Failure to Clarify the “Parties”

By Brian Madigan LL.B.

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)

# 1 Parties

If Courts cannot figure out who the other party is to the agreement, then it simply will not be enforceable.

So, where does this happen? Usually with commercial transactions involving shell companies, joint ventures, syndicates, partnerships and trusts.

It has to be clear who is the contracting party. Frequently, there is an assignment clause. That also means there must be a proper, duly executed assignment. If the Courts cannot figure out who is the contracting party, then they will not enforce the agreement.

Oddly, this circumstance arises frequently, but in many situations it doesn’t give rise to a problem because both parties are anxious to proceed with the transaction, and consequently, they “cure” any lack of compliance.

However, in a rapidly changing market where the price suddenly goes either up or down, you may have one party who would rather have an “out” than proceed.

Brian Madigan LL.B., Broker

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