Jason Bryk 

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It may not be easy to get out of a contractual commitment

2020


After entering into a contract - which is otherwise binding on the parties to it - one of the parties may have a change of mind or, having for the first time thought out the consequences of the contractual commitment, decides that release of that person from their commitment would be in their own best interests.  Such persons may be able to convince a Court to extricate them from their agreements' obligations, reasons or excuses to so extricate vary from situation to situation, but a number of them are - in essence - that the party wishing to withdraw was misled by the other party, or that the party wishing to withdraw didn't understand the language in the written document or had not had the wording adequately explained to her/him.  A recent illustration of this situation is found in the Ontario Court of Appeal judgement Country Wide Homes Upper Thornhill Estates Inc. v. ge (2020 ONCA 400), judgement issued June 22, 2020 (the "Country Wide Case").  In the Country Wide Case, the vendor and the purchaser entered into an agreement for a sale to the purchaser of a substantial parcel of land (basic purchase price being $2,800,000.00).

Prior to closing, the purchaser took the position that the agreement was not binding.  The Court noted that "there was no issue with the agreement, its contents or the steps taken after it was signed.".  The purchaser's rationale for requesting confirmation of termination of the agreement included these allocations:

(i)    the agreement was lengthy and was signed by a non-English speaker;

(ii)   the agreement was signed without the purchaser having a solicitor of the purchaser's choosing review the agreement before the purchaser signed;

(iii)  the purchaser simply did not understand the contents of the agreement.

The Court rejected the purchaser's arguments and confirmed that the agreement was binding.  In particular, the Court pointed out:

(a)  Mandarin-English speaking real estate agent with whom he was able to fully communicate;

(b)  the purchaser was not a novice to the real estate market;

(c)  the purchaser had initialed every page of the agreement of purchase and sale and its schedules and had initially deleted the area where a purchaser could fill in the name of the purchaser's own lawyer; and

(d)  each page of the agreement of purchase and sale contained the following prominently displayed statement: "ORAL REPRESENTATIONS DO NOT FORM PART NOR CAN THEY AMEND THIS AGREEMENT".

There are undoubtedly situations where the above "background factors" leading to execution and delivery of the contract may taint the "meeting of the minds" process that a Court will excuse contractual performance.  But people contemplating entering into contracts and the counsel should tread carefully!


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