Understanding Authority and ‘time is of the essence’: A Case Study on Evans v Jan

DATE PUBLISHED: May 27, 2025

In the recent case of Evans v Jan ([2025] QSC 31), the Supreme Court of Queensland examined the legal implications of authority, contractual deadlines where time is of the essence, and the enforceability of sale contracts.

The case provides valuable insight for any contract between parties involving an agent or where a deposit is payable and can extend to business/share sale contracts, property contracts or service agreements where a deposit is payable.

1. The Case at a Glance

The dispute arose from a property sale where Stephen Gary Evans, the buyer, entered into a contract to purchase a property from Yea Lan Jan, the seller. The contract stipulated a purchase price of $985,000 with a required deposit of $98,500. Both parties signed the contract on 22 January 2024, and the deal was confirmed the following day when the real estate agent sent an email to both parties’ solicitors, confirming the sale and requesting that the buyer pay the deposit promptly.

However, the buyer, unable to meet the deadline for the deposit, contacted the real estate agent on 23 January 2024, explaining the delay. Over the following days, he made partial payments toward the deposit, but by 28 January, the agent informed the buyer that the seller no longer wished to proceed with the sale. The seller claimed that the contract had been terminated due to the buyer’s failure to pay the deposit on time.

The key legal issue in this case was whether the real estate agent had the authority to extend the deposit deadline on behalf of the seller and whether the buyer could rely on the agent’s actions to enforce the contract.

2. Arguments from Both Sides

Both parties agreed that the buyer’s late payment was a breach of an essential term of the contract, specifically the obligation to pay the deposit by the agreed-upon date. This breach gave the seller the right to either affirm the contract or terminate it.

The buyer argued that the real estate agent had the seller’s authority to accept the late payment. According to the buyer, the agent’s communication on 24 January which confirmed that payments were being made served as an affirmation of the contract. Furthermore, the buyer claimed that even if no affirmation occurred, the seller should be estopped from terminating the contract because of the agent’s actions.

In contrast, the seller argued that the agent had no authority to grant an extension for the deposit payment. The seller further contended that she was unaware of the buyer’s late payment and had not authorised the agent to allow such an extension. As a result, the seller maintained that the contract was properly terminated on 29 January 2024.

3. The Judge's Ruling

The Court’s decision hinged on two main issues:

(a) the scope of the real estate agent’s authority; and

(b) whether the buyer could rely on the agent’s actions to enforce the contract.

3.1 Actual Authority

The Judge found that the real estate agent did not have actual authority to extend the deposit deadline. Actual authority arises when there is a clear agreement between the principal (in this case, the seller) and the agent that allows the agent to take specific actions on behalf of the principal. The judge explained that real estate agents generally do not have authority to negotiate payment deadlines unless explicitly stated in the contract. The contract in this case did not give the agent the power to make such decisions, and the agent’s actions were not authorised by the seller.

3.2 Ostensible Authority

The judge also dismissed the buyer’s argument that the agent had ostensible authority to extend the deposit deadline. Ostensible authority occurs when a principal’s actions make it appear that the agent has the authority to act on their behalf, even if such authority does not exist. The judge found no evidence that the seller made any representations to the buyer that would have led the buyer to reasonably believe the agent had the authority to accept a late deposit.

3.3 Affirmation and Estoppel

The buyer also argued that the seller had affirmed the contract by not terminating it immediately after the late deposit payment was made. However, the judge ruled that the seller’s actions (or lack thereof) did not amount to an unequivocal affirmation of the contract. For affirmation to occur, the party seeking to affirm the contract must have full knowledge of the breach and voluntarily choose to continue with the agreement. In this case, the seller was unaware of the late payment when the agent sent the text messages, so she could not have knowingly affirmed the contract.

As for promissory estoppel, the judge found that the buyer could not rely on any representations made by the agent because the agent did not have the authority to make such promises. Estoppel would prevent the seller from going back on a promise that the buyer reasonably relied on, but in this case, no promise was made with the seller’s authority.

4. The Outcome

Ultimately, the Judge ruled in favour of the seller, rejecting the buyer’s request for specific performance (forcing the sale to go through). The seller was allowed to keep the deposit as the contract had been validly terminated due to the buyer’s failure to meet the deposit deadline.

5. Key Takeaways

1. Understanding the Scope of Agent Authority

It is crucial to clearly define the authority of agents, especially in contracts involving significant transactions like real estate sales. Buyers and sellers should ensure that any extensions or changes to contract terms are explicitly authorised and documented between the parties and not rely on representations made by an agent.

2. Timeliness Matters

There are serious implications to missing contract deadlines where, under the terms of the contract, time is of the essence.

3. Legal Advice is Crucial

Any amendments or extensions under contract between the parties should be done after seeking legal advice to ensure that any such changes are documented correctly.

This case serves as a reminder of the importance of clarity in contractual relationships and the potential risks of relying on an agent's authority without clear consent from the principal. Whether you're buying or selling property, understanding the scope of authority and the consequences of missing deadlines can make all the difference in the success of a transaction.