Contract of Sale

35210 — Contract of Sale

Contracts & Agreements (35200)

Overview

Node 35210 examines the contract of sale, the legally binding instrument through which an interest in Australian real property is agreed to be transferred from vendor to purchaser. Every jurisdiction in Australia has developed a standard form contract — typically published jointly by the relevant law society and institute of conveyancers or real estate institute — that sets out standard conditions governing matters common to all transactions, such as the deposit, time for settlement, and default provisions, while leaving space for special conditions negotiated between the parties to address matters specific to the transaction.

The contract of sale is formed on exchange, the point at which both parties have signed identical copies of the contract and those copies have been physically or electronically exchanged between the parties’ representatives. Exchange fixes the terms of the transaction and, in most residential transactions, triggers a statutory cooling-off period during which the purchaser may rescind subject to a prescribed penalty. The contract remains executory between exchange and settlement, the point at which the balance of the purchase price is paid and title passes.

This node provides technical reference for conveyancers, property lawyers, real estate agents, and transacting parties on the structure, formation, and standard terms of the contract of sale, ahead of the disclosure, condition, and settlement detail addressed in nodes 35230, 35240, and 35250.

Scope & Boundaries

This node addresses the structure, formation, and standard and special conditions of contracts for the sale of Australian real property, including the process of exchange and the principal terms found in state and territory standard form contracts. It does not address statutory cooling-off rights, addressed in node 35220, nor the taxonomy of conditions, warranties, and representations and the consequences of breach, addressed in node 35240.

Coverage extends across all Australian states and territories, each of which maintains its own standard form contract and conveyancing legislation, notwithstanding common law principles of contract formation that apply nationally.

Scope Note

This node describes generally applicable principles governing the Australian contract of sale as at the time of writing. Standard form contracts and their prescribed conditions vary between jurisdictions and are amended periodically; practitioners should confirm the current form and conditions applicable in the relevant state or territory before acting.

Key Concepts

Exchange of Contracts

The point at which both parties have executed identical copies of the contract of sale and those copies have been exchanged between the parties, at which point the contract becomes binding and, in most residential transactions, a statutory cooling-off period commences.

Deposit

The sum, typically ten per cent of the purchase price though frequently varied by special condition, paid by the purchaser on exchange and held by a stakeholder, usually the vendor’s agent or solicitor, pending settlement or a contractual entitlement to release.

Standard Conditions of Sale

The pre-printed conditions incorporated into a state or territory standard form contract, addressing matters common to property transactions generally, including time for settlement, adjustment of outgoings, and the consequences of default by either party.

Special Condition

A condition drafted and negotiated for the specific transaction and appended to the standard form contract, which may vary a standard condition or introduce an additional term, such as a finance condition, a building and pest inspection condition, or a condition addressing the sale of the purchaser’s existing property.

Regulatory & Legal Framework

Conveyancing Act 1919 (NSW)

and equivalent state and territory conveyancing legislation — administered by state Attorneys-General and justice departments — prescribes statutory conditions and disclosure requirements incorporated into or attached to the contract of sale.
Property Law Act 1974 (Qld)

and equivalent state and territory property law legislation — administered by state departments of justice — governs the formation and general law principles applicable to contracts for the sale of land.
Australian Consumer Law

contained in Schedule 2 to the Competition and Consumer Act 2010 (Cth) — administered by the Australian Competition and Consumer Commission and state fair trading regulators — prohibits misleading or deceptive conduct in representations made in connection with the sale.
Stamp Duties Act

and equivalent state and territory duties legislation — administered by state revenue offices — imposes transfer duty on the dutiable transaction created by the contract of sale, assessed by reference to the contract price.

Practical Application

Contract of sale practice manifests differently according to the method of sale and the conditions negotiated, though each transaction proceeds through exchange to settlement under the applicable standard form.

Scenario	Application	Outcome
Purchaser negotiates a private treaty contract subject to finance and building and pest inspection	Special conditions are drafted specifying the finance amount, approval period, and inspection period, with a right to rescind if either condition is not satisfied	Contract remains conditional until both special conditions are satisfied or waived, after which the contract becomes unconditional
Purchaser and vendor exchange contracts electronically through their respective conveyancers	Electronic exchange is conducted in accordance with applicable electronic transactions legislation, with identical contract versions confirmed between the parties	Exchange is effected without physical attendance, with the contract binding from the point electronic exchange is confirmed
Vendor defaults on settlement under a completed contract	Purchaser issues a notice to complete in accordance with the standard conditions, preserving rights to terminate and claim damages if settlement does not occur within the notice period	Purchaser’s remedies proceed under the standard conditions and general contract law applicable to vendor default