In Maltese property law, the promise of sale agreement, commonly known as the konvenju, has long been treated as a legal ticking clock. For decades, a rigid interpretation of Article 1357 of the Civil Code fostered what many practitioners came to regard as a procedural trap: if a vendor failed to file a judicial letter before the expiration of the konvenju and follow it up with a lawsuit within thirty days, the agreement would expire entirely, and with it the right to retain the deposit. The prevailing belief was that Article 1357 functioned as a master switch, extinguishing not only the ability to force the sale but also any ancillary rights flowing from the contract, including the forfeiture of the deposit. A landmark judgment delivered by the Court of Appeal on 20th February 2025, in the case of Raymond Mercieca f’isem is-soċjetà Tri-Mer Services Limited v. Dominique Peter Werner Rudolf Hiltbrunner has now decisively dismantled this long-standing assumption and reshaped the legal landscape surrounding expired konvenji.
Traditionally, Article 1357 was interpreted with strict formalism. The provision states that the “effect” of a promise of sale expires unless a judicial letter is filed before the agreed term lapses and a lawsuit is subsequently instituted within thirty days. Courts frequently applied this requirement scrupulously. Where a vendor failed to observe these timelines, lower courts often concluded that the entire agreement had lost legal force. In practical terms, this meant that even where a purchaser had clearly defaulted by refusing to appear on the final deed without justification, the vendor could still be compelled to return the deposit simply because the procedural steps had not been followed in time. The expiration of the konvenju was thus treated as extinguishing all rights arising from it, including the right to retain sums expressly agreed as damages.
The Court of Appeal in its 2025 judgment rejected this reasoning as resting on a false premise. It introduced a critical and game-changing distinction between two fundamentally different legal objectives: enforcing the performance of the promise of sale and claiming damages for breach of contract. The Court clarified that Article 1357 is specifically concerned with actions “to carry out the promise” (biex titwettaq il-wegħda). In other words, if a party wishes to compel the other to execute the final deed of sale, the procedural safeguards and deadlines of Article 1357 must indeed be respected. The judicial letter and subsequent lawsuit are mandatory where the objective is specific performance of the agreement. However, the Court emphasised that this procedural framework does not automatically extinguish independent contractual clauses regulating damages in the event of breach.
Central to the Court’s reasoning was the principle of contractual autonomy. In the case at hand, the konvenju expressly provided that the vendor would be entitled to retain the deposit as “pre-liquidated and undisputable damages” if the purchaser failed to honour
his obligations. This clause was not framed as conditional upon the institution of judicial proceedings under Article 1357. The Court therefore held that the expiry of the promise of sale as an enforceable obligation to conclude the final deed does not erase the consequences of a breach that has already occurred. Even if the procedural mechanism to force the sale lapses, the contractual penalty clause survives. The deposit, when clearly agreed upon as liquidated damages, remains enforceable provided the purchaser is in default without valid legal justification.
The implications of this judgment are significant. For vendors, the ruling provides a crucial safety net. They are no longer compelled to initiate urgent and often costly litigation merely to preserve their right to retain a deposit, as long as the agreement has been properly drafted and contains a clear liquidated damages clause. For purchasers, the decision serves as a stark warning: allowing the konvenju to expire is not a tactical escape route. The passage of time does not automatically entitle a defaulting buyer to recover the deposit. The breach remains legally relevant even after the promise of sale can no longer be specifically enforced.
By drawing a firm line between enforcing performance and claiming damages, the Court of Appeal has restored coherence to an area of law that had become unduly procedural. The judgment makes clear that Article 1357 was never intended to function as a universal extinguisher of all contractual rights. Rather, it regulates a specific remedy ie. specific performance of the promise of sale. A breach of contract remains a breach of contract regardless of whether the window to compel the sale has closed.
In dismantling the so-called expiry trap, the Court has reaffirmed that contractual obligations and agreed consequences cannot be nullified solely by the lapse of a procedural deadline.
For anyone entering into a konvenju in Malta, the message is unmistakable: the clock may stop ticking on the promise to sell, but it does not necessarily stop ticking on liability for breach.