The Draft Contract Flashcards
Contracts have just been exchanged on the sale of a residential property. A 10% deposit has been paid by the buyer’s solicitor to the seller’s solicitor. The contract incorporates the Standard Conditions of Sale (5th edn, 2018 revision) and contains no special conditions as to the deposit. The seller has a related purchase and also has an existing mortgage on the property she is selling.
Which one of the following statements is correct as to how the deposit is to be held by the seller’s solicitor?
All or part of the deposit may be used as a deposit on the seller’s related purchase, with the balance held as stakeholder until completion.
A company is selling a commercial building and its solicitor has already issued a draft contract to a prospective buyer. The company now instructs that it wishes a draft contract to be issued to another prospective buyer, so that there will be a ‘contract race’.
Which one of the following statements represents best practice as to whether the solicitor may act in a contract race?
The solicitor can act provided all buyers are immediately informed that there is a contract race and the client gives consent to this disclosure.
It is possible for a seller’s solicitor to act in a contract race, but the solicitor should apply best practice when acting and comply with the SRA Standards and Regulations.
The owner of a freehold house is selling the property, which is free of any mortgage or lease. Contracts have just been exchanged, with completion in a month’s time. The buyer has requested permission to start moving into the property during the intervening period. The contract utilises the Standard Conditions of Sale (5th edn, 2018 revision) and there are no special conditions relating to occupation of the property by the buyer pending completion.
Which one of the following statements best describes the position under the Standard Conditions of the contract regarding such occupation?
The Standard Conditions provide that such occupation will be permitted on the basis that the buyer is a licensee not a tenant.
Contracts have just been exchanged for the sale of a flat. Completion is to take place on a date which falls ten working days after the date of exchange. The contract incorporates the Standard Conditions of Sale (5th edn, 2018 revision) (SCS). The buyer’s solicitor now needs to submit the draft transfer to the seller’s solicitor.
Under the SCS, which one of the following is the minimum period before the completion date within which the draft transfer must be submitted?
Eight working days.
A solicitor is acting for the buyer of a field. The contract incorporates the Standard Conditions of Sale (5th edn, 2018 revision) (SCS) and the parties are ready to exchange; the agreed price is £10,000. Given the small scale of the transaction, the seller’s solicitor has suggested dispensing with a specified completion date in the special conditions.
Which one of the following statements best describes the effect of doing so?
Completion is to take place 20 working days after the date of the contract.
This is the open contract provision when the SCS do not apply.
A solicitor is acting for the buyer of a freehold house. The title was first registered some years ago and the house has been sold twice since then. Contracts have been exchanged. The contract incorporates the Standard Conditions of Sale (5th edn, 2018 revision) (SCS). The solicitor is preparing the draft transfer and is considering whether it is necessary to include an indemnity covenant by the buyer in respect of covenants referred to in the charges register.
Which one of the following would the solicitor need to check before deciding whether to include an indemnity covenant?
Whether there is a condition in the contract in respect of the inclusion of an indemnity covenant in the transfer.
The two executors of a deceased sole owner of a house are selling the property in their capacity of personal representatives. The contract has been prepared for signature, in readiness for exchange of contracts.
Which one of the following statements best describes whether either or both of the executors will need to sign the contract
It is permissible for one executor to sign the contract provided they have the authority of the other to do so.
Signature of a single contract by both executors is not obligatory in all cases.
The owner of a dilapidated house is selling the property. They already have a number of interested buyers, but have not yet decided whether to sell the property by private treaty or at a public auction. The seller discusses the sale with their solicitor and asks about the form of contract required, as they would like to keep the costs low. The solicitor explains that certain requirements for a contract for the sale of land are imposed by statute.
Which one of the following statements correctly describes an aspect of those statutory requirements?
The requirements apply to contracts by private treaty but not to contracts by public auction.
A solicitor is acting in a sale of part for a residential freehold property. The sellers decided to build a house on part of their land as their house was set on a large plot and they did not need all the space. They have accepted an offer and the solicitor has asked them for a copy of the plan detailing the boundaries of the property.
Which statement below best describes the requirements for the plan which will be referenced in the property description in the contract?
The plan must be of sufficient size and scale to enable the boundaries to be easily identifiable
A solicitor is acting for a client who is purchasing a leasehold flat. The seller’s solicitor has contacted the solicitor to request that a special condition be added to the contract allowing the deposit to be held as agent.
Which option below best describes the advice a solicitor should give their client regarding this amendment?
Agreeing to the deposit being paid as agent is risky because the funds will be released to the seller. If the seller was to default and completion did not go ahead, it could be difficult to get the funds back.
