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Contracts - Offers. Covenoho v. HomeLife Response Realty Inc.
In Covenoho v. HomeLife Response Realty Inc. (Div Court, 2022) the Divisional Court distinguished between a bare real estate listing, as opposed to the offer and acceptance which constitute an APS:[39] For parties to be ad idem, or in accord, on the terms of the contract they must have reached the same understanding as to the essential terms of the agreement. In this case, the vendors had listed their property for sale. Contrary to the Appellant’s position, listing the property was not an “offer to sell”. It was, at most, an expression of interest in selling the property and a solicitation of offers. . Covenoho v. HomeLife Response Realty Inc.
In Covenoho v. HomeLife Response Realty Inc. (Div Court, 2022) the Divisional Court considers the nature of a conditional offer:[40] Further, the Appellant’s assertion that her clients’ conditional offer to purchase the agreement was an “interim acceptance” of the vendor’s offer to sell is contrary to the well-understood principles of contract law in Canada. Whether a contract has been formed is an objective question. It requires the Court to determine whether a reasonable person would consider that each side was intending to enter into a contract. Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp. 2020 SCC 29, (2020) 450 D.L.R. (4th) 105 at para. 29.
[41] There is no reasonable basis at law to find that a conditional offer actually creates a valid contract. The offer in this case was conditional on certain events or conditions coming to pass. It is possible that those things would never have come to pass and the offer would then never be completed. For example, in this case, if the prospective buyers had never been able to obtain financing, they would never have been either obligated or permitted to complete the transaction as they likely wouldn’t have been able to pay for the property. It is unreasonable to assume that a conditional offer was an actual contract on the facts of this case. It is also unreasonable to expect that the vendor will simply wait for the buyer to complete the conditions and not continue to look for other offers. If the vendor had received an offer without conditions, at a higher or lower price, the vendor would have been at liberty to accept that other offer instead.
[42] Put another way, a conditional offer is not a valid offer. Re/Max Welland Realty Ltd. v. Canada (Minister of Transport) [1999] O.J. No. 2612. In that case, the Court was considering the sale of a property by the St. Lawrence Seaway. The Seaway had originally agreed to sell the property to Quarry Holdings. However, the Seaway then went and negotiated with the City of Welland and ultimately ended up selling the property to the City. The agent who had listed the property for the Seaway and brokered the deal with Quarry Holdings sued for his commission.
[43] In considering the case, the Court stated (at para. 9):It is clear in law that had a valid condition been inserted into the agreement of purchase and sale that this condition would have made the entire agreement only conditional. A truly conditional agreement is not a valid offer to sell but is subject to being resiled at the request of the party in whose favour the condition was inserted. [44] Having determined a conditional offer is not valid, there was no obligation on the part of the vendors to accept the offer made by the Appellant’s clients. In addition, for a valid contract to exist there must be offer and acceptance and the acceptance must be communicated to the offering party. The Law of Contracts (Sixth Edition) S.M. Waddams at paras. 92 and 93. None of these conditions exist in this case. Therefore, on these grounds alone, the Appellant’s claim was properly dismissed by the Deputy Judge.
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