A properly drafted Contract of Purchase and Sale (CPS) is critical to the successful completion of a real estate transaction. Drafting legally enforceable contracts that accurately reflect the agreement between a buyer and seller is a fundamental part of every REALTOR®’s practice, and failing to do so can introduce unnecessary risk and potential liability for both you and your clients.

While contractual documents are often marked up or revised during the back-and-forth of negotiations, it is important that edits be made with care and precision. Contracts that are ambiguous or unclear can lead to uncertainty regarding the parties’ intentions. If there is doubt about the essential terms of a contract, it may ultimately be deemed to be unenforceable. Here are essential things to know about navigating changes, strikeouts, and initials in a CPS:

1. Sloppy Edits Lead to Risky Lawsuits 

When there are multiple rounds of offers and counter-offers, there is a heightened risk of uncertainty or ambiguity regarding the parties’ expressed intentions, particularly when edits are made carelessly. Disputes over a contract’s terms or enforceability can lead to lengthy and costly litigation, and the REALTORS® that were tasked with drafting or reviewing such contracts may be drawn into these proceedings. In some cases, REALTORS® can become targets of legal claims themselves.

2. A Good Case in Point

In Intergulf,¹ the seller argued that three purchase contracts entered into with the buyer were unenforceable. Each agreement contained multiple drafting errors, and the seller claimed that uncertainty regarding the purchase price and identity of the purchaser rendered the contracts unenforceable.

In drafting the initial offers, the buyer’s agent misstated the name of the buyer as “Intergulf Development Corporation” (a non-existent entity) instead of the correct legal name, “Intergulf Investment Corporation.” This error was only partially corrected by the buyer. In some instances, the word “Development” was struck out and replaced with “Investment,” while in other parts of the contract, references to “Intergulf Development Corporation” remained. In the seller’s counter-offer, the seller initialled the buyer’s corrections but did not amend the remaining references to “Intergulf Development Corporation.”

In addition to the lingering incorrect references to “Intergulf Development Corporation,” the seller’s counter-offers (which were accepted) contained inconsistencies in the stated purchase price. In particular, the seller’s agent had struck out the original purchase price and inserted a revised amount in both numeric and written form. However, the numeric and written amounts did not match, introducing further ambiguity into the agreement.

Despite these drafting errors and finding that the contracts were “sloppily drafted,” the BC Supreme Court held that the contracts were enforceable, having found sufficient evidence that the parties had reached agreements on the essential terms. In particular, the court found that there was no ambiguity as to the purchaser’s identity, as some of the naming errors were corrected and those changes were initialled by both parties. With respect to the purchase price, the court was able to determine, based on the sequence of the exchanged documents, that the numerical expression of the purchase price was the correct one. As a result, the trial judge was satisfied that the substance of the agreements could be sufficiently discerned and ordered the rectification of the contracts (i.e., a court-ordered remedy that corrects a written contract to reflect the parties’ true agreement).

The seller appealed the trial court’s decision, but the BC Court of Appeal upheld the ruling, finding no error in the trial judge’s reasoning. While Intergulf² involved clear mistakes in the contracts, the legal outcome may have been different had the parties’ intentions been less evident, giving rise to legitimate ambiguity. Notably, however, the final legal resolution came only after a lengthy and expensive legal process, one that included a nine-day trial (where both the buyer’s and seller’s agents testified) and an appeal to this province’s highest court.

3. Practice Tips for REALTORS®

To avoid similar legal pitfalls that were seen in Intergulf,³ and to protect both themselves and their clients, REALTORS^® should keep the following practical tips in mind when drafting or revising contracts during the negotiation of offers and counter-offers:

• Keeping it clear: A fundamental requirement of any written contract is that it must be clear and readable. Illegible handwriting or unclear text can introduce ambiguity and spark disputes. Whenever possible, use typed or printed text when making edits to ensure clarity and to avoid misinterpretation.

• Striking with care: When striking out terms / clauses, use a single line striking through each clause instead of a large “X” over multiple clauses. Vague or partial strikeouts can cause confusion about which terms are included or excluded. Clear, precise edits maintain readability and minimize ambiguity.

• Initial every change / edit: All parties should initial every change in an offer or counter-offer to ensure mutual agreement on each edit. Failing to initial changes may create confusion or lead to legal disputes as to the terms of the agreement or even whether there is an enforceable contract at all.

• Review and confirm with your client: Carefully review the CPS with your client to ensure they understand and agree to all terms and changes. Have them initial each approved change and take the opportunity to clearly document any related discussions and client instructions.

• Managing multiple edits: Offers and counter-offers can go back and forth indefinitely, but too many changes and initials on one page (or pertaining to a single clause) can cause confusion as to what has actually been agreed upon. Where appropriate, consider using a CPS Addendum or drafting a counter-offer on a fresh form instead of repeatedly striking through and editing an existing form. This approach helps avoid overcrowding and enhances clarity. If you’re preparing a counter-offer using a fresh form, remember to take care to ensure that all intended contractual terms and conditions are transposed completely and accurately.

• Take care when striking through initials: If possible, avoid striking through initials when negotiating a term multiple times. Instead, consider using a fresh form to avoid potential confusion. While keeping previous initials visible can help show the sequence of changes and provide a clear negotiation trail, striking through old initials for proposed terms that were not accepted may enhance clarity in some cases. However, drafting a counter-offer on a fresh form also introduces the risk that agreed-upon terms or conditions may be inadvertently omitted or misstated, and may create uncertainty if multiple versions of a contract appear to be complete or binding. As always, careful review is essential to ensure that only the intended agreement is operative and that clarity, accuracy, and readability are maintained.

• Review every detail every time: Negotiations can move quickly, but it’s essential to take the time to thoroughly review each offer and counter-offer. The back-and-forth nature of these exchanges can lead to mismatches between the written and numeric expressions of the purchase price, inconsistent terms, or uninitialled changes. When reviewing a counter-offer (even after multiple rounds of negotiations), never assume that the only change relates to the purchase price or a single clause. Always review the entire contract to ensure all revisions are clearly identified, properly initialled, and fully understood by your clients.

4. The Importance of an Audit Trail

Whether a contract is executed electronically or using wet signatures and initials, maintaining a clear audit trail is essential. As demonstrated in Intergulf,⁴ the court examined the sequence of negotiations to determine the parties’ mutual intent, which was instrumental in the court finding that the impugned contracts were enforceable. Accordingly, it is highly advisable to keep accurate records of when offers, counter-offers, and acceptances are communicated. Furthermore, where possible, such as when using electronic signing software, REALTORS® should retain an electronic audit trail showing when and by whom edits, initials, and signatures were made. This level of documentation can be critical in resolving disputes about the formation or terms of the CPS.

Final Remarks

As demonstrated in Intergulf,⁵ even when courts can ultimately decipher the contracting parties’ intentions, poorly drafted or unclear contracts often result in costly, time-consuming, and risky legal disputes. By carefully managing how changes are made, initialled, and documented, and by maintaining a clear audit trail, REALTORS® can help protect both their clients and themselves from unnecessary risk and potential liability.

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	1.	Intergulf Investment Corporation v. 0954704 BC Ltd., 2018 BCCA 337.
	2.	Ibid.
	3.	Ibid.
	4.	Ibid.
	5.	Ibid.

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