Confirmation of Acceptance is Troublesome
The current version of the standard form Agreement of Purchase and Sale by the Ontario Real Estate Association (OREA) includes a “Confirmation of Acceptance.
This statement appears below the signature lines for the parties, and this is what is says:
Confirmation of Acceptance: Notwithstanding anything contained herein to the contrary, I confirm this Agreement with all changes both typed and written was finally accepted by all parties at _____am/pm this _____ day of _____20xx.
(Signature of Seller or Buyer)
If you look back to the previous version of the OREA standard form Agreement of Purchase and Sale, you will find a Confirmation of Execution. It followed the signature line for the parties and looked like this:
Confirmation of Execution: Notwithstanding anything contained herein to the contrary, I confirm this Agreement with all changes both typed and written was finally executed by all parties at _____am/pm this _____ day of _____20xx.
(Signature of Seller or Buyer)
Did you notice the difference?
The word “execution” was deleted and replaced by the word “acceptance”.
However, you can’t simply change a word and replace it with another without changing the meaning.
Execution just means “sign”. So, it was both fair and reasonable to have the last party (the ultimate offeree), being either the buyer or the seller sign this document.
Acceptance has a different meaning! And, clearly this was not well understood when the change was made.
The issue of “acceptance” came before the Supreme Court of Canada in Schiller v. Fisher (1981), where the Court confirmed the long standing principle at common law:
“Generally, the fact of acceptance of an offer must be communicated to the offeror before acceptance is complete and a binding contract is created.”
Acceptance, if you look at the decision of the Supreme Court of Canada is a two step process:
1) assenting or agreeing to the proposal, and
2) communicating such assent.
Now, we have a contract. Silence is not golden! You cannot assent to an agreement and keep that information to yourself. If you do that, you will not have a contract.
It is step 2, namely the communication of the acceptance that creates the binding agreement between the parties.
You will now see the problem. The offeree could always say they signed the document, and that was the final signature required. That would have been a fair and reasonable statement.
But, now they are being asked to confirm acceptance. In the two step acceptance process, they can only confirm the first step, that is, the signature, the signing of the document. If that just sits on the kitchen table forever, there is no acceptance and there is no deal.
Assume the offer is open for Bob to accept until 8:00 pm. Bob must sign it and someone must communicate that fact to the other side by 8:00 pm.
Oftentimes, with late negotiations, it will be noted as accepted at 7:59 pm. That only leaves one minute to communicate that fact to the other side. So, on the face of it, the document already appears irregular, and "suspicious".
And, if Bob’s agent Bill makes a phone call, sends an email or a fax to the other side, then truly, it is only Bill who knows of that second step in the acceptance process. It is only Bill who can sign the Confirmation of Acceptance.
Naturally, in our example, if Bob personally made the phone call, sent the email or sent the fax, then Bob could sign the Confirmation of Acceptance. However, how RARE is THAT!
The Confirmation of Acceptance says that it is to be signed by the Seller or the Buyer. Bob could only do that if he was informed by Bill that the communication had already taken place.
Brian Madigan LL.B., Broker is a Manager at RE/MAX West Realty Inc., Brokerage 416-745-2300.