A Few Issues with Published Statements Concerning Conditions

Implied & Expressed Conditions examples – ARCHITECTURAL KNOWLEDGE

(Ontario)

There may be a few problems with the published statements posed below in italics:

Condition Subsequent- Contract is binding from start. If condition is not met eg. house inspection was not acceptable…then notice must be given by date and time in conditional clause in order to sever the contract otherwise it stays binding.

Note: the proper terminology would be “terminate” the contract. The reference to “sever” has no meaning.

Condition precedent- Contract is NOT binding until notice is given that condition is met OR waivered by date and time in conditional clause.

Note: This is not correct. The contract is binding, it just happens to be subject to a condition. If that condition is waived, satisfied or fulfilled then the contract formerly, “conditional”, becomes “unconditional”. There was a binding agreement at all times.

True Condition Precedent- waiver provision cannot be added to conditional clause because condition must be met. eg. Buyer wants the vacant land but only if it can be severed. Contract becomes binding only if buyer gives notice by date and time that severance is possible. This cannot be waived.

Note: the True Condition Precedent involves a Third Party, like a Bank agreeing that the new Buyer can take over the mortgage. It either happens or it doesn’t. Property subject to a severance requires the Municipality to consent. Again, this either happens or it doesn’t. Once the Buyer is aware, then the Notice of Fulfillment should be used. Sometimes, it’s the Seller who becomes aware, in which case the Seller should deliver the Notice of Fulfillment. This isn’t something that either party could waive. Remember, just like the previous example, the Agreement was binding once accepted.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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