Can An Unsigned Sale And Purchase Agreement Still Be Valid And Enforceable?

In Chia Seong Pow v Alexma Corporation Sdn Bhd [2026] 5 CLJ 185, the Court of Appeal considered whether a land sale agreement could still be valid where the SPA remained unsigned and was described as a “draft”.

The dispute arose from the proposed sale of two parcels of land, where several draft SPAs were exchanged and the purchase price was later reduced from RM5,109,510.00 to RM4,102,341.00 after a land survey revealed that part of Lot 101 was unusable.

The Court of Appeal held that the absence of execution was not fatal. By 16 June 2020, the parties had reached consensus ad idem on the essential terms of the sale, namely the “three Ps”: parties, property and purchase price.

Background of the Case

The dispute arose from a proposed sale of two parcels of land owned by Alexma Corporation Sdn Bhd. In February 2020, Chia Seong Pow was approached by a property agent acting on behalf of Alexma Corporation Sdn Bhd with an offer to purchase the lands for RM5,109,510.00.

Negotiations then proceeded through the parties’ respective solicitors. The purchaser’s solicitors prepared and exchanged the 1st and 2nd draft Sale and Purchase Agreements with the vendor’s solicitors.

On 13 June 2020, a land survey revealed that approximately 3,119 square metres of Lot 101 was unusable due to the steepness or high gradient of the land. Following this discovery, the purchaser proposed a revised price of RM30 per square foot, reducing the total consideration to RM4,102,341.00.

On 16 June 2020, the purchaser’s solicitor informed the vendor’s solicitor that their respective clients had agreed to the reduced price and requested confirmation. The vendor’s solicitor replied “Ok proceed”, and the firm later formally confirmed by email that its client had accepted the reduced price.

A 3rd draft Sale and Purchase Agreement incorporating the revised purchase price was then sent to the vendor for execution. However, the vendor did not execute the agreement despite reminders.

The Court of Appeal’s Decision

The High Court had dismissed the purchaser’s claim on the basis that no concluded contract had been formed, as the 3rd draft Sale and Purchase Agreement remained unsigned and further changes were later proposed through the 4th and 5th draft Sale and Purchase Agreements.

On appeal, the Court of Appeal allowed the appeal and set aside the High Court’s decision. The Court held that the High Court was plainly wrong in concluding that the 3rd draft Sale and Purchase Agreement lacked agreed terms.

By 16 June 2020, the parties had reached consensus ad idem on the essential elements of a land sale contract, described as the “three Ps”: parties, property and purchase price.

The Court further held that the word “draft” was merely an expression of convenience. It did not negate the fact that the essential terms had already been negotiated, agreed and reduced into writing in the 3rd draft Sale and Purchase Agreement.

The 4th and 5th draft Sale and Purchase Agreements were treated as proposals to vary an already concluded and binding contract, rather than proof that no agreement existed earlier.

Since the lands had already been sold to a third party, specific performance was no longer available. The matter was therefore remitted to the High Court for assessment of damages payable by the vendor to the purchaser.

Key Takeaways

1. An unsigned Sale and Purchase Agreement may still be valid and enforceable where the parties have already agreed on the essential terms of the transaction.
2. The mere description of an agreement as a “draft” does not automatically mean that there is no concluded or binding contract.
3. In a land sale contract, the Court may focus on whether the parties have reached consensus ad idem on the “three Ps”: parties, property and purchase price.
4. Later proposed amendments may be treated as attempts to vary an already concluded agreement, rather than proof that no agreement existed.
5. Parties who do not intend to be bound until formal execution should clearly state this in their correspondence and draft documents.
6. Solicitors should exercise caution when communicating acceptance or confirmation during negotiations, as such communication may later be relied on to prove a binding agreement.

This case is an important reminder that in property transactions, substance may prevail over form. Where the parties have already agreed on the essential terms, the absence of formal execution may not necessarily prevent the Court from finding that a binding contract exists.

For further information, please contact Dato’ George Miranda at george@mirandasamuel.com.

🌐 Follow us for timely updates on legal news and insights:

LinkedIn: https://www.linkedin.com/company/miranda-samuel/

Instagram: https://www.instagram.com/mirandaandsamuel….

Facebook: https://www.facebook.com/mirandandsamuel…