Clarity Clauses, Agreements and Documents (Part 2)

The Clarity Document

In Part 1, we looked at the requirement under RECO for the production of a legible document.

A custom had developed among certain real estate agents to prepare and exchange a nicely typed and readable version of the agreement that was negotiated in the wee hours of the morning.

This caused great concern among lawyers. They didn’t want anything signed again that may be in conflict with the original. So, the practice evolved somewhat. Some documents were signed and others were not. In fact, most lawyers cautioned against it.

If it is your intention to have such a document, then what should it say? Basically, there are four separate issues that need to be addressed.

First, is this intended to replace the previously negotiated agreement? If so, then it should be called an “agreement”. But, this is the specific risk that the lawyers cautioned about. Perhaps, it should simply be intended for ease of reference. If that is the case, then you must call the document something else. Never refer to it as an agreement. If you want to call it something, refer to it as a “document”, and the form it should take is as an “Acknowledgement”.

Second, make absolutely certain that it does not amend or alter the terms of the agreement. That’s not its purpose. The lawyers will be pleased with that approach.

Third, is the document intended to have some value? If it is, then perhaps it might be able to be used as evidence in Court. If this is the case, then the document should say so. Certainly, that would be helpful. Naturally, the agreement governs, but the second document actually passes the evidentiary test, if that is specified. So, if you want it to be a guideline, then this second document should clearly indicate that it may be used in Court as evidence.

Fourth, if it is not to be signed by both parties, then it should not be exchanged or delivered. The agent would be better advised, to simply to prepare such a companion document for their own client.

The actual document might look something like this:

“Acknowledgement

The Undersigned parties, namely the Buyer and Seller hereby acknowledge and agree the Document attached as a schedule is a true and accurate representation of the terms of the Agreement of Purchase and Sale dated 10 February 20xx.

The Parties further acknowledge that the Document:

· Has been prepared for the purposes of ease of reference to improve the legibility and clarity of the Agreement

· Does not alter or amend the terms of the Agreement

· May be introduced as evidence in Court under the Canada Evidence Act


Dated at Mississauga, Ontario this 10th day of February, 20xx.

Signatures etc. would follow”


As a word of caution, all documents appearing on this blog are intended for review, consideration and discussion. They are not intended to be used in a specific transaction. Readers are requested to seek legal advice if they propose to use a document in practice.The author specifically disclaims all such responsibility, and readers’ use of any such documents is at their own risk.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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