A purchase and sale agreement (PSA) is a legal contract between a buyer and seller that outlines the terms and conditions of a property sale. When both parties sign this agreement, they are legally bound to fulfill their obligations as outlined in the document. But, there are instances where a PSA may become unenforceable due to various reasons. In this article, we`ll discuss some of the factors that may render a purchase and sale agreement unenforceable.
1. Mutual mistake
If both parties in the PSA make a mutual mistake regarding a fundamental term of the contract, it may render the agreement unenforceable. For example, if both the buyer and seller agree to a price based on a misunderstanding of the property`s condition or location, the PSA may be voided.
2. Lack of capacity
If either party lacks the legal capacity to enter into a contract, the PSA may be unenforceable. For example, if the seller`s mental capacity is compromised, or if the buyer is underage or incapacitated, the agreement may not be enforceable in a court of law.
3. Fraud or misrepresentation
If either party engages in fraud or misrepresentation during the negotiation or signing of the PSA, the agreement may become unenforceable. For example, if the seller misrepresents the property`s condition or location, the buyer may be entitled to void the contract.
If the subject or purpose of the contract is illegal or against public policy, the PSA may be unenforceable. For example, if the property being sold is being used for illegal purposes, the PSA may not be enforceable.
5. Force majeure
If a force majeure event occurs, such as a natural disaster or war, that makes it impossible to fulfill the obligations outlined in the PSA, the agreement may be unenforceable. In such cases, the parties may need to renegotiate the terms or terminate the contract.
6. Breach of contract
If one of the parties breaches the terms and conditions outlined in the PSA, the agreement may become unenforceable. For example, if the buyer fails to make payment as agreed upon, the seller may have the right to terminate the contract.
In conclusion, a PSA is a critical document in a property sale transaction, and both parties must ensure that all terms and conditions are carefully negotiated and agreed upon. Understanding the factors that may render a PSA unenforceable is essential before entering into a property sale agreement. If you`re unsure about any aspect of the PSA, it`s always best to consult with an experienced attorney to ensure that your interests are protected.