Monday 31 March 2025
Your weekly SQE Prep Quiz has arrived
Dear Subscriber,
I hope you had a great weekend! Please see below for the question, the answer to the previous question and associated resources. You can view a web version of this newsletter by clicking here.
Question: Amira is a solicitor acting for a buyer who is purchasing a freehold residential property in England for £450,000. The property is registered at the Land Registry. As part of the conveyancing process, Amira must investigate the seller’s title. The seller’s solicitor has sent a contract package, including the official copy of the title register and plan. Amira is now considering what steps to take to investigate title effectively before her client commits to the purchase. Which of the following best describes the main purpose and process of investigating title in a residential property conveyancing transaction?
1. To verify the buyer’s identity and mortgage offer so the seller can withdraw if the buyer lacks funding for completion.
2. To confirm that the seller has a valid and marketable title, check for any defects, restrictions, or third-party rights, and raise pre-contract enquiries to clarify any issues.
3. To assess the buyer’s financial position and confirm that they can afford the mortgage repayments over the next 25 years.
4. To ensure the local council has no objections to the sale and that the seller has received planning permission for the property.
5. To prepare the buyer’s Stamp Duty Land Tax return and submit the application to the Land Registry following exchange of contracts.
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Answer and feedback to last week’s question: Harry enters into a contract with Premium Builders Ltd. to construct a bespoke conservatory at his home for £30,000. The completed conservatory, however, does not meet the agreed specifications. The roof is constructed from cheaper materials, and the dimensions are smaller than those stipulated in the contract. To rebuild the conservatory properly would cost Harry an additional £15,000. However, an independent valuation indicates that the value of Harry’s property has only decreased by £5,000 due to the builder’s errors.
Harry wants advice on the measure of damages he can claim to compensate him for the breach of contract. Which of the following correctly describes the difference between “cost of cure” and “difference in value” as measures of expectation loss in damages?
1. The “cost of cure” measure provides damages based on the cost of correcting the defects to meet contractual specifications, whereas the “difference in value” measure compensates for the actual decrease in the property’s market value due to the defects.
2. The “difference in value” measure always provides higher compensation than the “cost of cure,” as it factors in subjective disappointment and inconvenience.
3. The “cost of cure” measure always limits compensation to the loss in the property’s market value, whereas the “difference in value” measure compensates fully for any additional expenses needed to rectify the breach.
4. Both measures are identical in law; courts always award damages based on the property’s decrease in market value alone.
5. The “difference in value” measure exclusively considers the cost required to rebuild or correct defects, ignoring the property’s market value entirely.
Correct Answer: 1. The “cost of cure” measure provides damages based on the cost of correcting the defects to meet contractual specifications, whereas the “difference in value” measure compensates for the actual decrease in the property’s market value due to the defects. When assessing damages for breach of contract, particularly regarding construction contracts, English courts recognize two primary measures for calculating “expectation loss”:
- Cost of Cure:
- Represents the actual costs necessary to rectify the breach and achieve compliance with the original contractual terms.
- Used typically when the claimant intends and is entitled to have the defects corrected to meet the original specifications.
- Difference in Value:
- Represents the difference between the property’s market value as contracted (if properly completed) and its actual value with the breach present.
- Applied where rectification is disproportionately costly or where the claimant might not reasonably intend to carry out the rectification works.
In Harry’s case, there is a significant disparity between the cost of rectification (£15,000) and the actual reduction in market value (£5,000). The court would consider which measure is more reasonable and proportionate based on whether Harry genuinely intends to have the defects rectified and whether doing so is economically sensible.
Why the Other Options Are Incorrect:
- Option 2 is incorrect: The difference in value measure does not consider subjective disappointment or inconvenience; that would be a separate head of damages (e.g., loss of amenity).
- Option 3 is incorrect: It wrongly reverses the definitions. The cost of cure refers to the costs of fixing defects, not limiting to market value loss.
- Option 4 is incorrect: These measures are distinct, and courts apply whichever measure is more appropriate and reasonable based on the circumstances.
- Option 5 is incorrect: Difference in value explicitly considers the property’s reduction in market value, not the rectification costs.
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Dr Ioannis Glinavos
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