What remedies does a party to a deed of sale have if the other party fails to fulfil his or her contractual obligations?

What remedies does a party to a deed of sale have if the other party fails to fulfil his or her contractual obligations?

The first step to be taken under such circumstances is to consider the wording of the clause in the deed of sale relating to the breach of the contract by one of the parties. Almost all deeds of sale contain such a clause. Most of these clauses state that in the event of the one party (the defaulting party) failing to fulfil his or her contractual obligations then the other party (the aggrieved party) must send a notice to the defaulting party demanding that they remedy the breach within a certain period (usually between 7 and 14 days)

If, for example, the deed of sale states that the buyer must provide bank guarantees to secure the payment of the purchase price by a certain date and the buyer fails to do so then the transferring attorney will send a written demand to the buyer demanding delivery of the guarantees. If the buyer still fails deliver the guarantees then the seller normally has two remedies available to him: he can either cancel the contract and claim damages or issue summons against the buyer claiming payment of the purchase price.

If the seller elects to cancel the contract and resell the property but is unable to achieve the same purchase price i.e. the property is sold for less than it was originally sold for, then the difference in the purchase price between the first sale (the cancelled sale) and the second sale will constitute one element of the seller's damages. Furthermore if the seller has to pay the estate agent commission in respect of the cancelled sale this amount will constitute another element of his damages. The seller may suffer other damages as well but space does not allow for a full discussion on damages.

The seller's other remedy namely to sue for payment of the purchase price is very often not a practical option. If the buyer defends the court action then the property cannot be resold until the court case is finalised. This could take years. Even if the seller is successful but the buyer is, from a practical point of view, unable to pay the purchase price, then the court order requiring him to do so is of little practical value. As a result the seller normally elects to cancel the sale and claim damages as this enables him to resell the property immediately.

If the seller is the defaulting party the purchaser has similar remedies to those set out above. If for example the seller refuses or is unable to pass transfer of the property to the buyer then the buyer may cancel the contract and claim damages. Alternatively the buyer can issue summons against the seller claiming that the seller transfer the property to him. If the purchaser is successful the court will order the seller to transfer the property to the buyer.

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