BRIAN  MADIGAN

BRIAN MADIGAN

Broker

RE/MAX West Realty Inc., Brokerage *

Mobile:
647-404-8150
Office:
416.745.2300
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Due Date for Deposit (2 Possibilities)

Due Date for Deposit (2 possibilities)

Can you avoid screw-ups that destroy tenancy deposit claims?

Question:

An agreement of purchase and sale was negotiated on Friday. It included the reference to the deposit being due upon acceptance.

The was another provision in Schedule B (supplied by the Listing Brokerage) to the effect that the deposit would be due the next business day, Saturdays, Sundays and holidays excluded.

The Listing Agent is taking the position that the deposit is due on Saturday

Answer:

This actually should be an exam question since it raises a number of issues. We have an Agreement with two conflicting due dates for the deposit, a couple of days apart. A Judge is going to go with the second one, since both parties agree to that date as well. It’s important to be aware of the fact that the situations described are covered by the law of torts and the law of restitution in addition to the law of contracts. However, only contracts is taught through OREA and Humber.

Judges will attempt to be “fair and reasonable” to the parties in any interpretation of a contract. When I say the “parties”, I mean both the Seller and the Buyer. In this case, to go with Saturday only favours the Seller. But, the Seller has already agreed to Monday as well. In fact, it was the Seller who darfted up Schedule B. So, they are going to have to be stuck with the Monday date whether they like it or not.

This type of interpretation goes back to the 1970’s , it’s not new. It was reflected in the Bhasin case in 2014 and just recently in Callow (December 2020). There is an honesty and good faith provision in all contracts. If it’s not written down, just consider that both parties agreed to it anyway. Successful performance is the goal of both parties. That was a concept enunciated by the Supreme Court of Canada in Bhasin. Many Courts have applied that concept for years. In Callow, the Supreme Court extended this concept to include errors, oversights and omissions which may induce, encourage or allow the other party to misinterpret the treatment of the contract by the other party. In this case, I can’t imagine any more flagrant deception, than a clause which says the deposit is not due until Monday (if that were not true).

It is the Loblaws’ case which gives rise to the law about the breach of the deposit permitting the Seller to terminate and sell to another party without a mutual release or even informing the other party or permitting them an opportunity to rectify their mistake. Justice Rutherford made that decision, however, in my opinion ( I have appeared before him many times) he would have been fair and reasonable to the parties, and would have established the breach of contract at the expiry of the second time period (as was agreed by the parties) rather than have selected Saturday which only would benefit the Seller.

Brian Madigan LL.B., Broker

www.iSourceRealEstate.com

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