Cancelation of sale agreement for non payment.

Dear Client, In case of the default of the buyer in paying the balance amount within 2 months of execution, you have a right to cancel by giving 15 days notice. The agreement contains a clear and unequivocal clause as to the same. This is a remedy which is mutual agreement between the parties and is enforceable as per section 55 (right and duties of seller and buyer) of the Transfer of Property Act and section 73 (duty to pay compensation) of the Indian Contract Act. In case 2 months passed from Apr 7, 2025 without any payment, you have full right to serve the 15 days cancellation notice. Send it by post registered with acknowledgement due at the address of the buyer as mentioned in the agreement.

Regarding your question about whether the buyer can challenge this in court, the answer is yes, any party can approach a court. But if the terms of the Agreement are unambiguous and the time limit has in fact expired, the buyer’s challenge would be very weak. The buyer may claim that the delay in loan disbursement was not in their control and ask for some more time. In some cases, courts have granted buyers short extensions where the delay was really due to bank processing issues, not the buyer's fault.” To protect yourself, make sure your notice is sent on the day after the 2 month period expires not before and keep all records showing that the buyer did not arrange payment within the stipulate period. Retain the 10% advance as liquidated damages under your agreement as it likely permits and be ready to defend the termination if it is challenged.

I hope this helps, and if you have any further issues, do not hesitate to contact us.

Dear Sir,

Yes. Even if you terminate the sale agreement as per the clause mentioned in the agreement the buyer can still challenge the cancellation before a civil court. However whether the buyer will succeed or not depends upon the facts and conduct of both parties.

In your case the agreement itself clearly provides that if the buyer fails to pay the balance sale consideration within 2 months the seller has the right to terminate the agreement by giving 15 days notice. Such a clause generally strengthens your position because the parties had mutually agreed to the consequence of non payment within the stipulated time.

Before cancelling the agreement you should strictly comply with the terms of the agreement. You should issue a proper legal notice to the buyer mentioning:

• the date of agreement,
• the amount already paid,
• the expiry of the 2 month period,
• failure to pay the balance consideration,
• your readiness to complete the sale if payment is made within the notice period, and
• that the agreement will stand terminated if payment is not made within 15 days.

If the buyer still does not pay within the notice period you can terminate the agreement and communicate the cancellation in writing.

The buyer may still file a suit for specific performance claiming that the delay occurred due to the bank loan process and that he was always ready and willing to perform his part of the contract. Courts generally examine whether the buyer genuinely made efforts to obtain the loan and whether the seller also cooperated by providing documents required by the bank.

Dear Client,

Even though your agreement contains a clause permitting termination upon non-payment within 2 months after giving 15 days’ notice the buyer can surely challenge the cancellation before a court. However, the success of such a suit will depend largely on the conduct of both the buyer and the seller. If the payment timeline was clearly stated in the agreement and sufficient opportunity was given to the buyer to make arrangements for the balance consideration, then you are within your rights to terminate the contract by issuing a proper legal notice in accordance with the agreed terms of the agreement. The buyer can file a suit demanding specific performance indicating his readiness and willingness to complete the transaction, if he can show sufficient cause that prevented the happening of the transaction earlier. Even still, the courts will examine whether the buyer genuinely took timely steps to secure the loan and whether time was intended to be the essence of the contract. Therefore, before cancelling the agreement ensure that the terms of the agreement are strictly complied with and maintain proof of all communications with the other party with regards to this transaction. 

I hope this helps and if you have any further issues do not hesitate to contact us.