Pilon v Rosu, 2014 CanLII 140 (ON SCSM) is a recently decided court case which illustrates the importance of real estate agents exercising diligent attention to details when negotiating and recording the written terms of a real estate transaction.
The plaintiffs, through their agent, made an offer on September 22, 2011, to purchase the subject property for $400,000 with a closing date of November 16, 2011. The defendants responded, through their agent, with a counter-offer of $420,000 with a closing date of December 16, 2011.
The plaintiffs’ realtor was Mr. Clifton van Dincten. The defendants’ realtor was Mr. Ninoslav Orasanin. All communications between the parties were through their realtors and there was no direct communication between any of the parties at any time.
Apparently, there were several versions of the several offers and counter-offers, each of which was transmitted as an attachment to an email. Amongst this correspondence, there were instances of missing signature pages and/or signature pages with missing signatures, witnesses and dates beside the signatures.
The dispute that eventually arose surrounded a misunderstanding between the parties as to the actual agreed upon purchase price and an amendment to the closing date. The court surmised that at the heart of the case was the question of whether an actual contract (Agreement of Purchase and Sale (“APS”)) had been formed between the parties, given the confusion over missing signatures, etc.
When the deal fell apart, the Plaintiffs claimed breach of contract and damages for various wasted expenses, general damages and that their deposit of $2,500 be returned.
In examining the communications between the agents and between the agents and their clients, the court commented that one of the agents did not appear to have examined the document with any significant care. Furthermore, a dispute even arose between the Rosus and their agent, Mr. Orasanin, regarding the purchase price. They alleged, and he denied, that he advised them that their counter-offer of $420,000 had been accepted by the plaintiffs.
Interestingly, the defendants did not know that the purchase price was disputed until after the litigation was started. Furthermore, the defendants did not open and review the email they received containing the “final” copy of the Agreement of Purchase and Sale, assuming they knew what was in it.
Both real estate agents agreed with the court that there were many oversights regarding the execution of the APS. Thus, the case speaks to not only the care and diligence that should be exhibited by real estate agents in putting together a deal but also the thoroughness and clarity that is warranted in communications between real estate agents and their clients.
In the end, the court found that the plaintiffs could not succeed on their breach of contract claim because there was no contract formed. Specifically, the law of contracts dictates that for a legally-binding contract to be formed, an offer must not only be accepted but the acceptance must also be communicated to the offeror:
If a party executes an agreement which simply then remains in the possession of that party’s agent and is not transmitted to the offeror, there has been no communication of acceptance and contract formation has not occurred.
The court also noted that acceptance by both of the joint owners, and timely communication of such acceptance i.e. before the offer had expired, would have been necessary to form a legally-valid contract.
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