Binding Negotiations Collateral Agreement (the Elements)

Binding Negotiations Collateral Agreement (the Elements)

Ontario Real Estate Source

By Brian Madigan LL.B.

You have made a decision to utilize the OREA e-mail clause (or your own modified clause). The OREA clause is as follows:

E-Mail Authorization CLAUSE

The new clause, seen below, can be inserted into Schedule A of the APS.

"In addition to any other provisions for delivery of documents and notices set out in this Agreement of Purchase and Sale or any Schedule thereto, this offer, any counter-offer, notice of acceptance thereof or any notice to be given or received pursuant to this Agreement or any Schedule hereto shall be deemed given and received when transmitted electronically to the email address provided below, in which case, the signature(s) of the party (parties) shall be deemed to be original.

Email Address…………………………………for delivery of documents to Seller.

Email Address…………………………………for delivery of documents to Buyer.

Caution: Care must be taken to ensure that the email has been sent to the correct email address. If the delivery of a document must be made within a definite time period, registrants should verify that the document has in fact been received and verify the status of a transaction and related documentation based on the required time periods and other provision(s) set out in the Agreement.”

Collateral Agreement

You want to lessen the risks. After all, it is THE client who is away in Europe and wants to negotiate by e-mail. He says he does it all the time, even for deals which are a lot bigger than this one.

Well, you have to admit, he has a point here. Your issue is with RECO, OREA, CREA and the Statute of Frauds and the Electronic Commerce Act.

Your client wants to run the risk. So, is there something that could be signed that would lessen your responsibility and place the liability clearly upon the shoulders of the contracting parties? Maybe!

Let’s have a look at some of the provisions that you might want to include in such an agreement:

Recitals to the Agreement

This is the group of “whereas” clauses where you want to tell the story and set up the proposed agreement.

You will want to include references to both the Acts, that is, the Statute of Frauds and the Electronic Commerce Act.

You should say that RECO has published a Bulletin expressing extreme caution, but suggesting legal advice, which naturally opens the door.

Note that there is a new clause provided to the industry by OREA.

Indicate that the parties to the agreement wish to use the new system.

The Parties

You will want to have this document include the seller, the buyer and their respective agents.

The Agreement

In addition to the usual clauses dealing with consideration, jurisdiction and the creation of a binding agreement, you should have the following matters addressed:

·        Agreement to use the new system

·        Acknowledgement of the legislation

·        Acceptance of the risks

·        Agreement to Proceed with transaction once negotiated

·        Agreement to indemnify the agents

·        Agreement to waive defence in litigation

·        Transfer for nominal consideration of entitlement to use legal defence

·        Agreement upon Authentication as alternative to witnessed documents

·        Assignment of rights in both Contract and Tort

·        Limitation on Damages for breach of Agreement

The above matters should be addressed in an appropriate limiting agreement. Should it be signed by the respective clients, then the agents involved in the transaction can probably safely use the e-mail negotiating system that everyone really wants.

Brian Madigan LL.B., Broker is an author and commentator on real estate matters, if you are interested in residential or commercial properties in Mississauga, Toronto or the GTA, you may contact him through Royal LePage Innovators Realty, Brokerage 905-796-8888
www.OntarioRealEstateSource.com