When parties enter into a contract, they generally do so in reliance on certain information. For example, if a business contracts a supplier to provide a certain number of widgets over a certain period of time, there is a representation on the part of the supplier that they have the ability to produce and distribute the widgets in accordance with the terms. If, partway through the term of the contract, the supplier became unable to keep up with demand, or if the quality of the widgets dropped dramatically, the business may have a valid claim against the supplier, who misrepresented their abilities.<\/p>\n
Misrepresentation refers to an untrue statement made by one party, which in turn induces another party to enter into a contract with them. It is important to remember that misrepresentation is not always intentional. There are three types of misrepresentation recognized by Ontario courts:<\/p>\n
The remedy for a finding of misrepresentation can vary depending on the circumstances and the type of misrepresentation. For the first two categories above, a claimant can seek damages, rescission of the contract, or both. For innocent misrepresentation, a court is more likely to award damages rather than recession.<\/p>\n
In a recent decision<\/a> before the Ontario Court of Appeal, a homebuyer had brought a claim seeking recession of an agreement of purchase and sale after discovering a significant discrepancy in the square footage of the home from what had been presented initially. The buyer was relatively young and inexperienced in real estate, and this was the first time he had purchased a property. He was looking for a specific amount of space in order to accommodate himself, along with several members of his family.<\/p>\n His real estate agent showed him a home and told the buyer it was approximately 2100 square feet in size. The real estate had relied upon information provided in a previous listing of the property as well as details provided by the homeowner, however, the agent did not conduct a property measurement exercise. The agent agreed he had been negligent in failing to do this.<\/p>\n The buyer visited the property himself twice and inspected each room. On the second visit, he was accompanied by members of his family as well. He signed an agreement of purchase and sale to purchase the house. However, his financial institution required that he have an appraisal done on the home as a condition of the approval of his mortgage. When the appraisal was completed, the size of the home was assessed at 1450 square feet. Given the significance of the difference, the buyer withdrew from the transaction and brought a claim seeking rescission of the agreement and a return of his $50,000 deposit.<\/p>\n The lower court found in favour of the homebuyer and rejected the argument that the buyer’s personal inspection of the home should have been a better determination of his expectations regarding the size of the home than the representations made. The court took the buyer’s age, inexperience with square footage and first-time homebuyer status into account in determining that it was reasonable he had relied on the representations even after seeing the home himself.<\/p>\n The defendant real estate agent appealed the decision, claiming again that once a buyer has inspected a property, the inspection should displace any representations made regarding the size of the home. The Court of Appeal dismissed the appeal, holding that this argument might apply in some cases, whereas in others, such as the case at hand, the constellation of facts would render this finding unfair. The following facts were at the core of the Court’s decision:<\/p>\n Contact\u00a0GLG LLP\u00a0<\/strong>in downtown Toronto for assistance with litigation relating to breach of contract<\/a>, real estate<\/a> or other civil disputes. The firm\u2019s real estate and litigation lawyers<\/a>\u00a0provide efficient and skilled\u00a0trial advocacy<\/a>\u00a0for a range of legal issues and will look to settle your matter quickly and efficiently. Call the firm at\u00a0416-272-7557<\/strong>\u00a0or contact them\u00a0online<\/a>\u00a0to schedule a confidential consultation.<\/p>\n","protected":false},"excerpt":{"rendered":"When parties enter into a contract, they generally do so in reliance on certain information. For example, if a business contracts a…","protected":false},"author":4,"featured_media":576,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[3,8,10],"tags":[],"yoast_head":"\nBuyer’s Inspection Did Not Override Representations of the Homeowner and the Agent<\/h2>\n
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