Withdrawing from promise of sale and purchase agreement

A reader wishes to know under what circumstances may he withdraw from a promise of sale and purchase agreement where a deposit has been paid on account of the selling price.

In a promise of sale and purchase agreement (convenium) it is best to state clearly and precisely whether the parties intend to pay a deposit on account of the price or whether their intention is to pay the deposit by way of earnest (kapparra). In the latter case, both parties may opt out of the agreement. In fact, in such cases, the parties are not actually binding themselves to perform the final deed of sale and purchase.

According to law, where in any promise to sell or buy, earnest has been given, each of the parties shall be at liberty to withdraw from the contract: the party giving the earnest forfeiting it and the party receiving the earnest returning double the amount thereof.

When the deposit is one paid on account of the price, there is an obligation on both parties to carry out the final deed of sale. If the sale can no longer be carried out, the parties in default are obliged to make good the damages to one another, depending upon which party to the agreement is at fault.

Therefore, to sum up, when the deposit is paid and received by way of earnest on a promise of sale and purchase agreement, the parties to the agreement, whether with or without a good and just cause, are free to recede from the agreement by forfeiting or paying double the amount of the earnest to the other party.

In our reader's case, since the deposit was made on account of the price, he is bound with the final deed of sale unless there are other justifiable grounds at law to rescind from the final contract.

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