Counteroffer – No Date for Acceptance by Purchaser; No Listing Contract for the Sale of Shares #154

Jun 01, 1990

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By Gerry Neely
B.A. LL.B.

Murphy's law - if something can go wrong it will, and then get worse - doesn't always lead to litigation, but when it does, it often highlights a useful practice point. A company whose principal was a licensed REALTOR, listed three strata lots for sale, through the agent with which the REALTOR was licensed. A selling salesman in the same office brought an offer to purchase one lot to the listing salesman which he accepted on behalf of his company.

An addendum to change the possession date to May 30, 1989 was prepared and signed by the listing salesman. The selling salesman had the purchaser sign the addendum and then the selling salesman put it in the incoming mail slot of the listing salesman. All of these actions took place on the same day, March 28, 1989.

The listing salesman did not receive the addendum, and on May 2nd, resold the property to a third party. When the purchaser became aware of this, he advised the listing salesman on May 15th of his acceptance of the counteroffer by addendum. He also filed a Lis Pendens to prevent the sale to the third party, and litigation ensued.

The listing salesman had failed to insert in the addendum, the date to which it was open for acceptance by the purchaser. The vendor argued that without a date, acceptance had to be made within a reasonable period of time, and the period between March 28 and May 15 was unreasonable. The Judge rejected this argument and held that the counteroffer remained open for acceptance or rejection by the purchaser or withdrawal by the vendor, until May 30th, the date for the change in possession.

Even if the listing salesman had been alerted to the problem in time to withdraw the counteroffer before the purchaser's acceptance had been communicated on May 15th, he still would have lost. The evidence that the signed addendum had been delivered to the listing salesman's mail slot was accepted by the Judge. Delivery by the selling salesman of the addendum to the listing salesman's mailslot, was sufficient communication of the purchaser's acceptance.1

* * *

An agent who takes a listing from a Company for the sale of property, and then is invited to sell the shares of the Company as an alternative, should refuse the invitation unless the terms of sale of the shares are agreed upon and the listing is revised.

An agent with an exclusive listing for the sale of property owned by a company was told to liaise with the company's property manager. He advised the agent that the agent could offer the property or the shares of the Company for sale. The agent brought an offer to purchase either the property or the shares.

The offer for the property would have been accepted except that several shareholders were considering the purchase of the shares held by other shareholders, and the agent was asked to defer the presentation of the offer. The purchase of the remaining shareholders' interests took place but no sale of the property. The agent sued but its claim for commission against the Company was lost because no binding contract of sale of the property came into being for which the agent was the effective cause.

The claim against the shareholders was denied because the agent was unable to prove that the property manager had authority to create a contract between the shareholders and the agent. Even if there had there been an agreement to pay commission, it would have been unenforceable because it was uncertain. The agent did not know the identity of the shareholders and whether all or just some of them wished to sell. There was no agreement as to the basis upon which the price of the shares was to be established. There was not agreement as to the commission rate.

The final question left unanswered by the judge was whether the agreement to sell the shares was an exclusive listing which violated Section 46 of the Real Estate Act because it was not in writing. The wide definitions of "real estate" and "business" found in the Act, as well as the facts of this case, are a reminder of the need for an agreement in writing with the shareholders who wish to sell.2

  1. Finch v. Spring Realty Ltd. S.C.B.C. 818, Penticton Registry (Reasons for Judgment dated October 6, 1989).
  2. Richmond Realty Ltd. v. Charlton Enterprises Ltd. S.C.B.C. Vancouver Registry C885746 (Reasons for Judgment dated January 10, 1990).

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