Monday, December 3, 2012

When is an agreement to be void for uncertainty?

Hanif v. TJM Management Consultants Ltd.,  2012 BCCA 485 deals with uncertainty in contract and specifically holds a purchase and sale agreement is not void merely because it does not set out the date for transfer of title:


[36]         Although there is no completion date under an agreement for sale, the question remains as to the timing of the transfer of title from the vendor to the purchaser.  From the above description and definition of an agreement for sale, it is apparent that title is to be transferred when the purchase price is fully paid. In my opinion, there need not be a specific date on which the transfer is to take place and there does not need to be any further description of the “triggering events” leading to the transfer of title.


[37]         This point has previously been addressed by this Court.  In Nicholson v. O’Shea, 2005 BCCA 243, 46 B.C.L.R. (4th) 111, the owner of a house invited a friend to live in it, and they agreed that the friend would pay the mortgage payments, taxes and utilities.  They subsequently agreed that the friend would buy the house by assuming the mortgage and paying the additional sum of $30,000, with $9,800 paid as a lump sum and the balance payable by monthly installments of $500, commencing a year later, as the purchaser could afford them.


[38]         A dispute arose between the parties when the owner felt it was taking too long for the purchaser to make the periodic payments.  Legal proceedings were commenced, and the owner took the position that the agreement was void for uncertainty.  In upholding the trial judge’s ruling that the agreement was sufficiently certain, Mr. Justice Lowry made the following comments which are apposite to the present case:


[21]      ... even where the terms of an agreement are imprecise, a court will strive to uphold an agreement where the intentions of the parties can be ascertained.  This is particularly true where, as in this case, there has been partial performance of the agreement.


[22]      This was the kind of agreement one would expect might be made by two friends in the absence of the formalities that come with lawyers intervening.  The fact that payment was to be made within a reasonable time demonstrates, as the judge found, the real intentions of the parties.  No greater certainty to be derived from an agreed schedule of payments was required.  There was no term providing for the payment of interest because it was not agreed that Mr. O’Shea would pay interest.  It was, as the judge said, to be reasonably inferred that the completion date would be the date upon which the purchase price was fully paid....


Although I do not concur with the use of the term “completion date” in the last sentence, the important point is that a date for the transfer of title did not need to be specified in order to create sufficient certainty.  It was inferred that the owner was obliged to transfer title when all of the payments were made; it was reasonable to infer this, in my view, because it is a usual aspect of an agreement for sale.



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