A contract of sale is a document containing the terms and conditions agreed upon between a seller and a buyer in relation to goods. The essential elements that must be present in a contract of sale of goods are:

Parties: There should be at least two parties, i.e. the seller and the buyer.

Subject matter: The subject matter of the contract must be stipulated.

Price: This includes the monetary consideration involved in the sale of goods and when it is owing.

Transfer of property: There should be a transfer of property in goods from the seller to buyer.

All other essential components of a valid contract such as offer, acceptance and intention to create legal relation also form the essential elements of a contract of sale.

Components of a Sale Contract Relating to Property

The essential components of a contract for sale concerning sale of a property include the following:

Details about the Vendor and the Purchaser: This includes the name and present residential addresses of the parties to the contract.

The description or the physical dimension of the property to be sold.

A list of chattels included in the property. Chattels are items that are not physically attached to the property and these include amongst other things items like curtains, furniture, dishwasher, fridge, and the washing machine.

The purchase price or consideration of the property and the date of such payment(s). In case of sale of a property, consideration may usually be divided into deposit and the remaining balance. The percentage of the amount to be deposited depends on the terms of negotiation mutually agreed upon by both the parties.

General covenants: These include terms and conditions relating to loss or damage to the property prior to settlement, consequences for breach of contract, penalties for delay in settlement, transfer charges, whether the contract is subjected to financial approvals or the sale is subjected to a tenancy, including whether the property is presently in the occupancy of a tenantetc.

Easement rights: An easement gives an individual or a company, the right to use the land or property for a particular purpose. The inclusion of a clause relating to easement actually restricts the use of a property. Common easements includea shared driveway between neighbours or routing of electrical mains or drainage systems through a property by governmental authorities. *Easements that are registered on a certificate of title will remain as the land is bought and sold. It can only be removed upon mutual agreement of the easement holder and the owner of the land.

Sunset Clause: This clause is a provision in a contract of sale that sets certain stipulation(s) after which the agreement will no longer be effective, such as reaching settlement by a certain date. The incorporation of this clause enables both the buyer and the seller to protect themselves from certain circumstances. For example a buyer can use a clause to state the expected completion date of certain constructions and/or developments and cancel if such developments are not completed within the particular time period. Similarly a seller might use a sunset clause to fix a settlement date thereby ensuring that the payments are fully and promptly paid.

Cooling-off Period: The contract of sale often contains information about a ‘Cooling-off period’. This clause enables a buyer to end the contract without large penalties.

Goods & Services Tax (GST): Before signing a contract of sale it is always recommended that the purchaser should check whether GST is included in the purchase price or not.

Owen Hodge Lawyers can provide advisory and consulting services and assist in drafting of sale contracts and other agreements of similar nature.

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