Usually contracts of sale are fully carried out but the occasional breach renders necessary some understanding of the rights and liabilities which in that event may be invoked. The default may be, obviously, by either party.

If the seller fail to carry out the contract, his failure may arise from either of two causes, unwillingness or inability, each of which gives the purchaser different remedies. The seller may be able to fulfill the contract but unreasonably refuse to do so. In such case the purchaser may pursue any of three courses. First, he may recover the amount of his deposit with interest and the reasonable expense he has incurred in examination of the title. Second, he may, if the seller still has title to the property, bring an action to compel the seller to specifically perform the contract. If he is successful in his action, the seller must carry out the terms of the contract or he may be jailed until he does so. Third, the purchaser may, if he wish, or if the seller has disposed of the property, sue for the loss of his bargain, in which case he may recover as his damages the difference between the value of the property and what he agreed by his contract to pay for it. Should the value be less than the price, of course this remedy is ineffectual.

The seller may however be quite willing to carry out the contract but be compelled to default by his inability to give the title he has promised. His title may not be clear, there may be other people who have some interest. In such case, if the seller acted in good faith, knowing nothing of the defect, the purchaser may recover only the amount of his deposit and interest and title examination expenses. But if the seller, knowing of the flaw in his title, permitted the purchaser to act to his detriment in entering into the contract, then the purchaser may recover for the loss of his bargain; the difference between the value of the property and the selling price.

The purchaser in signing the contract, having only himself to consider and not having to deliver title to property, which may, without his knowledge have some defect, does not receive as much consideration as the seller. He should not undertake the obligation of the contract unless he sees his way clear to perform his part. Should he default, his seller may either (A) forfeit the deposit and cancel the contract, (B) bring an action against the purchaser for specific performance, or (C) sue for his damages - the difference between the value of the property and the price the purchaser agreed to pay, this relief being appropriate naturally only if the price exceeds the property's value.