In order to be “enforceable”, real estate contracts must be “definite and clear”. So, here, the Courts will look to:
1) parties, (sufficient to identify)
2) price, (capable of ascertainment)
3) description, (capable of ascertainment)
4) closing date, (capable of ascertainment)
# 2 Price
Courts need to know what the price may happen to be. In a residential situation, this should be clear. It’s right on the first page of the offer.
When it is a new building, there may be government grants, incentives and rebates which all must be taken into consideration in calculating the adjusted price.
If that formula is clear, then there is a deal. If you can’t figure it out, then, if it is a relatively small matter in the context of the transaction, the Courts will try to figure it out. If it is too complicated, or too significant, the Courts may very well decline.
So, when is it too significant?
Sometimes, in commercial transactions, price is based on a formula. If there is a clear price per acre, that will be fine, since the parties can lead proper evidence concerning the size of the parcel. But, what if there is a restriction to “developable acreage”? That term may not be suitably defined by the terms of the agreement. Should that be the case, then, Courts will not re-write the deal for the parties, but simply conclude that there was not a clear contract.
Brian Madigan LL.B., Broker
www.OntarioRealEstateSource.com