Deposit Forfeiture Clause: Does it have any Meaning?

Question:

What do you think on this clause from a Seller’s perspective?

“The Buyer hereby acknowledges that in the event of the buyer’s breach of the agreement of purchase and sale once the agreement is firm, any deposit would be forfeited to the sellers “on account of damages”.

Answer:

A deposit is a pre-estimate of the amount of liquidated damages which the Seller would sustain should there be a breach of contract by the Buyer.

So, this extra wording is basically superfluous.

It adds nothing.

If it’s taken out, nothing is changed.

All too often parties become inventive and Brokerages will like to add clauses to their Agreements, mostly, without legal advice.

Brian Madigan LL.B., Broker

www.OntarioRealEstateSource.com

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