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20180525 Money or Signature?

20180525 (Fri)

Money or signature, which is more important in a contract?

In a normal sequence of events, a booking fee is paid upon an offer to the landlord or vendor. When the agent (who communicate with his principal) accepts this booking fee, it is as if the booking fee is accepted by his principal. So, the contract has started as all elements are fulfilled. However, full payment has not completed. Example, other deposits like security deposit and utility deposits in case of rental. And, if it is a sale, the remaining loan and obligations of the purchasers – see below.

Bearing in mind that “time is an essence” as in S.56 CA30, these subsequent events have their time frame to complete. If it is a tenancy, the subsequent full payments need to be paid. Only upon payment of all that contingent events, that the tenancy agreement can be formed in completion. Therefore, signature to the tenancy agreement part of the whole events, not the initial part or final part. When a promise is made, all elements of the promises/conditions are contingent to the contract. If any such commitment were not fulfilled, the signature holds no water.

For example, you entered into an agreement with Leonard to paint his fence, repair his ceiling in living room and he pays you a sum of money. Before commencement, he also needed to give you entrance key to his bungalow. Both of you signed the agreement before the commencement date, and he has paid a down payment for your work. However, he never passed you his bungalow key. Is the signing of the name thus make you liable to the delay, no matter what?

No, because a condition had been set – he has to pass you the key! Without that condition being fulfilled, the contract is not formed (becomes unconditional).

In the post SPA or post tenancy period, the agreement has become a completed contract. Therefore, any breach of the performance will be discharged in accordance to the contract. Tomorrow we shall see some examples.

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