The provisional agreement is binding upon the parties upon its execution. Under the test provided by Lam Tam Yi v Chak Wai Man (1993) 1 HKC 537, the intention of the parties to make the provisional agreement binding makes the agreement binding. In the given case, the provisional agreement contains the intention of Janice to sell the real property described and the intention of Rachel to purchase the agreement. However, the parties also agreed that the provisional agreement is something that precedes the signing of the formal contract. As such, the terms of the provisional agreement governs the actions of the parties to the extent of Janice Wong and Rachel Lam's compliance with their respective responsibilities based on the terms of the provisional agreement to reach the signing of the formal contract. As such, since the terms of the provisional contract involved the payment of the deposit and purchase price, then Rachel Lam carries the obligation to make payment in order to execute the terms of reach the signing of a formal agreement. However, since the provisional contract constitutes a preliminary agreement intended to the replaced by the signed formal and final purchase agreement, the signing of the formal purchase agreement is necessary to make claims for the fulfilment of the contract or compensation for breach. This means that when the formal sale agreement has not been signed, the parties can make claims limited only to the rights and remedies under the provisional agreement. Section 3 under the Conveyancing and Property Ordinance 1984 provides that no legal action can be made regarding a land conveyancing contract if the agreement was not made in writing. This is true for a provisional sale agreement. In the given case, assuming that the provisional sale contract was made in writing, then the parties are compelled to fulfil their respective obligations such as payment and showing of proof of ownership. However, since the formal contract for the purchase of the real property was not signed, then the parties cannot proceed with the actual sale or sue for breach of contract of sale. What apply are the terms of the provisional agreement such as the return or forfeiture of the deposit depending upon the terms of the provisional agreement.
(b) The vendor has offered an assignment by way of gift, dated 15 March 1994, as the intermediate root of title to the property.
(i) Explain the meaning of "intermediate root of title".
Understanding the 'intermediate root of title' needs to consider the meaning of 'root of title'. According to Section 13(1) of the Conveyancing and Property Ordinance 1984, the root of title is the government lease, which constitutes the evidence of title to the land being subjected to conveyancing. As such, in purchasing real property, the buyer should require the vendor to produce the government lease. However, Section 13(2) provides that mortgage by assignment or the legal charge relating to interest in the property subject to conveyancing may be demanded as proof of the legal right of the vendor to sell the real property. While, section 13(1) explains the root of title, Section 13(2) describes the intermediate root of title. As such, an intermediate root of title constitutes proof of the interest of the vendor in the land being conveyed to support the validity of the sale of the real property as well as the intention of the vendor to transfer the property to the buyer subject to the terms of the agreement between the parties. Moreover, the intermediate root of title constitutes the point that leads to a chain of transactions eventually leading back to the root of title. Choosing the intermediate root of title to be shown as proof by the vendor is key to tracing the vendor's interest in the property subject to conveyancing and the validity of the title in case of the actualisation of the formal agreement of sale of the real property. The point in the legal chain concerning the real property should be carefully considered, which under the law involves either assignment by mortgage or legal charge.
(ii) Explain whether or not you would accept the 1994 Assignment as the intermediate root of title to the property.
I will not accept the 194 Assignment as the intermediate root of title to the property. The Conveyancing and Property Ordinance 1984 provides that if the sale is made after a period of at least 15 years from the grant of the government lease, the valid evidence of real estate title is an assignment. Janice Wong offered an assignment by way of gift, which was intended to constitute the intermediate root of title to the property being sold to Rachel Lam. Although the proof of title was an assignment, the law specifies the assignments considered an evidence of title, which is by way of either mortgage or legal charge. In applying the rules of legal construction, the specification means that the law intends these as the valid forms of assignment as proof of title so that an assignment by gift does is entirely different from these specific forms. As such, the assignment by gift cannot constitute an intermediate root of title.
(c) The Government Lease provides that any building erected on Lot 168 shall not exceed 35 feet in height. Handsome Building is an 80-foot building of 10 storeys, erected in 1973.
(b) The vendor has offered an assignment by way of gift, dated 15 March 1994, as the intermediate root of title to the property.
(i) Explain the meaning of "intermediate root of title".
Understanding the 'intermediate root of title' needs to consider the meaning of 'root of title'. According to Section 13(1) of the Conveyancing and Property Ordinance 1984, the root of title is the government lease, which constitutes the evidence of title to the land being subjected to conveyancing. As such, in purchasing real property, the buyer should require the vendor to produce the government lease. However, Section 13(2) provides that mortgage by assignment or the legal charge relating to interest in the property subject to conveyancing may be demanded as proof of the legal right of the vendor to sell the real property. While, section 13(1) explains the root of title, Section 13(2) describes the intermediate root of title. As such, an intermediate root of title constitutes proof of the interest of the vendor in the land being conveyed to support the validity of the sale of the real property as well as the intention of the vendor to transfer the property to the buyer subject to the terms of the agreement between the parties. Moreover, the intermediate root of title constitutes the point that leads to a chain of transactions eventually leading back to the root of title. Choosing the intermediate root of title to be shown as proof by the vendor is key to tracing the vendor's interest in the property subject to conveyancing and the validity of the title in case of the actualisation of the formal agreement of sale of the real property. The point in the legal chain concerning the real property should be carefully considered, which under the law involves either assignment by mortgage or legal charge.
(ii) Explain whether or not you would accept the 1994 Assignment as the intermediate root of title to the property.
I will not accept the 194 Assignment as the intermediate root of title to the property. The Conveyancing and Property Ordinance 1984 provides that if the sale is made after a period of at least 15 years from the grant of the government lease, the valid evidence of real estate title is an assignment. Janice Wong offered an assignment by way of gift, which was intended to constitute the intermediate root of title to the property being sold to Rachel Lam. Although the proof of title was an assignment, the law specifies the assignments considered an evidence of title, which is by way of either mortgage or legal charge. In applying the rules of legal construction, the specification means that the law intends these as the valid forms of assignment as proof of title so that an assignment by gift does is entirely different from these specific forms. As such, the assignment by gift cannot constitute an intermediate root of title.
(c) The Government Lease provides that any building erected on Lot 168 shall not exceed 35 feet in height. Handsome Building is an 80-foot building of 10 storeys, erected in 1973.
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