News Kilpatrick Townsend prevails in the Supreme Court of Sweden on behalf of the municipality of Vallentuna

19 May 2020

In 2015, the municipality of Vallentuna sold real estate to a company. The purchase agreement contained a condition that required the municipality to produce a bill of sale after the purchase price was paid (Sw. köpebrevsklausul). The company failed to timely pay the purchase price, and as a result, the municipality rescinded the contract. The notification of the rescission was sent by registered mail. After the notification was sent, but before the company received it, the company paid the purchase price.

The company filed a declaratory injunction suit against the municipality and claimed that the company  should be deemed the legal owner of the real estate. The district court found that the municipality was the legal owner of the real estate, and the court of appeals upheld that decision. The company appealed to the Supreme Court, which granted certiorari regarding: (1) whether the municipality was required to send a notification of rescission; and (2) whether the notification of rescission the municipality sent was sufficiently clear and timely made.

The Supreme Court found that the bill of sale clause should be regarded as a  rescission clause (Sw. hävningsförbehåll) rather than as a reversion clause (Sw. återgångsklausul). As a result, a notification of the rescission is required when a seller wants out of the contract due to the buyer’s delayed payment. However, the notification of rescission is sent at the buyer´s risk if the notification is sent “in an appropriate manner.” The Supreme Court found that the notification in question was sufficiently clear and that it was appropriate to send it by registered mail to the company’s address as stated in the company register. Thus, the company was deemed notified of the rescission the day after the notification was sent. At that time, the purchase price had not yet been paid. Accordingly, the notification of rescission was timely and the municipality remained the legal owner of the real estate.

The Supreme Court’s decision issued on April 17, 2020, case number T 1305-19.

Kilpatrick Townsend’s team included Matti Scheffer and Johan Wedsberg.