The contract conditions.
Most of the time, whether a buyer can pull out comes down to the conditions in the contract. A sale made subject to finance lets the buyer end it if a loan is not approved by the date agreed, a due diligence condition lets the buyer walk if the investigation is not satisfactory, and some contracts include a cooling-off right. Outside those, a buyer who simply changes their mind is in breach and risks losing the deposit, so the conditions are where a buyer's exit usually lives. Our business sale and purchase service drafts and reviews these conditions for both sides.
The statutory escape hatches.
Separate from the contract, the law gives a buyer rights in particular situations. If the seller or agent did not give a proper section 52 disclosure statement, the buyer can avoid the contract within the window the Act allows and recover what was paid. A similar right applies where the agent promised finance and did not give the section 51 statement. And where the buyer was misled about the business, the Australian Consumer Law can give a remedy, which may be rescission or damages depending on the circumstances. These rights are technical and time sensitive.
What it means for each side.
For a buyer, the message is that an exit usually has to be built in or found in a defect, not assumed. For a seller, it is that a rushed or defective disclosure statement, or an overstated representation about the business, can hand the buyer a way out well after signing. Getting the conditions and the disclosure right protects both sides from a sale that unravels.
A buyer who just gets cold feet, with no condition and no defect to rely on, usually forfeits the deposit. A seller who skimps on the disclosure statement can hand the buyer a clean exit months later.
Law referenced: Estate Agents Act 1980 ss 51, 52; Australian Consumer Law.