Simanke v Liu

Simanke agreed to sell a property to Liu for $650,000, with the sales agreement stating that a deposit of $300,000 was to be paid within 14 days.

The contract was later cancelled, and Siminake sued for the $300,000 deposit. Liu defended the claim by saying as under the Contractual Remedies Act 1979, once a contract is cancelled, no party is obliged to perform any further on a contract. Simanke argued that the Act still requires the deposit to be paid.

The court ruled that in New Zealand, the customary deposit is 10%, meaning in this case, $300,000 was not in the nature of a deposit, and so was not enforceable here. Furthermore, Simanke's claim was not helped either by the fact that the sales agreement had limited the forfeiture of deposit to be only 10%, anyway. Simanke's claim was dismissed.