Question:
The standard clauses for financing and inspection which say “absolute and unfettered discretion” are no longer the case. How do you get around that?
Answer:
There is no obligation to “negotiate” in good faith, but once you have a contract, you are obligated to “perform” in good faith.
In the Bhasin case, the test went from subjective to objective. So, the way to get around Bhasin is to include a subjective test. That’s not the way that the OREA clause is worded, so in this case, there’s no free walk away.
So you would add the words:
“…in his sole and absolute discretion, to be determined in accordance with a subjective test….”.
That’s the bare minimum. You could add more information etc. for clarity, like:
“….notwithstanding that this agreement may simply constitute an option to purchase in favour of the Buyer….”.
Brian Madigan LL.B., Broker