HS Developers Pty Ltd was negotiating to sell an office space in the CBD to Go-Go Bank. Go-Go Bank refused to accept the terms of the contract until they were assured that there was no asbestos in the roof insulation. HS Developers gave oral assurance that there was no asbestos in the office and straight after the parties signed a contract for the sale of the office for a price of 2 million dollars. The written contract did not mention anything about asbestos.

Two months later, while a fire alarm test was being conducted, asbestos was found in the roof space above the office.

YOUR TASK 

Part A (5 marks): Advise whether Go-Go Bank can sue for breach of contract and/or terminate the contract. Would your answer change, if there was an ‘entire agreement’ clause in the contract?

Part B (5 marks): Advise whether Go-Go Bank is entitled to sue for damages for each of the following:

• $500,000 for costs associated with the removal of asbestos from the roof.

• $60,000 for loss of rent, as Go-Go Bank expected to lease the office.

• $5,000 for conveyancing fees (legal advice and paperwork done by a law firm).