The remedies for the breach of a purchase and sale agreement need to be adequately spelled out in the agreement. Frequently the forfeiture of the earnest money which is deposited is the sole remedy available for the Buyer’s breach. However, if this is not spelled out adequately, the Seller may also be able to sue for damages and specific performance for a Buyer’s breach. Likewise, the buyer may have remedies available at law if they are not adequately identified and set forth in the purchase agreement itself.
Frequently, particular transactions call for certain remedies in addition to the mere forfeiture of earnest money.
The buyer in a large transaction may wish to consider as a remedy shifting the cost of some of the pre-closing inspections and testing in the event the seller is not able to furnish marketable title or meet the requirements set forth in the purchase agreement. This can shift significant costs such as environmental studies to the buyer.
There may also be the ability to provide for alternative dispute resolution for issues which may come up prior to closing. Consider whether or not arbitration of issues is desirable and necessary.
Consideration should also be given to what happens to documents and information if the transaction fails. Confidentiality agreements, agreements to return all documents and not to retain any copies in the event a closing does not take place, can help you protect your clients interests.