Confirmation of Acceptance in the Agreement
For some reason, the Confirmation of Acceptance in the standard form OREA Agreement of Purchase and Sale has become somewhat controversial. Many agents are unfamiliar with the statement and its relationship to the Agreement.
Origins in 2008
The Confirmation of Acceptance (COA) became part of the standard Form in 2008. Prior to that, there was a previous statement being the Confirmation of Execution (COE).
Confirmation of Execution
The Confirmation of Execution had a difficult history. It was introduced in order to confirm the “time” for the delivery of the deposit, and also the time for the commencement of other conditions if they were based upon the commencement of the contract.
The intention was that the last person to sign the contract, being the Offeree. OREA taught that the “last person to sign” should sign the COE.
Deposit Provisions in the Standard Agreement
“DEPOSIT: Buyer submits............................ (Herewith/Upon Acceptance/as otherwise described in this Agreement)……”.
There were three choices with respect to the timing of the delivery of the deposit:
- Upon Acceptance, and
As otherwise described…
Herewith meant “now”, with the submission of the actual Offer. Sometimes, that wasn’t appropriate since funds were not immediately available.
Upon acceptance was defined in the Agreement as follows:
“Upon Acceptance” shall mean that the Buyer is required to deliver the deposit to the Deposit Holder within 24 hours of the acceptance of this Agreement.
That provision was clear, it meant no later than 23:59:59 hours. The full 24 hours would be one second too late.
“As otherwise described” would be the preferred choice in most cases. The Buyer could make arrangements for a certified cheque or a bank draft, but that could take an additional day or two. How much time would depend upon the actual circumstances.
Upon Acceptance for Deposit Delivery
In order to calculate the time, we would have to know precisely the “time” when the contract started.
The Confirmation of Execution was designed to address this issue. But, in truth, that was simply an irrelevant time and had nothing at all to do with the actual commencement of the contract. Who cares when the last person signed!
Acceptance of a Contract in Law
Acceptance in law is a two step process:
- Signing or executing the contract by the Offeree, and
Communicating the fact that the Offer has been accepted to the Offeror.
If the second step does not take place, then we don’t have a contract. The person who submitted the Offer never, ever heard back. They submitted an Offer, then SILENCE. In this case, silence isn’t “golden”, there is just no contract.
Signed, Sealed and Delivered
In respect to any contract under seal, there are really three steps:
- Signing the document,
- Sealing the document,
Delivering the document.
Confirmation of Acceptance added in 2008
This is the provision:
“CONFIRMATION OF ACCEPTANCE: Notwithstanding anything contained herein to the contrary, I confirm this Agreement with all changes both typed and written was finally accepted by all parties at ..........................(time: am/pm) this ................. day of...................................................................., 20...........
(Signature of Seller or Buyer)”
The intention was to have the clock running from the time that was inserted into the COA. The COE was not of much value so it was simply replaced by the COA. And, please note that it says "was finally accepted". That's past tense. It has already happened. So, obviously, this COA isn't intended in any way to constitute part of the contract formation.
Improper Execution of the COA
More often than not, an improper time was inserted into the COA. No one read the memo from OREA explaining the differences between the COE and the COA. Actually, that was a bit of a problem: there wasn’t one.
So, many agents simply continued with the old practice of the “last person to sign”.
In reality, the correct person would be the individual who knew about the actual acceptance. That might not be the person who signed with the intention of accepting the Offer. That was just step 1. They would have to know about step 2, and often they didn’t know anything at all about step 2.
Bob acts for Sam the Seller and Mary acts for Bill the Buyer.
Bob and Sam sit together at Sam’s dining room table and go through the process of accepting Bill’s Offer. Mary and Bill are at Mary’s office.
8:00 pm Irrevocable time
7:30 pm Mary leaves Sam’s house
7:40 pm Sam decides to accept the Offer
7:41 pm Sam signs his name to the Offer (the seal is already in place)
7:42 pm Bob calls Mary and communicates the acceptance (this is step 2)
7:43 pm Bob advises Sam to sign the COA (which he does)
7:45 pm Bob emails the accepted Offer to Mary
7:46 pm Mary receives the email from Bob
This is the correct way to handle the deal. The communication (step 2) must take place prior to the expiry time of the Offer (8:00 pm).
The contract start time was 7:42 pm, even though the COA was signed one minute later.
But, for the purposes of the contract, Sam will be stuck with the 7:43 pm start time, because he wrote it in.
You will also appreciate that the two agents were aware of the timing of the email. They certainly could sign the COA since they would be in a good position to testify in terms of “delivery”. Bill could also complete the COA, effective the time it was received by his agent Mary. However, that would likely be hearsay.
Who should sign the COA?
The person who knows for sure that step 2 took place. Mostly, that will be Bill. Mary could sign the COA. She could look at her phone to see the time of Bob’s telephone conversation which would be 7:42 pm,
Is the COA part of the Contract?
No, it’s simply an evidentiary statement.
What if the COA is not signed?
Nothing happens, we still have a contract. We just need to figure out the starting time. However, it may not be crucial if the deposit was already delivered with the Offer (herewith).
What are we looking for?
The wording for the Seller is as follows:
“I, the Undersigned Seller, agree to the above offer.”
It’s this provision which binds them to the deal, as long as we have gone through step 2.
This is the statement which will be signed by both parties:
“I acknowledge receipt of my signed copy of this accepted Agreement of Purchase and Sale and I authorize the Brokerage to forward a copy to my lawyer.”
This statement is nice, but not necessary. In fact, it could easily by signed weeks after the start of the contract.
Rarely, is there a document similar to the COA.
Thousands of Years of Contract History
We have had contracts relating to the sale of land for thousands of years, and there was no COA until 2008. Those deals still got closed!
Brian Madigan LL.B., Broker