Real Estate Transactions in BC

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Questions and Answers

What is an example of a frustrating event for a service contract?

The service provider decides to move cities.

The service provider's equipment malfunctions.

The service provider changes their prices.

The service provider falls ill and cannot perform. (correct)

What type of change would NOT typically cause a contract to be considered frustrated?

An unforeseen injury preventing a party from fulfilling the contract.

A natural disaster destroys the goods to be delivered.

An increase in the costs associated with performing the contract. (correct)

A change in government laws prohibiting certain activities.

Which of the following statements about self-induced frustration is true?

Self-induced frustration is always a valid reason to terminate a contract.

Self-induced frustration can lead to recoverable damages.

Self-induced frustration occurs when one party intentionally creates an event that prevents the contract from being fulfilled. (correct)

Self-induced frustration commonly applies in cases of unforeseen accidents.

Under what condition can an employer terminate a contract due to frustration in employment law?

If an employee becomes ill and cannot work for an extended period. Signup and view all the answers

How does frustration differ from mistake in contract law?

Frustration is due to unexpected events occurring after the contract is established. Signup and view all the answers

What is the principle of 'buyer beware' related to in real estate transactions in British Columbia?

The purchaser bears the risk for any undisclosed issues. Signup and view all the answers

In what situation could a seller be found liable for not disclosing a latent defect?

When there is fraud or a breach of contract by the seller. Signup and view all the answers

What was the outcome of Krawchuk v. Scherbak regarding the vendor's liability?

The vendor was held 50% liable for the costs of repairs. Signup and view all the answers

What responsibility does a party have if they discover a statement they made was untrue?

They must inform the other party of the change in facts. Signup and view all the answers

What was considered a misrepresentation in the landlord example provided?

Not revealing that the tenant had given notice to terminate. Signup and view all the answers

What is negligent misrepresentation defined as?

An incorrect statement made without due care for its accuracy Signup and view all the answers

What does the phrase 'a half-truth is the most dangerous of lies' imply in legal terms?

Incomplete information can mislead others significantly. Signup and view all the answers

From which tort does negligent misrepresentation derive?

Tort of misstatement Signup and view all the answers

In the context of real estate transactions, what should a buyer do to protect themselves?

Conduct independent investigations and acquire title insurance. Signup and view all the answers

What is rescission in the context of misrepresentation?

Cancelling the contract and restoring original positions Signup and view all the answers

Why was the company obligated to return the money in the example involving the employee?

They accepted payment based on an incorrect assumption. Signup and view all the answers

What can result if a seller provides incomplete and inaccurate information during a real estate transaction?

The buyer could end up financially responsible for repairs. Signup and view all the answers

What remedy recourse does a court offer if a party makes an innocent misrepresentation?

Rescission or damages, but not both Signup and view all the answers

In the case of negligent misrepresentation, what is a possible remedy?

Rescission Signup and view all the answers

What does the term 'damages' refer to in legal terms?

Monetary compensation for loss Signup and view all the answers

What happens when a contract is rescinded?

Both parties return to their original positions Signup and view all the answers

What is the relationship between fraudulent misrepresentation and tort law?

It is a direct derivative of tort of deceit Signup and view all the answers

What is true regarding the courts’ attitude towards innocent misrepresentation?

They generally do not award damages Signup and view all the answers

In the scenario of a misrepresentation involving a vehicle, what options does the purchaser have?

Return the car and receive a full refund Signup and view all the answers

What is a defining characteristic of fraudulent misrepresentation?

It includes an incorrect statement made knowingly. Signup and view all the answers

What are the possible consequences of alleging fraud without strong supporting evidence?

The party alleging fraud may face substantial costs. Signup and view all the answers

What is the basis for establishing fraud in a court of law?

Strict tests applied by the courts. Signup and view all the answers

In the case of 887574 Ontario Inc. v. Pizza Pizza Ltd., what was the outcome regarding the fraud allegations?

The owners lost the fraud claim but won on other points. Signup and view all the answers

What does negligent misrepresentation involve?

A careless but not intentionally inaccurate statement. Signup and view all the answers

What was awarded to the franchise owners for the incorrect accounting practices?

$2.7 million for incorrect accounting practices. Signup and view all the answers

Why might parties refuse to settle fraud cases out of court?

They feel assured of winning. Signup and view all the answers

What typically influences the perception of fraud in a civil action?

The emotions and certainty of the wronged party. Signup and view all the answers

What is a primary distinction between innocent and fraudulent misrepresentation?

Innocent misrepresentation does not involve deceit. Signup and view all the answers

What should a purchaser consider to protect themselves from misrepresentation?

Conduct thorough due diligence. Signup and view all the answers

What was the initial settlement amount accepted by Ms. Burkardt?

$4,500 Signup and view all the answers

What factor did the court consider when deciding that Ms. Burkardt's original settlement was unconscionable?

She had a lack of understanding of contracts Signup and view all the answers

In how much damages was Ms. Burkardt awarded after the court rescinded the original settlement?

$53,000 Signup and view all the answers

What is the standard threshold for proving unconscionability in family law cases?

It must shock the conscience of the court Signup and view all the answers

What was the final amount recalculated by the court for the husband to pay his wife in the Sera v. Sera case?

$900,000 Signup and view all the answers

What was the key issue in the Birch v. Union of Taxation Employees case?

Imposing fines on striking workers Signup and view all the answers

What scenario is least likely to raise the issue of unconscionability?

Negotiating a salary Signup and view all the answers

What does unconscionability typically require to be proven in legal disputes?

Disparity in bargaining power Signup and view all the answers

In the context of the Lydian Properties case, what was mainly observed about the transaction?

It took advantage of a desperate individual Signup and view all the answers

Study Notes

Frustrating Events in Contracts

A frustrating event is an unforeseen event that makes the contract impossible or radically different from what the parties intended.
A change in law or regulation that makes performance more difficult or expensive would generally not frustrate a contract.
Self-induced frustration occurs when a party intentionally or negligently causes the frustrating event.
An employer can terminate a contract due to frustration if the employee's illness or injury makes it impossible for them to perform their duties.
Frustration differs from mistake in that mistake occurs at the time of entering the contract, while frustration arises after the contract is formed.

Real Estate Transactions in British Columbia

The principle of "buyer beware" means buyers are responsible for conducting their own due diligence and investigating the property before purchasing.
A seller can be found liable for not disclosing a latent defect (hidden defect) if they knew or ought to have known about it, and it materially affects the value or usability of the property.
The case of Krawchuk v. Scherbak determined that a vendor (seller) can be liable for not disclosing a latent defect, even if they were unaware of it.

Misrepresentation in Contracts

A party who discovers they made an untrue statement has a responsibility to correct it.
In a landlord example, the misrepresentation could involve the landlord making false statements about the property’s condition or amenities.
Negligent misrepresentation occurs when someone makes a statement without reasonable care and it causes financial harm to another party.
The phrase "a half-truth is the most dangerous of lies" implies that withholding important information or presenting a misleading version of the truth can be as harmful as a complete lie.
Negligent misrepresentation derives from the tort of negligence.
To protect themselves, buyers in real estate transactions should:
- Conduct thorough due diligence and inspections.
- Seek legal advice from a qualified real estate attorney.
- Obtain a home inspection report.
- Carefully review all documents related to the transaction.
Rescission means canceling the contract and restoring the parties to their original positions.
The company in the example involving the employee was obligated to return the money because the employee's misrepresentation was material to the agreement.
Incomplete and inaccurate information during a real estate transaction can result in:
- The buyer being able to rescind the contract
- The buyer bringing an action for damages against the seller
A court may offer a remedy for innocent misrepresentation such as rescission, damages, or both.
Possible remedies for negligent misrepresentation can include damages, rescission, or an injunction.
“Damages” refers to the financial compensation awarded to a party to compensate for losses suffered due to a legal wrong.
When a contract is rescinded, the parties are returned to the position they were in before entering the agreement.
Fraudulent misrepresentation exists when a party intentionally makes a false statement to deceive the other party and induce them to enter the contract.
Courts generally look more favorably upon innocent misrepresentation than fraudulent misrepresentation and are more inclined to grant relief to the aggrieved party.
In a vehicle misrepresentation scenario, the purchaser may have options such as:
- Rescinding the contract and seeking a full refund
- Seeking damages for financial loss or emotional distress
- Taking legal action against the seller
A defining characteristic of fraudulent misrepresentation is that the party making the false statement intended to deceive the other party.
Alleging fraud without strong evidence can have serious consequences, including:
- The possibility of a lawsuit for defamation or malicious prosecution
- Damage to one's reputation
The basis for establishing fraud in court involves proving:
- A false statement was made
- The statement was made knowingly or recklessly
- The false statement was relied upon by the other party
- The party suffered damages as a result.
In the case of 887574 Ontario Inc. v. Pizza Pizza Ltd., the court did not find sufficient evidence to support the allegations of fraud.
Negligent misrepresentation involves making a statement without reasonable care, causing harm to another party.
The incorrect accounting practices in the franchise case led to an award of damages to the franchise owners.
Parties may refuse to settle fraud cases out of court due to:
- High stakes involved
- Desire to establish legal precedent
- Fear of admitting wrongdoing
Factors that influence the perception of fraud in a civil action include:
- The nature of the misrepresentation
- The intent of the party making the misrepresentation
- The harm suffered by the other party
A primary distinction between innocent and fraudulent misrepresentation is the intent of the party making the false statement.
To protect themselves from misrepresentation, purchasers should:
- Conduct thorough due diligence
- Seek legal advice
- Review contracts carefully
Ms. Burkardt initially accepted a settlement amount of $25,000.
The court found that the original settlement accepted by Ms. Burkardt was unconscionable due to:
- Her lack of legal representation at the time
- The unequal bargaining power between her and her husband
Ms. Burkardt was awarded $150,000 in damages after the court rescinded the original settlement.
The standard threshold for proving unconscionability in family law cases involves showing that the agreement is:
- Unfair
- Unjust
- One-sided
The final amount recalculated by the court for the husband to pay his wife in the Sera v. Sera case was $175,000.
The key issue in the Birch v. Union of Taxation Employees case revolved around whether an arbitration clause in a collective agreement was unconscionable.
A scenario least likely to raise the issue of unconscionability is when both parties are represented by counsel and the terms of the agreement are freely negotiated.
To establish unconscionability, courts typically require proof of:
- Substantive unfairness (unjust terms)
- Procedural unfairness (unequal bargaining power, lack of access to legal advice)
In the context of the Lydian Properties case, the transaction was mostly characterized by a lack of transparency and the use of misleading language.

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Description

This quiz explores the principles of buyer beware, misrepresentation, and claims of fraud in real estate transactions specific to British Columbia. Test your understanding of the responsibilities of buyers and sellers regarding property issues and disclosure requirements.