Real Talk!

The other day, while doing some research for my enormous family tree (I now have 10,303 people in it), I stumbled across the record of an incorporation that included my gr-gr-grandfather as a principal in the “Statutes of the Province of Quebec”. It was “An Act to incorporate "L'Union Nationale Francaise et de Refuge" and was “Assented to” on the 18th day of May, 1887.

The item was quite lengthy, as usual, outlining the purpose and the rules and all that stuff… but I was quite taken, in particular with the following words:

“Whereas Pierre Didier and Mederic Laurier, both contractors and Joseph Rivard, bailiff, all of the city of Montreal, have, by their petition, represented that in order to come to the assistance of needy Frenchmen they have founded an association called "L'Union Nationale Francaise et de Refuge," and in order to derive every benefit from such association, they require an act of incorporation; whereas they have prayed for the passing of an act for the purpose, and it is expedient to grant their prayer; “

I thought it was quite charming that “they have prayed for the passing of an act” and that Quebec could “grant their prayer”. I looked at some similar Acts from the 1880s in Ontario… in Ontario; they didn’t say anything about praying.

All of this got me to thinking about “wording” and legal language. The wording the clauses and conditions in an Agreement of Purchase and Sale is a difficult part of a Realtor’s job.

In today’s world, oral agreements are not sufficient- Buyers and Sellers need to have a precisely worded document to back up their agreement. Carefully worded clauses and conditions will ensure that contracting parties will have no differences in their interpretation of the text.

It’s also important to understand that any clauses added to the body (or white space) of an Offer will supersede anything in the pre-printed clauses of the form.

The manner in which something is expressed in words (the style of verbal expression, the phrasing, phraseology, wordage) may influence the success or failure of the Agreement. Poorly drafted contracts have the potential to confuse, disappoint, or worse, lead to a lawsuit.

Each property transaction has individual circumstances that make it unique. Agreements often require the inclusion of an unusual clause or condition and care must be taken to read all inferences and revise each clause to be certain there will be no misunderstanding in the intended meaning.

The parties, also, need to understand the distinction between conditions and warranties- the difference is very critical to the wording that should be used in the Agreement.

A condition is a requirement that is fundamental to the very existence of the offer. The failure or breach of condition may cancel the Agreement and usually will allow the buyer to have the full amount of their deposit back.

A warranty is a minor promise and if there is a breach of warranty, the Buyer cannot usually cancel the Agreement, but must complete the contract and then, sue for damages.

Any and all representations, warranties or agreement must be stated in the offer. Representations made prior to the offer and not forming part of the offer, either verbal or written, are unenforceable.

One of the most confusing phrases that frequently appears in a warranty is: The parties agree that this warranty shall survive and not merge upon completion but apply only to the state of the property existing at completion of this transaction.

When Contracts are exchanged the warranty will come into effect. When the transaction then continues to completion, the warranty will remain enforceable and will not become superseded by completion.

HUH?

The simple explanation of this clause is that whatever is being warranted (for example the refrigerator) is the responsibility of the Seller to maintain (and repair if necessary) up to the date of completion – meaning, the date the keys are exchanged… so the fridge has to be in good working order on the date of completion and the Seller, making the warranty or representation is liable after the closing is complete- if it turns out that the fridge isn’t working when the Buyer takes possession.

Survive means the condition continues to exist as a contract… However, one can’t expect the Sellers to continue to warranty something that they will not have control over after they’ve transferred the property- so the Buyer has only a reasonable time after closing to determine that the refrigerator is working.

Often, a warranty includes the phrase:

“The Seller represents and warrants, to the best of the Seller’s knowledge and belief that…”

This means that the Seller really does believe that what they are saying is accurate, given their knowledge and information about the property. If the Buyer were unsatisfied with the state of the fridge, at closing… the Buyer would have to prove that the Sellers had knowledge of the defect and had been lying when they made the warranty.

The parties of a contract need to remember, they should be working in good faith AND they are signing under seal- which means that they are providing evidence and assurance of their intent to carry out the promises they have made within the Agreement.