the contract is that settlement will take place after 12 weeks in order to give Sam time to organise his finance. This is because Sam has complicated financial holdings through overseas managed funds and he needs a longer period of time to settle. Both parties are represented by solicitors.

Two days before the settlement date, Sam says he cannot settle. He asks for extra time because one of the trustees of an overseas company in which he has shares has been ill and failed to organise part of the settlement funds on time. Carrie and Harry reluctantly agree to give Sam extra time. Their solicitor serves Sam with a notice to complete. The notice sets a new time for settlement in 28 days with 'time of the essence'.

On the day before the new settlement date, Sam again asks for more time because an amount of money he was expecting to come from one of his investments in the Cayman Islands was delayed. Carrie and Harry's solicitor replies that they do not agree.

The solicitor attends the settlement but no one is there on behalf of Sam. The solicitor waits for 10 minutes and then leaves. Carrie and Harry terminate the contract and claim the deposit. Sam threatens to take them to court.

a) Advise Carrie and Harry whether, and on what basis, they would be entitled to terminate the contract for sale when Sam said he could not settle two days before settlement?

b) Advise Carrie and Harry about their prospects for claiming the deposit in the circumstances of this case.