What Happens when Either Party Fails to Honour the Sale Agreement?

Deepa Agarwal

Architect

A sale agreement is a legal document that is drafted after the buyer and the seller reach an agreement. However, like any other agreement, this can go wrong as well if one party fails to follow their part of the agreement. In such a case, there are certain steps one can follow to make sure they are given justice.

Seller’s perceptive: When a situation like this occurs, there are certain scenarios where you can act. However, it is important to look at the agreement and check if there is any clause which addresses the concern. Things to check:

Is there any clause in the agreement that states what happens if the buyer fails to make the payment?
It is important to look if there’s any clause which states the outstanding amount until the buyer is satisfied with the property.
Look for the clause that can help you in issuing a legal notice to the buyer for cancelling the agreement and seek the damages.
The seller should check if there is a clause stating that the buyer can renege on the agreement if he fails to make the payment.

If the property has been registered, then a deed of cancellation will have to be executed by both the parties. It is only afterwards the property can be sold to the third party. If the buyer does not agree to cancel the agreement, then the seller can file a lawsuit.

Buyer’s perspective: The same rules apply if the seller fails to honour their part of the agreement. The buyer can look into the certain clauses in the agreement that will help to get justice:

Look for the clause in the contract that states what will happen if the seller pulls out from the deal?
Is there any clause which enables the seller to pull out of the agreement if certain criteria are not met?
Is there a clause that can help you in filing a lawsuit for breaking the agreement and seek the damages?

Therefore, it is important to register the agreement after drafting the agreed clauses to protect your rights. If the seller pulls out of the deal, then they are liable to return the deposit or any other payment that has been done along with added reasonable expenses.

Specific performances
In term of real estate, specific performance means either the buyer or the seller wants to complete sale under the agreed terms and conditions. Either party who wants to compel the recalcitrant party to honour the agreement under the agreed-upon terms can plead injunction by seeking a court order. It is on the court if they decide to order the sale through specific performance.

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