Contract Law for Real Estate Flashcards

In Ontario, what is the principle of 'privity of contract' in real estate?

Answer: The principle that only parties to a contract can enforce its terms or be bound by its obligations

Privity of contract means that only the parties who are signatories to a contract can enforce its terms or be held liable under it. Third parties generally cannot sue on the contract or be sued under it, though exceptions exist (e.g., covenants running with the land).

What is 'mutual mistake' in Ontario real estate contract law?

Answer: When both parties share a fundamental misunderstanding about a material fact in the contract, which may render the contract void or voidable

Mutual mistake occurs when both parties are mistaken about the same fundamental fact (such as the identity of the property or its essential characteristics). If the mistake is about something fundamental, the contract may be void; if about a less essential matter, it may be voidable.

In Ontario, what is a 'condition subsequent' in a real estate contract?

Answer: A condition that, if it occurs after the contract is formed, terminates the contract or an obligation under it

A condition subsequent is an event that, if it occurs after the contract has become binding, terminates a party's obligations. Unlike a condition precedent (which must be met before the contract is binding), a condition subsequent dissolves an already-binding contract.

What is the role of a 'lawyer's undertaking' in an Ontario real estate closing?

Answer: A personal promise by a lawyer to perform a specific act, breach of which can result in professional discipline

A lawyer's undertaking is a solemn professional promise to perform a specific act (such as registering a discharge of mortgage after closing). It is personally binding on the lawyer, and failure to fulfill an undertaking can result in professional discipline by the Law Society.

In Ontario, what is 'substantial performance' in real estate contract law?

Answer: When a party has performed the essential terms of the contract with only minor deviations, entitling them to enforce the contract with an adjustment for the deficiency

Substantial performance occurs when a party has completed the essential elements of the contract but with minor, non-material deviations. The substantially performing party can enforce the contract but the other party may claim damages for the deficiency.

What is 'anticipatory breach' in Ontario real estate contract law?

Answer: When one party indicates, before the performance date, that they will not fulfill their contractual obligations, giving the other party the right to treat the contract as breached

Anticipatory breach (also called anticipatory repudiation) occurs when one party clearly indicates before the due date that they will not perform their obligations. The non-breaching party can treat the contract as breached immediately and pursue remedies without waiting for the performance date.