Long settlement was negotiated

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Reference no: EM134008320

Question

Jack owned a parcel of land, which he decides to sell to Property Tycoon Ltd. A long settlement was negotiated. After Jack had entered into a legally binding contract with Property Tycoon Ltd to sell the land but before he had actually transferred the title of the land to Property Tycoon Ltd, the regulations in relation to the land changed. Now the property can be used for land development, which wasn't possible, when he agreed to sell the land to Property Tycoon Ltd. This change has significantly increased the value of the property. Jack no longer wants to sell the property to Property Tycoon Ltd but legally he is obliged to, as he has already entered into a valid contract of sale with them. Therefore, Jack decides to create a company, called 'My Property, Not Yours Pty Ltd' and transfers the land to the new company. At this time, the land was still registered in Jack's name. Jack believes by doing this, he can get around the contract with Property Tycoon because now 'My Property, Not Yours Pty Ltd' is the registered owner of the land and as he, Jack, is no longer the owner he cannot perform the contract with Property Tycoon Ltd.

Is his reasoning correct?

Reference no: EM134008320

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