Abstract:
The forfeiture of the option fee in the context of an aborted sale and purchase of real property is generally uncontroversial in typical transactions where the “standard” option fee is 1% of the purchase price. However, in non-typical transactions such as “bulk purchases” or where the option period is significantly longer than the standard 14 days which may involve a larger option fee, the forfeiture of the option fee is less uncontroversial. This case note discusses the approach and reasoning of the Appellate Division of the High Court, and the ruling by the General Division of the High Court that the forfeiture of sums paid over to the vendor in this case was penal.