BUYER & SELLER - EXCHANGE OF CONTRACTS

Question 1

WHAT STAGE OF THE LSCP IS USED IN THIS STAGE OF THE TRANSACTION?

Answer 1

Stage B (pre-exchange), Stage C (prior to exchange) & Stage D (exchange of contracts)

Question 2

WHAT ARE THE THREE METHODS FOR EXCHANGE?

Answer 2

1. Physical exchange
2. Postal exchange
3. Telephonic exchange

Question 3

WHAT IS INVOLVED IN PHYSICAL EXCHANGE?

Answer 3

The solicitors meet and exchange the part contracts in person.

This method is very rare.

Question 4

WHAT IS INVOLVED IN POSTAL EXCHANGE?

Answer 4

The buyer’s solicitor will post the buyer’s part contract and sends the deposit to the seller’s solicitor. The seller’s solicitor then sends the seller’s part contract to the buyer’s solicitor.

Exchange takes effect once the second part contract is placed in the post.

Question 5

WHAT IS INVOLVED IN TELEPHONIC EXCHANGE?

Answer 5

Two solicitors agree over the phone that contracts should be treated as exchanged even though the documents have not been physically exchanged. The binding moment is the agreement on the phone.

This method is very common.

Question 6

IN WHAT CASE WAS TELEPHONIC EXCHANGE APPROVED?

Answer 6

Domb and Another v Isoz [1980]

Question 7

WHAT IS FORMULA A IN RESPECT OF TELEPHONIC EXCHANGE?

Answer 7

One solicitor holds both signed parts of the contract. One solicitor will phone the other to exchange and they will agree a completion date. The solicitor holding the contracts will insert this date and confirms the contents of both parts are identical. The solicitors then agree that exchange shall take place from that moment. The solicitor holding the contracts undertakes to send their client’s signed part to the other solicitor

Question 8

WHAT IS FORMULA B IN RESPECT OF TELEPHONIC EXCHANGE?

Answer 8

Each solicitor holds their own client’s part contract. One solicitor telephones the other, the completion date is agreed, the parties confirm their part contracts are identical, the completion date is inserted and the contracts are agreed to be exchanged. Each solicitor undertakes to send out their client’s signed part contract that day.

Question 9

WHAT IS FORMULA C IN RESPECT OF TELEPHONIC EXCHANGE?

Answer 9

Used in linked transactions.

Each solicitor holds their own client’s signed parts of the contract and agrees to release the contracts for exchange for a specific period which allows all parties to be ready to exchange when the party at the end of the chain is ready. All contracts can then be exchanged almost simultaneously