Where postal settlement of a transaction is envisaged, good practice is to agree in advance the arrangements for the sending of and intromission with funds and other settlement items.

It is recognised that in a postal settlement it is appropriate for the buyer's solicitor to send a cheque to be held as undelivered either pending fulfilment of conditions in the missives or pending confirmation that the solicitor is in funds and the cheque can be encashed.  As practitioners are regulated by the same Rules and guidance, arrangements which rely on mutual acceptance of an undertaking not to cash the cheque or intromit with funds sent electronically can be made. In instances where some matters have been delayed there may be consequent urgency to deal with remaining practicalities before settlement. In these circumstances it is acceptable for a purchasing agent to impose unilaterally a condition making delivery and encashment of a settlement cheque or intromission with settlement funds conditional upon the purchasing agent authorising that. Where this happens the selling agent is not entitled to cash the cheque or intromit with the settlement funds in breach of such condition provided that the cheque or funds were sent subject to the words "to be held as undelivered" or similar wording to the same effect.

Where money or deeds are sent to be held as undelivered pending purification of a condition, they should be so held if the condition is not purified. Settlement will not take place until they can be treated as delivered, with consequent penalty interest if provided for in the missives. The matter is one of practice between agents rather than of law. 

When sending funds by electronic transfer, it is good practice to agree in advance that those funds will be held as undelivered pending fulfilment of certain conditions.

If a seller wishes to settle by electronic transfer their solicitor should ensure that they insert a clause in the missives requiring the transaction to be settled electronically. The parties should agree in advance of settlement which of them is to bear the funds transfer. 

 

Last reviewed: 15 March 2022