Question:
Is there any harm to adding:
“The buyer and seller understand this is now a firm and binding deal”
after the conditions in a Notice of Fufillment or Waiver?
The Bank is asking to see that. Even if it is not required, is there any harm?
Answer:
The Bank is acting very foolhardy. The Agreement of Purchase and Sale was firm and binding once it was accepted. It happened to be conditional and now it’s “unconditional”, just in case they need to know.
Potential Harm
There could be a “real” problem here. You have suddenly opened up negotiations. Even though, it doesn’t make any sense, what if the other party won’t agree to sign this Amendment? And, they decide to walk. Either the property in their opinion has gone up or down and they would prefer an “out”. If the deal falls through because of that, your client can sue you, and you won’t be able to blame it on the Bank.
Wrong Place for Such a Provision
Statements about both parties cannot be included in either a Waiver or NOF. They are single party documents.
It cannot go into an NOF, it says “buyer and seller agree”. So, if you did you have just turned an NOF into an Amendment. Bad enough that you are using the wrong form, but now you are going to allow the seller an opportunity to escape from the deal. The buyer will have a very easy time to sue! Just need one Defendant, who doesn’t have any defence. Speak up, tell the Bank employee who only a few weeks experience, what the law is. By the way, there are thousands of employees at the Bank who will understand
Answer the Bank’s True Question
The Bank can always make additional inquiries if they wish. Once accepted an Offer turns into an Agreement. We are no longer negotiating. We have a firm contract. That’s the case with or without any conditions.
In a colloquial sense, people will often say that the deal firms up once it becomes unconditional.
Good faith in contracts has been around for years, not just Bhasin v Hrynew. The obligations fall into place at the outset of the contract. Effectively, that means once we stopped negotiating and at the time we moved over to an accepted contract. The Supreme Court of Canada first set that out in 1958 in Mason v Freedman.
Brian Madigan LL.B., Broker