Summary Drafting and Exchange

Drafting & Exchange of the contracts -



Procedure for drafting and agreeing the sale contract -

Sellers solicitor prepares the first draft – contract will:

 Define the land being sold
 Set out terms & conditions agreed between the parties
o For commercial deals, these are found in ‘Heads of Terms’ - often agreed before
solicitors are involved

The sellers solicitor will use the ‘Heads of terms’ to prepare the first draft of the contract.

 Then send to buyer’s solicitor for approval (often done via email)

The buyer’s solicitor checks that the contract:

 accords with the Heads of Terms;
 accords with the buyer’s instructions;
 includes clauses dealing w/ issues that have arisen from the buyer’s solicitor’s investigation
of title;
 includes clauses which deal with any issues that have arisen from the buyer’s solicitor’s pre-
contract searches
 includes clauses which deal with any issues that have arisen from the seller’s solicitor’s
replies to the pre-contract enquiries

If not, they will amend the contract and send this back to the seller’s solicitor.

Once agreed, the seller’s solicitor prints 2 copies, and one is sent to the buyers solicitor.

 Buyer will sign
 Contracts exchanged
o The date for completion will be fixed in the contract

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Form of the contract-

Contract must comply with s2. LP(MP)A ‘89:

 be in writing;
 incorporate all the terms which the parties have expressly agreed (either in one document
or, if contracts are exchanged, in each document); and
 be signed by, or on behalf of, each party to the contract.



Subject to these requirements, the contract may take various forms: in practice your firm will almost
certainly have its own form of contract, sometimes known as ‘tailor made contracts’. In this module
we focus on the standard form contract

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Standard form contracts-

,Two forms:

 One covering residential transactions
 One covering commercial transactions

Two key terms:

 Standard conditions
 Special conditions

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Standard conditions-

The set of conditions appropriate to commercial transactions is known as the - Standard
Commercial Property Conditions (‘SCPC’),

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Special Conditions-

Have two purposes:

 Amended/ exclude any stanard conditions
o e.g. SCPC 3.2.1 states that the buyer will pay on exchange a deposit of 10% of the
purchase price. If it has been agreed that the buyer will pay a 5% deposit then a
special condition such as this one would need to be inserted on the back page:
“SCPC 3.2.1 shall not apply and on or before the date of this contract the Buyer shall
pay to the Seller a deposit of 5% of the Purchase Price.
 Deal with specific matters agreed between the parties
o Eg: if the seller agreed to remove shelving from the property

The standard form contract contains nine pre-printed special conditions with space for further
special conditions to be drafted by lawyers according to the specific features of the transaction.

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Other forms of contract-

Tailor made contract / bespoke contract:

 A tailor made contract will look very different to the standard form contract, but it will
incorporate the SCPC, and also have the firm’s preferred clauses amending the SCPC.



Open Contract: (Not studied on this module)

 fulfils the basic requirements of a property contract under s.2 LP(MP)A ‘89, but many terms
will not be incorporated into the contract (for example the SCPC may not be incorporated),
 so the parties will have to rely on common law to imply the terms and conditions that have
been omitted.

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Drafting the contract-

, Front page of Standard Form Contract must be filled in

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Date -

Remains blank until exchange of contracts

 Once entered, it becomes legally binding

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Seller-

Seller must have legal title to the property – all legal owners must be party to the contract

Seller must have a legal personality

Full names of sellers & their addresses should be in the contract

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Buyer-

Must have a legal personality and be able to hold legal title to the property

Full names of buyers & their addresses should be in the contract

SCPC 1.4 states that the buyer cannot transfer the benefit of the contract, which means that the
property may only be purchased by the buyers set out in the exchanged contract. It is therefore
essential that you ensure that you includeall buyers in the draft contract, or the seller could refuse
to add buyers after exchange of contracts

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Property (Freehold/ Leasehold)-

The contract must have a clear description of the land – if not, it will eb void for uncertainty

 If the property is not correctly described, the buyer may have a remedy for
misrepresentation and for breach of contract under SCPC 10.1.

If the land is freehold you must delete the word “Leasehold” on the left hand side of the contract
and vice versa.

LPA ‘25 s 62 - the land and everything attached to it and benefitting the property will pass
automatically on the sale of the land without having to be set out in the contract and transfer deed.

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Registered title-

On a sale of whole, the address of the property should reflect the wording in the Property Register
of the official copy of the register.

Different when you are dealing with sale of part of a title (which is beyond the scope of this module),
or unregistered title, where careful drafting of the description of the land being sold will be required.

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