Assignment 8

Question 1

Question 5

Which of the following is/are FALSE regarding amendments to a contract of purchase and sale?

A. An amendment does not require consideration or a seal, so long as the original contract is properly enforceable with good
consideration and/or a seal.

B. Re-opening negotiations between the parties will not terminate the original contract if the parties agree that the original
contract of purchase and sale is binding until any amendment is finalized.

C. Where the original contract includes a time is of the essence clause, unless the amended contract contains an identical
clause, the law presumes that time will no longer remain of the essence.

D. At law, an amendment constitutes a contract to change an already existing and legally enforceable contract.

1. A and C only
2. B and D only
3. A, C, and D only
4. A only

Answer 1

Correct Answer: 1

An amendment is a contract to change a contract; it always requires either consideration or a seal in order to be enforceable.
Where an original contract stipulates time is of the essence, the law presumes that time remains of the essence unless the
circumstances would make it unjust to do so.

Reopening negotiations may be interpreted as a breach of the original contract, so it must be made clear that the original contract is still in place and enforceable.

Question 2

Question 6

Sandra Seller listed her property with Anson Agent. The property remained on the market for a year but there has not been any
interest. In an attempt to attract more interest, Sandra lowers the asking price by 10%. Anson decides to buy the property, but
uses his sister’s name as the buyer and makes an agreement with his sister that she will transfer the property to him after the
transaction is complete. He makes no disclosure of his connection with the transaction to Sandra. Which of the following
statements is TRUE?

1. Sandra can have the transaction set aside, no matter how fair it may appear to have been.
2. Because the transaction has already been completed, Sandra has no recourse.
3. Sandra can only recover 25% of the commission paid by her.
4. Because his sister is listed as the buyer, Anson has no duty of disclosure to Sandra.

Answer 2

Correct Answer: 1

Option (1) is correct because Anson has broken section 53 of the Real Estate Services Rules for Disclosure of Interest in Trade.
Where a real estate licensee is guilty of nondisclosure and they have purchased their client’s property, the seller can have the
whole transaction set aside, regardless of whether or not the transaction appears to be fair.

For this reason, Option (2) is incorrect.

Option (3) is incorrect because where a licensee is guilty of nondisclosure, they will lose the commission and/or be
liable to the principal in damages in a court action. Option (4) is incorrect because the rules relating to the Disclosure of Interest in
Trade also apply when a licensee acquires land indirectly, as is the case in this question.

Question 3

Question 7

Section 54 of the Law and Equity Act permits a party to a contract which is subject to a condition precedent to waive the condition
precedent even though its fulfilment is dependent on the action of a third party. Which of the following is NOT a requirement for
the operation of this provision?

1. The condition precedent must benefit only the party waiving its performance.
2. The waiver must be made within the period allotted for fulfilment of the condition precedent.
3. The condition may only be waived with the authorization of the third party upon whom its performance was dependent.
4. The contract must remain capable of being performed without the fulfilment of the condition precedent.

Answer 3

Correct Answer: 3

Section 54 of the Law and Equity Act allows the unilateral waiver of the benefit of a condition precedent in some circumstances.
The authorization of the third party upon whom the condition’s performance is dependent is not required. Each of the other
options is a requirement for a unilateral waiver.

Question 4

Question 10

With respect to the standard form listing agreement, which of the following statements is/are TRUE?

A. A prospective purchaser is entitled to rely upon the terms set out in a listing contract.

B. If a prospective purchaser offers exactly the price and terms set out in the listing contract, the vendor is legally obligated to
accept the purchaser’s offer.

C. If a vendor refuses to accept an offer that contains exactly the price and terms set out in the listing contract, the licensee
acting for the vendor is nevertheless likely entitled to be paid the commission as if the sale of the property had been
completed.

D. A prudent listing licensee who reviews a plan of the property available for inspection in the land title office can use the plan
as a survey of the property.

1. A, B, and D only
2. B only
3. C only
4. All of the above statements are true.

Answer 4

Correct Answer: 3

Only statement C is true: although a seller is not obliged to accept an offer that meets the terms set out in the listing (Statement
B), such satisfaction of the terms of the listing will likely trigger the payment of commission by the seller.

Statement A is false because a listing agreement is a contract between the seller and the brokerage. The purchaser is not a party to the contract and therefore cannot rely on any of the terms of the listing.

Statement D is false because a plan is not a survey and therefore cannot be relied upon as such. A prudent licensee will obtain an actual survey to ensure that the property dimensions are accurate.

Question 5

Question 11

A “Norfolk v. Aikens clause” in a contract of purchase and sale is necessary to:

1. give the conveyancers permission to use the purchaser’s money to clear title.
2. tie up the property until a condition precedent has been satisfied.
3. identify the physical characteristics and problems that the property might have.
4. ensure that the contract is enforceable.

Answer 5

Correct Answer: 1

The contract of purchase and sale usually specifies that the vendor shall transfer clear title, for the purchaser’s cash.

However, the vendor usually has granted a mortgage on the property, and will not be able to transfer clear title until the mortgage is paid out.

Similarly, the purchaser requires a mortgage to make the purchase, but a mortgage company is unwilling to advance the
funds because the purchaser does not have title to the property being used to secure the mortgage.

The deadlock is broken through the use of the addendum which permits the conveyancers to complete the transaction on the strength of undertakings.

EX. Conveyance vs. Lender

The Norfolk academy won’t take yo kids unless you pay.

Question 6

Question 13

Yana is a listing licensee who is assisting her client, Gabriel, in the sale of his property in Vancouver. Yana hosts an open house, with a number of potential buyers attending. Which of the following is TRUE with respect to Yana’s disclosure obligations to buyers at her open house?

1. Yana must provide every buyer who attends her open house with a Disclosure of Representation in Trading Services
   form.
2. Yana must provide every buyer who attends her open house with a Disclosure of Risks to Unrepresented Parties form.
3. Yana can provide trading services to both Gabriel and a buyer through a dual agency relationship, as long as both
   parties are provided with a Disclosure of Risks Associated with Dual Agency form.
4. If a potential buyer starts to get into a conversation with Yana about their personal information, needs, etc., Yana may
   have to provide that buyer with both a Disclosure of Representation in Trading Services form and a Disclosure of Risks
   to Unrepresented Parties form.

Answer 6

Correct Answer: 4

Option (4) is correct because under section 5-10 of the Real Estate Rules (the “Rules”), if a licensee is hosting an open house
and receives information from a buyer about their motivation, financial qualifications, or needs in respect of real estate, the
licensee will have to provide that buyer with a Disclosure of Representation in Trading Services form. Because Yana is acting on
behalf of her client Gabriel in this trade, if the buyer is unrepresented, she will also have to provide a Disclosure of Risks to
Unrepresented Parties form under section 5-10.1 of the Rules.

Option (1) is incorrect because section 5-10(3) provides some exceptions to the requirement to provide a Disclosure of
Representation in Trading Services form. As long as Yana does not solicit or receive information from buyers about their
motivation, financial qualifications, or needs in respect of real estate, she does not have to provide the form when only hosting an
advertised open house.

Option (2) is incorrect because the Disclosure of Risks to Unrepresented Parties form is only required where the requirement to provide a Disclosure of Representation in Trading Services form is met (i.e., the licensee is providing trading services to the unrepresented party and does not fall within the aforementioned exception) AND the licensee is also representing a client in the same trade in real estate.

Option (3) is incorrect because sections 5-16 and 5-17 of the Rules prohibits the practice of dual agency, except in a very narrow exception where the real estate is in a remote location that is under-served by licensees and it is impractical for the parties to be provided trading services by different licensees. As this property is located in Vancouver, the situation does not fall within the exception for providing dual agency.

Question 7

Question 14

Joe is Mario’s agent. Joe has acted beyond his authority in agreeing to sell Mario’s horse to Giuseppe for $1,200. The following
statements deal with the legal consequences of ratification. Which one of them is TRUE?

1. If Mario chooses not to ratify Joe’s action, he could sue Joe for breach of warranty of authority.
2. If Mario chooses not to ratify Joe’s action, Giuseppe could sue Joe for breach of warranty of authority.
3. Even if Mario ratifies Joe’s action, Giuseppe can sue Joe for breach of contract.
4. If Mario chooses not to ratify Joe’s action, Joe can sue Mario for breach of the agency contract.

Answer 7

Correct Answer: 2

The relationship between the principal and the agent is governed by the agency contract. If the agent acts beyond his authority he has breached that contract and the principal. If the principal suffers damages, he can sue the agent for breach of contract.

That could arise where the Court holds that apparent authority exists which requires the principal to honour the contract entered
into by his agent.

Where the agent enters into a contract which is beyond his authority and his principal refuses to ratify his actions, it is the third party who suffers damages (unless he can prove apparent or usual authority).

In such a case the third party can sue the agent for breach of warranty of authority because the law implies that the agent warranted he had the authority he purported to exercise

Question 8

Question 15

Good negotiators will attempt to develop creative ways to exchange resources so that both parties benefit from the agreement. Which of the following is/are FALSE regarding the facilitation of this exchanging of resources?

A. By focusing on the parties’ underlying interests, negotiators can avoid becoming entrenched in, and unwilling to move from, their positions.

B. By making multiple or successive concessions, a negotiator may be inadvertently establishing a climate whereby the opposing side is LESS likely to participate in the negotiations.

C. “Packaging” issues together is not advisable, as a negotiator is left with fewer potential combinations of solutions and is LESS likely to come to a mutually satisfactory solution.

D. By deciding on an objective standard prior to discussing potential solutions, the parties are MORE likely to come to a final agreement that both view as fair.

1. A only
2. A and B only
3. C and B only
4. C only

Answer 8

Correct Answer: 4

With the exception of C, all of the above are true based on the text. Research has shown that “packaging” solutions together leads to better solutions.

“Packaging” allows the parties to reveal less information to the other party and allows for more creative solutions to be created.

Question 9

Question 16
Which of the following statements are TRUE?

A. A title search of listed property will eliminate the need for a purchaser to obtain a survey to ascertain property lines.

B. While licensees should not rely on vendors for accurate information in all cases, it is acceptable to rely on the vendor for
information as to the amount outstanding on their mortgage.

C. If the amount of an assumable mortgage is represented in the contract of purchase and sale as being $2,000 lower than it
in fact is, the purchaser may not be required to perform their obligations under the contract.

D. Contracts of purchase and sale are not firm contracts, but rather indicate the intention of the parties to enter into a binding
contract at a later date.

1. All of the above
2. B and C only
3. None of above
4. C only

Answer 9

Correct Answer: 4

Plans from the Land Title Office will not replace a proper survey.

Licensees should never rely on the vendor for information which
may be obtained from an outside official source. Contracts of Purchase and Sale are binding contracts C there is nothing “interim”
about them.

A purchaser may be entitled not to complete a transaction where the terms of vendor financing are uncertain or
misrepresented.

Question 10

Question 17

A seller agrees to pay their agent a commission if the agent can sell the seller’s motorcycle for $10,000. Although the seller never mentioned it specifically, the agent found it necessary to allow potential buyers to test drive the motorcycle before agreeing to a sale. What type of authority does the agent have to permit this?

1. Implied authority
2. Constructive authority
3. Express authority
4. Apparent authority

Answer 10

Correct Answer: 1

Implied authority is the authority needed to do anything necessary for, and ordinarily incidental to, carrying out the express authority granted by the principal to the agent. Here, allowing a buyer to test drive the motorcycle before agreeing to purchase it is likely necessary in order to sell it.

Question 11

Question 18

Corkie is a new licensee who has just signed her first listing agreement. Anxious to refresh her memory of her duties as an agent, she tries to recall her prelicensing studies. Which one of the following is NOT one of the duties of an agent which Corkie learned of in her course?

1. The duty to make full disclosure of all material facts
2. The duty not to act for more than one principal without disclosure and consent
3. The duty to indemnify the principal
4. The duty to follow lawful instructions from the principal

Answer 11

Correct Answer: 3

The duty of indemnity (protection from loss) is one which the principal owes to the agent and not vice versa.

Question 12

Question 19

Canny Angus wanted to present an offer to purchase on Bertha’s house. However, Angus was reluctant to include a deposit with
his offer. Which of the following statements is TRUE?

1. Unless Angus includes a deposit he is not giving any consideration and a binding contract will not be formed.
2. If Angus makes the offer and gives a deposit to the brokerage, should he later withdraw his offer after acceptance, and
   after the expiry of the Home Buyer Rescission Period, then his deposit will not be returned unless Bertha agrees.
3. If Angus is worried about giving the deposit before the offer is accepted the trading services licensee can agree to hold
   the deposit cheque and not deposit it until the offer is accepted.
4. Even if Angus places the deposit with his lawyer, the Real Estate Services Act requires the lawyer to hold the deposit as
   a stakeholder.

Answer 12

Correct Answer: 2

The deposit is an indication of a purchaser’s good faith but is not necessary for the formation of a contract. It is the mutual
promises of the parties which provide the necessary consideration. The agent is not entitled to hang onto the deposit cheque
pending acceptance of the offer. The agent is obliged to deposit the cheque DIRECTLY into their trust account.

The Real Estate Act only deals with licensees’ obligations concerning deposits. Unless the lawyer acknowledged receiving the money as a
stakeholder, Angus could request the lawyer to repay the money to him at any time. Once an offer is accepted and a brokerage holds the deposit, the deposit can only be returned with the vendor’s written permission (unless the buyer rescinds the contract within the Home Buyer Rescission Period.