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Brian Madigan LL.B., Broker

RE/MAX West Realty Inc.,
Independently owned and operated

96 Rexdale Blvd. 
Toronto, Ontario 

Phone: 416-745-2300

Cell: 647-404-8150 
Toll Free: 1-888-507-0817

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Deposit Failure and the Better Contract Consequence

August 14, 2013 - Updated: August 14, 2013




Oliver Wendell Holmes made it quite clear that there are two reasonable options with every contract:


  1. fulfill it, as required, or
  2. breach it, with consequences.

If the consequences associated with the non-fulfillment of the contract by the other side are not significant enough, then you failed to negotiate a good contract.


Breach is always an option. Damages are the usual remedy. There’s nothing wrong with breaching an agreement. That was one of the options in the first place.


This view of contracts somewhat changes the belief that the Courts are destined to come to the rescue of the party not in breach and save the non-defaulting party.


The Courts do not view this as bad or wrongful conduct. That rescue doesn’t happen. If a party is in breach, then so be it. What are the consequences of that breach under the agreement? That’s what is of interest to the Court.


Unpaid deposits occur in contracts every day of the week. There are, of course, consequences. It’s not that complicated. In Ontario real estate transactions involving the use of Form 100, the deal is still in place, even without the deposit having been paid.


The consequence which I prefer to negotiate, is that a unpaid deposit gives the seller the option to terminate.


That’s a much better remedy than having to spend $10,000.00 to $15,000.00 to go to Court prior to closing. That’s fine, if an insurance company is paying, but most can’t afford it, and so, they wait it out until closing, with all the attendant uncertainty that entails.


Brian Madigan LL.B., Broker

Tagged with: deposit not paid breach consequence right to terminate ontario law
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Brian Madigan LL.B. Broker

RE/MAX West Realty Inc. Brokerage

Independently owned and operated

96 Rexdale Blvd. , Toronto Ontario,

Phone: 416-745-2300

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