Question 7 Discharge of contract (4 marks)

Katherine and Darshan enter a contract for the sale of Darshan's house in Summer Hill NSW

to Katherine for $1 million. They know that the law requires contracts for the sale of land to

be in writing, so they sign a contract in the appropriate legal form. Katherine pays Darshan a

deposit of 10% of the sale price. Their agreement will be completed when Darshan has moved

out of the house and Katherine pays the balance of the purchase price. The day before the

agreement is completed there is a huge electrical storm in Summer Hill. The house is struck

by lightning and burns to the ground before the fire service can get there.

Katherine and Darshan are now not sure what to do. Now that the house has burnt down

what has happened to their contract? Explain how you believe a judge would analyse the

position facing Katherine and Darshan. Is their contract in force or has it come to an end?

Provide reasons for your answer