Prescribed, implied and prohibited terms for contracts of sale

Authored by Dr Stephen Pallavicini, Lead Property Lawyer, Marie Boustani, Property Lawyer, Woolworths Group Ltd and Sara Hatcher, Consulting Principal, Keypoint Law (NSW); Lisa Gaddie, Partner, Lander & Rogers (Vic); Luckbir Singh, Partner, MacDonnells Law, and Simon LaBlack, Director, LaBlack Lawyers (Qld); Gary Thomas, Special Counsel, Anthony Davis, Director, McWilliams Lawyers and Katie Loughridge, former Australian Government Solicitor Office (WA); Philip Page, Retired Partner, Mellor Olsson and Constantine Costi, Principal, Costi & Co Commercial Lawyers (SA); Tim Tierney, Principal and Sebastian Thomas-Wilson, Principal, Tierney Law (Tas); Tony Morgan, Partner and Andrew Giles, Senior Associate, HWL Ebsworth; Lyn Bennett, Consultant and Leon Loganathan, Managing Partner, Ward Keller (NT) and Christine Murray, Managing Partner and Stephanie Lynch, Partner, Meyer Vandenberg Lawyers and Duncan Webber, Partner, Moray & Agnew (ACT). Updated by the LexisNexis Legal Writer team.

The contract for sale is the primary document entered into by a vendor and a purchaser. It is a legally binding agreement under which the vendor agrees to sell, and the purchaser agrees to purchase, a particular property. The rights and obligations of each party are set out in the contract for sale. Additional rights or obligations may be implied by common law or legislation or equity, some of which cannot be contracted out of. Generally, it is prepared by the vendor’s legal practitioner and, once the terms are agreed, both parties sign the contract (or “exchange” signed identical counterparts) and the purchaser pays a deposit (usually 10% of the agreed price) to the vendor. Subject to the parties complying with the conditions in the contract, the sale usually completes (or “settles”) within the agreed period of time (eg 6 weeks) at which time the purchaser pays the balance of the contract price to the vendor and the vendor transfers the title of the property to the purchaser.

New South Wales

There is no legislation in New South Wales requiring a vendor to use a specific form of contract for the sale of land — however, for a contract for the sale of land to be valid and enforceable, s 54A of the Conveyancing Act 1919 (NSW) (Act) requires the contract to be:

• in writing; and
• signed by the party (or parties) against whom it is to be enforced (or by a person authorised to sign on behalf of that person).