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Sale agreement

Querist : Anonymous (Querist) 10 May 2010 This query is : Resolved 
Hello dear friends,

A and B jointly enter into a sale agreement of their lands to C. The terms of agreement tell that C shall pay advance of 2 lakhs and within 3 months time he should register the sale by paying the balance amount.

Meantime, C advances some more money to B without the knowledge of A beyond the agreement date and keeps on postphoning for final payment for more than 2 years. The said advanced amounts are acknowledged by B on the back of the sale agreement. One such receipt was acknowledged after the final date of agreed date for finalisation.

After 2 years A and B jointly execute a sale of the said lands to D, since C failed to honour his committment.

Now, the endorsement (acknowledgement of receipt of amount by B) beyond the sale agreement time i.e., 3 months will give any fresh lease of time to C?

And what remedy C has got to get his money back from B?

Thank you all in advance.
R.R. KRISHNAA (Expert) 10 May 2010
Yes C has got right to seek specific performance or right of recovery of money.

A and B stand in the position of joint sellers and hence it is enough for C to show before the court that B has received the payment which amounts to extension of time. (It is the burden of A to say he is no liable for the acts of B.)

Needless of the above defences, if the original sale agreement shows that the 3 month time period to register is not couched negatively that if payment is not made within 3 months the agreement expires then C gets a valid right to seek specific performance within a time period of 3 years (since in such case time is not the essence of contract) and the sale made by A and B in a period of 2 years is certainly invalid.
Querist : Anonymous (Querist) 10 May 2010
Dear Mr. Krishna

The agreement is very clear about the time of 3 months and forfeiture of advance in case of default.

An acknowledgement of receipt of further amount endorsed on the back of the agreement by one of the sellers after the due date i.e., 3 months stipulated in the agreement - how does this affect the agreement and parties?

Will acceptance of further amount give fresh lease of time to C? If yes, how long?

If No, How can C reclaim his amount back?
R.R. KRISHNAA (Expert) 10 May 2010
Dear anonymous,

Yes. An acknowledgement of amount gives a fresh running of time for performance of the contract i.e., it operates as a further extension of time. But how long it is extended will a lot depend on the intention of the parties or a reasonable period of time has to be assumed in cases where a further extension of time is not expressly specified or agreed. (In view of the above extension of time the original clause of 3 months looses effect and its effects cannot be relied by either parties.)

Best of luck..
niranjan (Expert) 10 May 2010
The plea of time was essence of contract is no more available to AB.
Querist : Anonymous (Querist) 11 May 2010
Then what is the position of D? who purchased the land from A and B.
Querist : Anonymous (Querist) 11 May 2010
And one another important aspect i forgot to mention the said agreement for sale is not registered = under this circumstance how are the above parties affected?
Surrender K Singal (Expert) 11 May 2010
Non-registration does not take away the fact of existance of sale-agreement !
Moreover, it has already been given effect to by initial advance and further payments;
The best could be mediation or refund of the moneys received !
Let us save work load of judiciary, as far as possible !


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