Unconditional contracts are sometimes used in certain sales. However, if they are not handled or managed correctly, they can be complicated.

Gone the wrong way, an unconditional contract can end up trapping a party into an agreement they no longer want to be in

In some instances, however, unconditional contracts can make matters more efficient and benefit the parties involved. 

In order to understand when to and how to properly utilise an unconditional contract, it’s wise to learn more about them. 

What Is An Unconditional Contract Of Sale?

An unconditional contract of sale is where a sale occurs that doesn’t have any additional terms or conditions attached to the sale. When two parties are negotiating a sale (particularly for major purchases), they might add certain clauses to make the exchange work in their favour.  

An unconditional contract of sale doesn’t entertain any of this. As long as the sale complies with the relevant consumer laws, it can take place absent of conditions. 

When Would I Need An Unconditional Contract?

Unconditional contracts are useful when you want the deal finalised quickly. If there’s some urgency to the matter and both parties are sure of entering the contract, then an unconditional contract can really help speed things up. 

When Does A Contract Become Unconditional?

A contract becomes unconditional when no additional terms or clauses are added to the contract. It is simply carried out in line with the relevant legal obligations. 

As long as the contract is fair for both parties involved, the contract is able to go ahead without any additional conditions.  

Kristy has agreed to supply John with fresh produce at the beginning of every week for the next two months. John runs a restaurant and Kristy will be his main supplier. As their contract needed to be secured quickly, they decided to opt for an unconditional contract.

Therefore, their agreement meets all the necessary requirements under Australian Consumer Law (ACL) however, neither party has added any extra conditions to it (such as exclusivity) to make the contract conditional.  

Rather, they have a straightforward agreement that adheres to the necessary legal regulations. They put in non of their own terms to further ‘customise’ the contract. 

Can A Seller Pull Out Of An Unconditional Contract?

Generally speaking, there isn’t much room to pull out of an unconditional contract for either a buyer or seller. 

Usually, sellers are not permitted to enter out of a contract. Buyers, on the other hand, have a bit more leeway in this regard. 

An unconditional contract, however, puts an obligation on both the seller and the buyer to stay locked into the agreement. 

Can You Get Out Of An Unconditional Contract?

However, simply because an unconditional contract makes it hard to leave the agreement, there are exceptions where a party may be able to get out of their unconditional contract. 

Remember, no contract (no matter how ironclad) has the authority to override legal regulations.Therefore, if your legal rights have been violated due to the terms of the contract or the conduct of the other party, then you may be able to terminate the agreement based on a breach of contract.   

Terminating An Unconditional Contract

If the contract between two parties has been breached, then the aggrieved party may have the right to get out of the contract. This really depends on the nature of the breach and to what extent the part was impacted. You will likely need to consult a legal professional if this occurs. 

When terminating a contract, it’s good to do so with another contract that simply puts it in writing that all parties are aware of it ending and accept this. This is usually done with a Deed Of Termination and it can help keep you protected when a contract is being terminated. 

What Should I Disclose?

When you are entering into any kind of contract, it’s important to communicate clearly with the other party and be transparent in your exchanges with them. 

People often sign contracts based on certain knowledge, therefore, you want to make sure both you and them have all the knowledge necessary to make an informed decision.

Additionally, if you keep things open from your end, it can really help keep you free from liability if something does go wrong at a later date.  

What Is An Unconditional Exchange Of Contracts?

In an unconditional exchange of contracts, the parties cannot add their own conditions to the exchange of the contract. However, normal legal regulations still apply. 

The purchase and exchange must simply move ahead, without any additional clauses or contractual terms (that are often useful with major purchases). 

Need A Contract Reviewed?

Whether you are engaging in a contract with conditions or getting an unconditional contract, it’s important to have your contract reviewed by a legal professional. At times, contracts can make the mistake of not taking into consideration relevant legal obligations or benefit one party over another. 

Getting a legal professional to take a look at your contract can help you avoid these scenarios and even potential trouble caused by a bad contract in the future. 

If you need help or advice regarding a contract, contact us today to get your contracts reviewed by one of our legal experts. 

Key Takeaways

Unconditional contracts can be useful, but if not reviewed by a legal professional or if done incorrectly, it can lock you into an unfavourable agreement.  

To summarise what we’ve discussed: 

  • An unconditional contract of sale is where there are no additional terms added to an agreement
  • These contracts are good for exchanges that need to be completed quickly 
  • Contracts become unconditional when it simply abides by the relevant regulations and the parties don’t add any of their own conditions to it
  • Sellers are often bound to both conditional and unconditional contracts
  • You can get out of unconditional contracts in limited circumstances (for example, if the law or the contract has been breached)
  • Be sure to disclose all relevant information
  • It important to have all your contracts reviewed by a legal professional to make sure you are protected 

If you would like a consultation on unconditional contracts, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.

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