Agreement to avoid disputes

A news a few years ago showed that a second-hand vehicle seller did not transfer the ownership to the buyer during the trade, whereas he handed over the registration document to the buyer and asked him to finish the transfer on his own. The buyer did not complete the transfer by the required time, which had rendered the ownership remained under the seller. The seller was liable to the three Fixed Penalty Tickets issued within 2 months afterward. The seller was unable to contact the buyer after all the incidents. He could only hand in the notice of transfer to the Licensing Office unilaterally and prove the transfer of ownership via related documents such as the agreement for sale and purchase.


In trading involving the transfer of ownership, potential liabilities and potential compensation, ranging from land to vehicle sales, both parties should sign the official agreement for sale and purchase. Such an agreement plays a vital role in settling future conflicts and ownership transfer shown in the news. In the news, if both parties had set out the date of transfer expressly in the agreement, the seller would be able to sue the buyer in the discovery of the buyer’s breach and entitled to an indemnity to the three penalty tickets.


The agreement helps prevent the above disputes; it is essential in securing both parties’ interests. An official agreement for sale and purchase typically includes parties’ names, interpretation, main clauses and general standard clauses. After signing the agreement, parties are liable to finish the responsibilities as listed in it. According to section 3 of the Conveyancing and Property Ordinance, no legal action upon any land sale would be enforced by the Court unless there is a signed agreement in writing. Apart from the sale of land, in trading with a smaller monetary consideration, the Court will find it hard to judge issues that are not supported by a signed contract. The Court can hardly order someone to fulfill her liabilities based on the oral agreement.


In Jacobs v Batavia and General Plantations Trust Ltd [1924] 1 Ch 287, a party who wishes to incorporate the oral agreement into the main contract has to prove that the oral promise is paramount for him to enter the main contract. Take the above news as an example; the parties had no official agreement for sale and purchase and had not set up a transfer date. Unless the seller can successfully prove that the buyer’s promise to transfer within the said period was the main consideration for him to sell the car, it would be difficult for the seller to claim compensation for the breach of contract. Although the custom of such kind of sales requiring both parties to finish the transfer within 72 hours would entitle the seller to make a claim, there are rarely customs in other types of transactions; thereby, parties may easily fall into conflicts. In conclusion, an agreement for sale and purchase not only prevents disputes from being raised and protects each party’s interest, but it also minimizes the chance of litigation, which usually consumes a large amount of time and money.


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