What If Buyer or Seller Breaches Sale Agreement

What If Buyer or Seller Breaches Sale Agreement

Sale Agreement contains terms and conditions agreed to between the buyer and the seller for effecting the sale.

When the buyer or the seller acts in violation of these terms and conditions or does not act or refuses to act as required, there is a breach of sale agreement. There can be numerous examples of such breach such as:

  • Payment not made in stipulated time
  • Delivery of product not made as promised
  • Seller refuses to repair within the warranty period

Options with the party when other party breaches the sale agreement:

Also Read: How to save title of your property from illegal occupants?

When one party violates the sale agreement, the other party may give notice to the defaulting party to act as per agreed term. If the defaulting party fails to perform, the other party can

  • Cancel the sale agreement – as per the cancellation clause of the agreement, if any or through the court
  • Approach the court seeking directions to the defaulting party to perform as per the agreement – suit for performance
  • Approach the court to direct the defaulting party to compensate for the loss/damages caused to the party by the defaulting party – suit for damages
  • Ask for a refund of the advance payment made to the defaulting party – suit for the price
  • Retain the advance payment made by the defaulting party
  • Seek directions from court if warranty clause benefits not provided by the seller- suit for breach of warranty

Depending upon the nature of the agreement and its terms and conditions, all or any of the remedies mentioned above can be availed. It is the discretion of the court to grant a specific remedy as per law.

Read: Rights on mother’s property after her death

Specific remedies – (Governed by Indian Contract Act and Sales of Goods Act)

Remedies of Seller against buyer:

  • When the buyer refuses to pay – seller can file a suit for payment
  • When the buyer refuses to accept the goods – seller can file a lawsuit for damages, i.e. seller can recover loss caused to him based on the market price of the goods. The amount taken for calculating the loss is the price existing on the date of delivery of goods.

Remedies of Buyer against seller:

  • When the seller refuses to deliver – the buyer can file a suit for loss/damages caused to him by non- delivery of the product
  • When there is a breach of warranty by the seller-buyer can file a suit for recovery of purchase price or can seek damages. Buyer can also reject the goods but not always.

Remedy to seek interest for the loss – It is available both to the seller and the buyer to recover interest on the monetary loss, especially in suits for recovery of price.  It is the discretion of the court to allow or not. 

Read: Land Kabza- What to do?

Remedy if before the performance as per the agreement, one party clears its intention not to perform – Here the non-defaulting party can either consider it as a breach of the agreement and seek proper remedy or can wait for the defaulting party to perform on the due date.

If the buyer is in breach, the seller can

  • cancel the agreement
  • sue for damages
  • sue for price
  • Sue for claiming the goods if they are in possession of the buyer.

If the seller is in breach, the buyer can

  • Cancel the agreement
  • Sue for damages
  • Sue for performance
  • Reject the goods when delivered by seller if they are not in conformity with the agreed terms

Agreements are meant to be performed. The parties, however, are free to provide remedies in the agreement itself in case one party fails to perform its obligations. The remedies can be:

  • Cancellation Clause
  • Notice to be given or not
  • Advance to be retained or returned
  • Compensation/Damages –payment

How to save title of your property from illegal occupants?

adverse possession

An owner of a property is at will to use or not to use his property. However, if there is an intrusion and he does not take any timely action against the intruder, he loses the property. It sounds strange, but this is the law.

Adverse Possession is a legal doctrine that legalises occupation of a trespasser over a property. The claimant gets a right of ownership in the property if the real owner of the said property is sleeping over his right and does not take any action against the intruder (the claimant) who has enjoyed the possession of the said property for a sufficient period.

Read More: Owners need to be careful

In Indian Law, the concept of adverse possession is explained under The Limitation Act, 1963. If the real owner does not claim his right against the intruder within a prescribed time, he loses his right, and the possessor (intruder) gets the ownership right.

Elements of adverse possession: There are certain elements which are necessary to form adverse possession. These are:

1.    Possession must be hostile to the owner:

  • The claimant must possess the property with an intention to acquire the right through adverse possession. It is possession with a declaration of ownership against the original owner.
  • A trespasser can occupy the land even by mistake or inadvertently
  • No adverse possession if the trespasser had the authority to use the property, e.g. a tenant

Read More: Boundary Line Dispute

The possession should not have been obtained by

  • Force
  • Unauthorised means

2.    Period of possession – A claim of ownership through adverse possession can succeed in a private property if the trespasser has possessed the property continuously for 12 years. The period begins from the date the claimant (trespasser) is in adverse possession. For Government properties, the time is 30 years. This period varies in different jurisdictions. The owner has to bring an action within this limitation period.

3.    Possession must be actual, uninterrupted, continuous and exclusive. The claimant must be physically present and using the property. The claimant must be using the property exclusively.

4.    The public at large must be aware of the possession of the claimant. It is not the liability of the claimant to inform the actual owner, but the possession should be open to the extent that the real owner has the means to know that someone is occupying his property.

Read More: When Caretakers Try to become Property Owners

Defenses to Adverse Possession

The real owner can prove the absence of any of the above stated essential elements to defeat the claim of the intruder:

  • The claimant has not possessed the property for requisite duration
  • Use of the property was not uninterrupted and not continuous
  • The property was not being used exclusively by the claimant. The owner was also using the said property
  • The owner has permitted the claimant to use the property. In such a case, possession is not hostile
  • Adverse possession does not help to get the title if the real owner is minor, of unsound mind or in armed forces.
  • Government-owned land is sometimes exempted from adverse possession.

Need to relook: Many legal thinkers have criticised the doctrine of adverse possession as it helps the illegal occupants to get the title because of the inaction of the real owner. There is unjust enrichment. There is a need to relook into this law. Recent court rulings reveal that courts are now making it more robust for the illegal occupants to claim title through adverse possession.

Precautions that real owners can take to protect their property: Being vigilant is the key          

  • Regular monitoring of the property – Especially in case of NRIs as they are more prone to losing their property to intruders.
  • Building a fence or wall around the property
  • Placing the signboards for trespassers

Rights on mother’s property after her death

Rights on mother's property

Right to property is governed by personal and statutory laws.

Once the mother (a woman) acquires any property through will or gift or by inheritance or it a self-acquired property, she becomes the absolute owner of the same. 

Under Hindu Law, the property of a mother devolves as per the Hindu Succession Act, 1956 (the Act). The Act applies to intestate succession.

Read More: Property rights of a wife after husband’s death

According to Section 15 of the Act, the following persons inherit a woman’s property after her death:

  • Her children
  • Children of predeceased children
  • Husband
  • Mother  and Father of the deceased mother
  • Heirs of husband
  • Heirs of father and mother

The order of preferences is as follows:

  • Firstly, the children, children of predeceased children and husband
  • Secondly, heirs of the husband
  • Thirdly, her mother and father
  • Fourthly, heirs of her father
  • Lastly, heirs of her mother

Thus if a mother dies intestate, under Hindu law, her children, children of predeceased children and her husband have an equal right to the property. In their absence, the property is inherited by other heirs as per order of preference.

Right to mother’s property also includes right to the share of the mother in her father’s property, and children of a predeceased mother have a right to claim the  deceased mother’s share in  the property of her father: –

Read More: Land Kabza- What to do?

After amendment of the 1956 Act in the year 2005, daughters are coparceners and have equal rights as a son, in the property of their father. Thus if a daughter (who is a mother also) dies before the partition of her father’s ancestral property, the children of such pre-deceased daughter have a right in the ancestral property of their maternal grandfather and can claim partition.

However, during the lifetime of the mother, only the mother has a right to claim her share in this property of her father and as a son or daughter of such mother, the person can file a suit for partition only through power of attorney executed by mother in favour of her children.

In case of self acquired property of the father (i.e. maternal grandfather), if such father dies intestate, the son/daughter of predeceased daughter of such father are included in Class I heirs given in the schedule of the 1956 Act and have a right to claim their share.

After the partition of property in which a woman (mother) has a share, she becomes the absolute owner of her share:

Read More: Settlement deed between brother and sister residing abroad

Once the share of a daughter has been transferred to her after partition of the property of her father, she becomes the absolute owner of her share. 

If a mother makes a will, the property bequeaths as per the will, and if the mother dies intestate, the laws of inheritance are applied as per the 1956 Act.

Distribution of the mother’s property between her son and married daughter:

Married daughter has equal right in the property of her mother as the son, and in case the mother dies intestate, the married daughter inherits her share equally with the son as per the Act of 1956.

Under Muslim Law, since the law is not codified, rights on the property of the mother are governed by personal laws.

For faiths other than Hindus, Buddhists, Sikhs, Jains and Muslims, devolution of mother’s property after her death is governed by India Succession Act, 1925. Generally, relatives of mother inherit and have priority over her husband and husband’s relatives.

Settlement deed between brother and sister residing abroad

Settlement deed between brother and sister residing abroad

Settlement deed is a legal document where parties to the deed settle their differences/disputes. The disputes may be related to court cases, property division, payments etc. A settlement deed between brother and sister living abroad may refer to any of these.

Generally, a settlement deed between brother and sister is a family settlement deed, and most often it is related to the division of property. Settlement deed is a legally enforceable document.

Requirements of Settlement deed

Settlement deed is essentially an agreement.

  • Like any agreement, settlement deed has to be based on mutual consent of all the parties, and such consent should be free from coercion, fraud or misrepresentation.
  • Settlement can be oral or written
  • If in writing, it must be signed by all the parties
  • Attestation by two witnesses

All the brothers and sisters must sign the settlement deed if it relates to the division of family property in which all have a claim. If any of the brother or sister is excluded, the deed is liable to be cancelled. Settlement deed once executed is binding between the parties to it.

Read More: Division of Property Among Daughters and Daughters-In-Law

Registration

A family arrangement can be oral or in writing. If it is oral, it does not require any registration, but if it is in writing, then the terms of the deed decide whether it is to be registered or not.

A family settlement deed between brother and sister for distribution of property must be in writing. In case of settlement deed for disposition of property, the property can be:

  • Moveable – jewellery, shares etc
  • Immoveable
  • Cash in bank accounts

If the deed purports to assign an immovable property, the settlement deed must be mandatorily registered. The stamp duty is payable as per the value of the property.

If it is compulsory to register the document and the same is not registered, it carries no evidentiary value in the court. It may act as an estoppel against the family member who has signed the document and has gained out of it. However, if it is not mandatory to register a document and it is not registered, it can be used in evidence.

Payment of stamp duty and registration can be done through an agent (power of attorney holder for the s purpose) if the parties are NRIs and are not present in India.

Read More: Property rights of a wife after husband’s death

Can the settlement deed be executed abroad?

The settlement deed between brothers and sisters residing abroad can be executed in the country where they reside. If the settlement deed relates to property division and has been executed abroad, the stamp duty is payable in India and registration, if mandatory, is done in Sub Registrar’s office where the property is located.

Otherwise also, for any document executed abroad and to be used in India, stamp duty is paid in India at the office of the Sub Registrar, within three months after it is first received in India. The concerned officer will authenticate the said document. 

Any signed document should be presented for registration within four months of its execution. If the document is executed abroad, the time of four months begins from the date it is first received in India.

Grounds for challenging Settlement deed

Some grounds can be

  • Coercion
  • Fraud
  • Misrepresentation
  • Improper execution

As settlement deed can be cancelled if the parties mutually agree to do so by executing a cancellation deed. Otherwise, a suit can be filed challenging the same on any of the grounds available for the same.

Read: Importance of Encumbrance Certificate (EC)

It is always advisable to seek legal advice for the preparation of settlement deed and completing other legal formalities. A settlement deed is good alternative to litigation to settle disputes.

Land Kabza- What to do?

Land Kabza- What to do

Land Kabza means someone else has occupied the land of an actual owner. The problem is common with NRIs as they cannot visit the place frequently and the property is left unattended for a long time. Grabbing such properties is easy.

Legal Advice and good property lawyer always help: It is sensible to hire a property advocate for proper legal advice to prevent Land Kabza and to take timely legal action in case of encroachment.

Also Read: Share of a brother in deceased brother’s property

Here are the answers to certain queries that are often raised in this matter.

What is meant by land kabza?   

Land kabza means illegally occupying another person’s land by a person who is not legally entitled to the same. The Illegal occupation can be:

  • By Force – land mafias generally occupy the land abandoned by owners
  • By forging the documents of title – people occupy the land and also procure forged title deed in connivance with the local authorities
  • Tenants who refuse to leave

What precautions are required to prevent Land Kabza?

A.    Documentation

  • Property Documents: All property papers must be in order. A person who has invested and purchased any property or has acquired any property legally must ensure that the title deed describing him as the owner of the property is prepared and available with him.
  • Payment of charges: The owner must have paid all the electricity, water bills and other government dues for the property and must preserve the receipts as these all assist in defending the ownership.
  • Registration and mutation:  The owner must get the documents registered in conformity with the State Laws. Mutation of the property is also essential. Mutation means to inform the revenue authorities about the ownership of a property. Mutation is not one time process but has to be done regularly.

Rent Agreement: In case the property is on rent, a valid rent agreement with the tenant must be in place.

Also Read: Property rights of a wife after husband’s death

B.    General Precautions:

  • Regular inspection of the property: The owner must visit the land frequently. In case of NRIs, it is not possible to physically inspect the site regularly; therefore, they can manage the same through a family member or a friend. A caretaker can be appointed to do important tasks.
  • Fencing: In case of vacant plot or land, fencing should be there. Constructing a wall indicates that someone owns the property.
  • A signboard warning the trespasser:The signboard helps to know that someone owns the land and trespassers will be prosecuted.

What are the remedies?

Also Read: Division of property between brother and sister after father’s death

If the property is found to be the encroached, immediate action is required. First of all, the owner should ensure that he has got all the necessary documents proving his title/ownership with him and then:

  • Inform the local authorities –revenue department etc.
  • File a complaint with Police Authorities
  • File a complaint in the court
  • Negotiations also help in case the opponent has occupied the land inadvertently

Specific legal remedies:

  • Filing a civil suit u/s 5 or 6 of Specific Relief Act, 1963 for recovery of  immovable property
  • Executive Magistrate of the area takes action u/s 145 of the Criminal Procedure Code to prevent the breach of peace in case of property disputes.
  • Action for the offence of trespassing and illegal dispossession under Indian Penal Code

Prevention is always better than cure so it is advised that owners must ensure proper documentation and regular inspection of their properties.