Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Contract definition

What does Contract mean? In legal practice, a contract is the enforceable agreement by which parties set out promises and allocate risk, whether made orally, in writing or by conduct. The law of contract is principally case-law driven across England & Wales, Scotland, Northern Ireland and Ireland, with statutory interventions on formalities, construction and consumer protection. In England & Wales, Northern Ireland and Ireland, formation generally requires offer, acceptance, consideration and an intention to create legal relations. In Scotland, consideration is not required; a contract is formed by agreement (consensus in idem) with the necessary intention, with writing only needed in defined cases. Key features...

Commercial property purchase: allocating risk and insurance at exchange and completion; SCPCs, landlord and tenant obligations, claims and s 47 LPA 1925 (England and Wales)

Published by a LexisNexis Property expert

Practice notes

When does risk pass to the buyer?

The core rule applied in most Contracts is that risk transfers to the buyer at exchange of contracts. Parties rarely depart from this unless the seller is undertaking works or there is an extended gap between exchange and completion. This mirrors the common law stance (the ‘open contract’ position) and is endorsed by the Standard Commercial Property Conditions (Third Edition—2018 Revision) (SCPCs), condition 8.1: ‘The property is at the risk of the buyer from the date of the contract.’ The timing of the transfer of risk is distinct from the question of who provides insurance during the period between exchange and completion. That issue depends on whether the sale is with vacant possession or subject to existing leases. Regardless of the insurance arrangement, risk must lie with the buyer, as loss may arise from perils that are uninsured (albeit this is qualified by the seller’s duty to take care of the property—see Duty to look after property below)...

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Web page updated on 21/05/2026

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