A contract of sale becomes legally binding when which of the following occurs?
Correct Answer
C) When both parties have signed and contracts are exchanged
A contract of sale becomes legally binding upon exchange, which occurs when both parties have signed identical contracts and these have been exchanged between the parties or their representatives. Prior to exchange, either party can generally withdraw without penalty.
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A contract of sale contains a clause stating 'Time is of the essence' regarding the settlement date. The purchaser is unable to settle on the specified date due to delayed finance approval. What is the most likely legal consequence?