Cancelling missives in Scotland: What buyers and sellers need to know before walking away

Sometimes, after two parties have signed a contract for sale of heritable property in Scotland, one of them wishes to pull out. That party might be legally entitled to do so, but in many cases, especially where someone has simply changed their mind, they can face legal claims. In this article, we explain the concept of “missives” in Scotland; the rights and obligations of parties when missives are concluded; and the potential risks and remedies when a party breaches the terms of the missives.

What are missives?

When individuals or commercial entities wish to purchase heritable property in Scotland – whether that is a home, a commercial property, a farm, or development land – their solicitors will engage in a series of formal letters known as “missives”. These detail the proposed conditions of the sale, and the obligations on the buyer and seller. As well as a description of the property being sold, the purchase price and the date of entry, the missives often also include an extensive array of other terms and conditions. In most sales of residential property, the Scottish Standard Clauses will apply.

Typically, an offer is made by the buyer to the seller, followed by one or more “qualified acceptances”, before a final unqualified acceptance is issued by the seller. That process can take some time, but once it is complete, missives are “concluded” and a legally binding contract is formed.

Can I pull out of a proposed transaction?

Before missives are concluded, there is no legally binding contract, so either party ought to be able to withdraw from the proposed transaction at any time without any legal consequences. However, once missives are concluded, it is often extremely difficult to cancel the transaction without penalty. In some cases there are certain clauses in the missives which might allow for this in precise circumstances, but typically there will be significant legal and financial consequences if one party refuses to perform their obligations.

Remedies for breach of missives

If a party refuses to complete a transaction in line with the missives, and an agreement cannot be reached, the aggrieved party has two main legal options.

Enforce the contract – it is possible to raise a court action for “specific implement”. This effectively seeks an order from the court forcing the party that is in breach of the missives to perform their obligations: requiring the seller to transfer the property in return for the purchase price, or vice versa.
Rescission and damages – if an innocent party considers that there has been a “material” breach of the contract, they may be able to rescind (cancel) the missives and raise a court action against the other party for damages.

Which option is pursued will depend on a number of factors, including the level of losses suffered and the financial position of the parties.

Damages for breach of missives

Damages in Scots law are compensatory, not penal, even if the breach of contract is deliberate. That means that the damages payable will be those required to put the innocent party in the position that they would have been in had the breach not occurred.

Damages are calculated by looking at what should have happened, what did happen, and the loss that the innocent party has suffered as a result. The damages that are recoverable will generally be those which are deemed by a court to have been reasonably foreseeable by the parties when they concluded the missives.

The party in breach could be liable to the innocent party for various costs, including for example: expenditure incurred by the innocent party in reliance of the contract, including legal costs; the costs involved in re-marketing the property; any difference in the sale price if the property later sells for less; any additional mortgage interest costs; and costs for temporary accommodation.

However, quantification of damages is not a precise science. It depends greatly on the particular facts of each matter, including the precise terms of the missives.

Breach post-completion

It is also worth mentioning that even after the transaction has completed and the buyer has taken possession, there can be a breach of missives which may entitle an innocent party to raise an action for specific implement and/or damages.

Commonly these claims are in relation to alleged breaches of warranties included in the missives. For example, ones relating to planning and building control, water supply, environmental matters, or flooding history.

How can we help?

There are strict time limits for bringing claims for breach of missives, so it is important to take specialist legal advice as quickly as possible.

We frequently advise clients on actual or anticipated breach of missives claims, and are also experienced in resolving these disputes. This can be done via correspondence, the courts, or alternative methods of dispute resolution such as mediation.

For enquiries in relation to breach of missives claims, or other disputes, please contact our Rural Disputes team.

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