Chapter 10 Problem questions and answer guidance

Exchange of contracts

Question 1

ABBEY & RICHARDS, SOLICITORS

INTERNAL MEMORANDUM

To:      Trainee Solicitor

From: Training Partner

We act for Tom Hayward who is selling 'Wickets', The Hyde, Eastminster to a first time buyer. Tom has a related purchase. He is buying (with the aid of a mortgage) Peartree Cottage, Hailey Lane, Great Amwell, a town some 40 miles away from our office. The seller of Peartree Cottage has instructed a firm of solicitors in Great Amwell. The sale and purchase are part of a large chain of transactions, of which 'Wickets' is at the bottom. 

Each solicitor in the chain holds his or her client's signed part of the contract and - save obviously for the seller's solicitor at the top of the chain - deposit cheque. All parties are ready to exchange today although a completion date has yet to be finalised. Both Tom's contracts incorporate the Standard Conditions of Sale and the Protocol is being used. Tom has asked whether he can complete his sale and purchase at the end of this week.

  1. Please advise me of the methods by which an exchange of contracts could be achieved and the moment at which the contract would become binding in each case. Explain which method would be most suitable and why other methods may not be suitable. (15 Marks)
  2. What matters should we consider before answering Tom's question about the completion date? (5 Marks)

Question 2

Your firm is acting for Emma Mathysse on a dependent sale and purchase. The Standard Conditions of Sale (5th edition) are being adopted in both contracts. The sale price is £500,000; the purchase price is £700,000. The solicitor in your office handling the two transactions is away ill. Emma has telephoned to raise two matters upon which she requires your advice:

  1. Emma has insufficient funds to finance the deposit on her purchase. What are her options and what advice would you give her? (12 Marks)
  2. Subject to the deposit problem being resolved, she would like you to exchange contracts immediately. What other matters should you consider before you exchange? (10 Marks)

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