During exchange of contract, two identical copies of the same document are prepared; one to be signed by the buyer and the other by the seller. The two copies are signed and physically exchanged, i.e. the one signed by the buyer is given to the seller and vice versa. This is when the contract becomes binding on both parties.
It is not necessary that the contract should be physically exchanged, therefore sometimes a contract can comprise of a single document that is then signed by both parties. In such cases, the contract comes into binding when the second signature is put on the document. This situation is not common as usually the same solicitor does not act for both the parties under Outcome (3.5) of the SRA Code of Conduct.
Authority to exchange
A conveyancing solicitor should seek the express permission of his client before exchanging the contract, failing which he shall be held liable for negligence. But once he has the permission to exchange it is understood that the solicitor also has the permission to decide on the method through which the contract is exchanged. This was a part of a judgement in Domb vs Isoz [1980] All ER 942.
Read more: Different methods of property sale contract exchange
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