Hi All: I signed an MoU, without a termination clause, with my neighbor 2 months back assuming he is a gentleman and will honor the commitments of making full payment by end of Feb 2022 towards my property purchase. However, since day 1 he had only paid one lac Rs. token and every other day he was promising on WhatsApp chats that I will make the payment today or tomorrow thus dragging the deal till the 1st week of Mar with no written confirmation on the Payment date. Our MoU doesn't capture any termination or exit clause, but I had asked him to write on the MoU - clause section - to mention he will be paying 50% of the deal amount by end of Jan and the remaining 100% by end of Feb 2022 which he had written it with pen on my insistence. Our MoU doesn't explicitly call out on the condition of what will happen if he doesn't honor the payment by Feb end. Tired of this situation, I had formally dropped him an email stating that the MoU stands canceled and I have returned his 1lac token as well with proofs. I have also mentioned him on whtsapp chats that given he has delayed so much I will be going ahead with other party and close the deal. Is there a chance that he can put a litigation and try to stall the other deal? MoU is registered on a 100 Rs. stamp paper and the original is with him. I have asked him to acknowledge the cancellation on email & Whatsapp however he hasn't reverted to it. The purchaser is into real estate line with lot of money and contacts.
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It is necessary to peruse MOU to advice
2) if he has failed to make payment within stipulated period you can cancel the co Tracy and refund his money
3) he may file suit seeking an injunction restraining sale of property by you
4) take the plea that MOU was cancelled as he failed to honour his commitment and advance has been refunded
The MOU is not an agreement of sale but an evidence for receiving the token amount or booking amount.
Since you have already returned the booking amount as well as you have intimated him that the booking is cancelled and asked him to cancel the MOU at his end, if he is not responding to your correspondences then it is his problem and not yours.
Therefore the burden lies on him tom prove his stand which actually do not exist.
There is no legally valid contract between you and him.
However since he has not responded to your communications so far, it would be better that you send a communication in writing sent by registered post to his address intimating about the decision to cancel the agreement entered through MOU for his default to honor the same and the details of the amount returned to him etc., so that this will come to your rescue to defend your interest in cae he is dragging you into a litigation.
As you have cancelled the mou, he can file a suit for specific performance of contract against you
however he will have to show his readiness and willingness to make the payment to you and that he was always ready and willing to make the payment
since that would not be so from your whatsapp conversations, you can easily demolish his case by showing that he was never ready and willing to pay and was only dragging the matter
i take it that the MOU is on a stamp paper of rs. 100 and was NOT registered with the sub-registrar
if it was registered then unless a cancellation deed is also registered for that mou, you will find it difficult to find a new buyer since any buyer will want that the previous mou of the seller is duly cancelled by a registered cancellation deed
MoU ought to have been registered, to be made a basis of any court case.
Without registration, it cannot be read and relied upon in the Court.
Even otherwise, you having send a notice of cancellation and having returned the advance received, there appear to be no trouble.
Yes it can be cancelled if no Consideration is paid
Dear Clients,
You can cancel the MOU as per the Termination Clause mentioned therein, return the part consideration which is the essence of the Contract. You are not liable to pay the excessive amount which the other party demand subject to verifying your MOU Termination Clause.But in absence of termination clause When there is no termination clause in an employee contract, it means an indefinite contract of employment is in place, but a termination is still an option with reasonable notice given. depending on case to case basis.This results either from looking at the evidence of what the parties really intended (on the basis of all the available – admissible – evidence); or by implying a term (in which case the express terms need to not contradict this).A termination clause is very important in a contract as it states the circumstances under which a contract can be terminated thereby reducing the risk of arbitrary termination.
Thanks & Regards
