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Attention to all the details in preparing a contract is crucial to ensure correct and intended execution of the contract as well as good risk management. Care must be taken when using standard form contracts and completing the variables.

Please note: Since this case the standard LIV form of contract has been amended so that the relevant GST box must be checked. In other words, it is no longer necessary to insert the words ‘plus GST’. Refer to the particulars of sale and general condition 19 in the LIV standard form of contract copyright August 2019.

In one claim, the practitioner acted for the vendor of a property which was sold on a ‘plus GST’ basis. When preparing the contract, the practitioner inserted ‘GST’ into the relevant box rather than ‘plus GST’ as specified by the contract.

A dispute arose between the vendor and the purchaser as to whether the price was inclusive or exclusive of GST.

At first instance the court found that the use of the letters ‘GST’ alone was ineffective to shift the burden of paying GST from the vendor to the purchaser.

The Court of Appeal considered that the GST box not being left blank to be of greater significance than the lack of strict compliance with the prescribed contractual mechanism to shift the GST burden from the purchaser to the vendor. It judged the attempted compliance – the inclusion of ‘GST’ in the relevant box rather than the required ‘plus GST’ – while not being perfect, was good enough.

While the imperfect completion of the contract resulted in the property being sold on a ‘plus GST’ basis as intended, it cost a lot of time and money to get a decision on the interpretation of the contract that could have been put beyond doubt with a little more care and attention to detail.