The Court of Appeal presided by His Honour Chief Justice Silvio Camilleri, Judge Tonio Mallia and Judge Joseph Azzopardi on May 29, 2015 in the case “Gerit Company Limited vs A.M. Developments Limited et” held that when a deposit is paid ‘on account of the price’ in a promise of sale agreement, the failure of the signatories to carry out the final deed of sale may be justified by a valid reason at law.

In this judgment the Court decided that the inability of the purchaser to finance the sale due to a warrant of prohibitory injunction filed against the director of the plaintiff company was a legitimate and justifiable reason to have the deposit repaid in full. The Court of Appeal also made reference to Pont Gloria vs J.L.J Construction Co. Ltd which judgement clarified that a judicial letter filed before the expiration of the promise of sale agreement (in terms of Article 1357(2) of Chapter 16 of the Civil Code) shall serve to extend the effects of the promise of sale for a further 30 days.

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