OREA Contract Law for Real Estate 3

Question 1

In Ontario real estate, what is 'misrepresentation' and what are its consequences?

Accepted Answer

A false statement of fact that induces a party to enter the contract, which may render the contract voidable and give rise to damages

Answer

Misrepresentation occurs when a false statement of material fact is made that induces the other party to enter the contract. It can be innocent, negligent, or fraudulent. The affected party may seek rescission of the contract and/or damages depending on the type.

Question 2

What is the difference between 'fraudulent misrepresentation' and 'negligent misrepresentation' in Ontario real estate?

Accepted Answer

Fraudulent misrepresentation involves intentional deception; negligent misrepresentation involves a failure to exercise reasonable care in making a statement

Answer

Fraudulent misrepresentation requires proof that the statement was made knowingly, without belief in its truth, or recklessly. Negligent misrepresentation occurs when a person with a duty of care makes a statement without exercising reasonable care to verify its accuracy.

Question 3

In Ontario, what is 'undue influence' in the context of a real estate contract?

Accepted Answer

When one party uses their position of power or trust to unfairly pressure another party into entering a contract

Answer

Undue influence occurs when one party exploits a position of power, trust, or dominance over another to pressure them into a contract they would not have entered freely. Contracts entered under undue influence are voidable.

Question 4

What is 'duress' in Ontario real estate contract law?

Accepted Answer

The use of threats, force, or coercion to compel a party to enter into a contract against their will

Answer

Duress involves the use of threats (physical, economic, or otherwise), force, or coercion to compel someone to enter a contract. A contract entered under duress is voidable because the party's consent was not freely given.

Question 5

In Ontario, what is the 'parol evidence rule' in real estate contracts?

Accepted Answer

A rule that generally prevents parties from introducing prior or contemporaneous oral evidence to contradict, vary, or add to the terms of a written contract

Answer

The parol evidence rule provides that when parties have put their agreement in writing, they cannot introduce prior or contemporaneous oral statements to contradict, vary, or add to the written terms. Exceptions include fraud, mistake, or ambiguity.

Ontario Real Estate Practice Test

Ontario Real Estate Practice Test

OREA Contract Law for Real Estate 3