Standard clauses - drawing, tips and examples
A clause must be written in such a way that people other than the parties can understand its intent.
Ideally, the clause should not be a reason for disagreement between the parties concerning the meaning to be given to it. Where this is the case, the courts are usually called upon to intervene. However, the person who interprets the clause is the judge to whom the case has been referred, i.e. a person external to the contract. That is why it may be useful to have a person external to the contract read any clause one may have written. If this person understands the intent of the clause, it is likely that a judge will understand it in the same way.
Examples of what a clause should contain
- Something to be done by a specific person
Obtaining permission from public authorities such as the Administrative Housing Tribunal (formerly called the Régie du logement); having an inspection done; obtaining a permit or a zoning change from a municipality; etc.
- A deadline for doing it
A deadline should be provided in consecutive days following acceptance of the Promise to purchase. The day marking the starting point, i.e. the date the Promise to purchase is accepted, is not counted, but that of the deadline is. The expression “business days” should never be used because it is confusing.
- A notice to be sent whether or not the undertaking is obtained
Provide for the sending of a written notice or document within the same period or within a different period, as the case may be, to indicate whether or not the conditions are met.
- A consequence: null and void
Provide for a consequence if the condition is not fulfilled or the written notice or document is not sent. For example, you may stipulate that the Promise to purchase shall become null and void if the document is not provided on time. One might also stipulate that if the buyer does not send the document by the specified deadline, he shall be deemed to have waived the condition. For example, further to an inspection, the buyer must send a written notice to the seller to the effect that he no longer wishes to buy.
Before writing a clause, it is important to read the content of the original contract or form. If the latter resolves the problem, it is not necessary to create a new clause. For example, it is not necessary to write "conditional upon a mortgage" in clause 12.1 of the Promise to purchasebecause such a condition is provided in section 6 and it is complete since it includes a mechanism to follow.
If the original form contains a clause you would like to amend, do not forget to strike out the preprinted clause and have the parties initial it (in the case of a Promise to purchaseform, the buyer and the seller should initial it), given that your specific clause amends it. Otherwise, there is a risk of dispute regarding the interpretation of the clauses, which could include contradictions.
Here is a series of standard clauses. Don’t hesitate to use them. They are also included in the OACIQ electronic forms. Attention: these standard clauses have been developed to fit the widest possible range of situations. They are accompanied by comments on how they should be used. However, it may happen that a clause is not entirely suited to a given situation. It’s up to the agency or broker who uses a clause to ensure that it reflects the will of the parties or to make the required changes and, if necessary, consult a legal expert.
