Notice to Agent Binding Upon Seller and Buyer #222

Aug 01, 1994

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By Gerry Neely
B.A., LL.B.

A licensee, whose name I've misplaced, asked for a reference for a B.C. case in which a licensee was held to be an agent for the purpose of receiving a notice on behalf of a seller or buyer. In one case, an offer prepared on behalf of a buyer by a licensee, who had a listing from the seller, was made conditional upon satisfactory financing being obtained. The buyer delivered the waiver to the licensee on the last day of the waiver period.

The licensee tried unsuccessfully that day to reach the seller and when the notice was delivered the next day, the seller said it was too late. Neither party had met the other, the agent having acted as an intermediary between them, preparing the offer to purchase and various counter offers. The judge held that the licensee was more than a mere messenger and that he was the agent for both parties with authority to accept the waiver on behalf of the seller.1

***

Another case of offers and counter offers by competing buyers. On January 31st, 1994, an offer was made by "A" which was open until 6:00 p.m., February 4th. This was rejected by a counter offer for a higher price which was open for acceptance until 12 noon, February 7th, 1994.

"A" accepted the counter offer although the Reasons for Judgement do not say when the acceptance occurred. On February 6th, "B" offered to purchase the property by an offer open for acceptance until 3:00 p.m., February 7th, 1994. The sellers accepted the offer on the same day and rescinded their counter offer to "A". Both documents were faxed to their agent on February 6th.

Both buyers claimed to have valid contracts. Paragraph ten of the Contract of Purchase and Sale provides that the contract becomes binding, when either the offer or counter offer is accepted in writing, and the other party is notified of such acceptance.

The sellers evidence was that they had not received notice of the acceptance of their counter offer. That evidence was sufficient to defeat "A's" claim to have a valid contract.2

***

Removing a condition, according to a Manitoba judge, is a key part of a deal, and if it is the licensee who prepares the waiver and arranges for the parties to sign it, then the licensee must exercise due care or risk being sued for negligence.

Conduct is said to be negligent if it creates an unreasonable risk of harm. In determining whether an unreasonable risk of harm occurred a court will assess how easy or difficult it would have been for the licensee to take the steps that would have removed the risk.

A Manitoba licensee prepared an offer to purchase a rooming house and added a condition that completion was subject to confirmation that the zoning permitted this use. Apparently the practise in Winnipeg is that the buyer and her lawyer verify this information, rather than the licensee, who gave a copy of the offer to the buyer and told her to take it to her lawyer. The buyer was noncommittal and evasive when the licensee asked the buyer if she had obtained this confirmation, but she finally said that she was satisfied and the condition was removed.

One would have thought that the licensee had done everything required of him, but that was not to be. The licensee did not specifically ask the buyer if she had verified the zoning. Neither had he been in touch with her lawyer to ask whether he was satisfied with the zoning. Had he made that call the licensee would have been aware that the buyer had not yet consulted her lawyer.

The risk in this case was that the zoning didn't permit a rooming house use. The measure necessary to eliminate that risk was to insist upon getting an answer to the question, "have you verified the zoning", or to call the buyer's lawyer. The judge considered this to be such a simple precaution to take that the licensee's failure to call the lawyer was negligence on his part. Because of the buyer's inaction and evasiveness, she was held to be equally liable with the licensee, reducing her damages by 50%.3

  1. B. Zar Enterprises Corporation v. Hitchen, 34 B.C.L.R., p. 87; (referred to in First City Trust Co. - 65 Alta. L.R., (2) 193).
  2. Hahn v. Hanson, S.C.B.C., Victoria Registry 94/0710, Reasons for Judgement dated June 1st, 1994.
  3. Kotowich v. Petursson, (Man.), 1994, (3 W.W.R. 669).

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