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Exchange of Contracts: Methods of Exchange SEE also P.239 and P.472 BookGeneral?
Telepho ne Exchang e ("The Law Society's formulas ")?Upon exchange, a binding contract is forged: o Neither can withdraw from the transaction without a penalty o Beneficial interest passes to the buyer and it should be protected with either a C(iv) Land Charge or a notice on the title register o Legal title remains with the seller o Buyer will assume the risk if there's no term to the contrary Buyer should insure immediately from exchange (SCPC 7.1.4(a)) It must be in writing, with all the agreed terms and signed by both parties (s.2(1) LP(MP)A 1989) Exchange occurs the moment both solicitors say it has, which is then followed by physical exchange in the post (but it is binding upon the telephone call) As a solicitor, remember to record during or immediately after the telephone exchange: o The date and time of the exchange Contract treated as o The Formula used and the exact wording of variations exchanged o The Completion date
..........am /..........pm Law Society o The deposit to be paid Formula.........
o The identities of the solicitors
[as varied o To carry out physical exchange by.....................
o If conditional, say what the condition is As the Solicitors are UNDERTAKING to do something they are liable for breach. Thus, making the undertakings gives certainty and reliability to the telephone exchange.
Used: where one solicitor holds both signed contracts Frequency: RareProcedure: o Bsol sends his signed contract and cheque to Ssol o Completion date is arranged o On completion date, Bsol phones Ssol o Ssol confirms he has his client's signed contract o Exchange takes place at that moment o Ssol undertakes to send contract to Bsol same dayUsed: where each solicitor has his client's signed copyFrequency: Most commonProcedure: o On phone, both sols say they have their clients' respective contracts which are signed o Exchange then takes place orally o Each undertake to hold those contracts to the other's order and to send them on to each other that same day o Bsol undertakes to send over the deposit (usually by direct credit/cheques are rare) Has the formula been varied because: ?
i. Post next day changed because missed the post or it was too late?
ii. Method to make deposit payment changed because it is credit not debit?
iii. Any other change?
iv. If more than one change these are recorded in a memo as agreed by both parties. o e.g. If Bsol's fails to send post the contract on that same day then, it will be necessary to vary Formula B to allow Bsol's to send his client's signed copy of the contract and the cheque for the deposit by first class post the next day. This should be agreed with the seller's solicitor at exchange and a written note made of this variation.Formul aA P239
Formul aB P239
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