Which topic is addressed by standard condition 2 of the standard contract?

• A. Formation of contract and deposit
• B. Time limit for deducing title
• C. Disclosure of incumbrances
• D. Available remedies for breach of contract

Answer: (A)

Formation of the contract and the deposit are addressed by this standard condition. In conveyancing, the contract becomes binding not when offers are discussed or documents are prepared, but at the exchange of contracts between buyer and seller. That exchange creates a binding agreement to complete on the agreed date. The deposit is paid at or around that point and is held as security for performance; it typically forms part of the purchase price on completion and may be forfeited if the buyer fails to complete. This condition thus governs when the agreement comes into existence and how the buyer’s money is handled to secure the deal.