A case decided in the Superior Court of Justice last year contains an important lesson to buyers and sellers: if one party to a contract changes its terms during the negotiations, even slightly, it’s not the same offer anymore. Until both parties sign the exact same version there’s no deal.
In June, 2023, Aashish and Arpita Patel made an unconditional offer to buy a home on Maitland St. in Kitchener, Ont., from Asad and Kifayyat Ali.
The offer contained a typical Schedule A. It was accepted by the sellers the next day but with a change on the first page noting that the agreement was now subject to a new schedule B, which was attached to the accepted offer. It was apparently overlooked when the offer was submitted.
Schedule B is a common attachment to most residential purchase and sale agreements. Its use became standard as a result of the COVID-19 pandemic. It typically defines what counts as a business day, where the keys would be left and similar housekeeping matters
The sellers’ agent asked the buyers’ agent to have the buyers initial the additional schedule alteration on page one and to initial schedule B itself. The email from the agent in fact did not contain a schedule B, but it was sent a few minutes later in a second email.
The purchasers did not respond to the sellers’ request to add schedule B to the agreement. They had a change of heart overnight and the next day they notified the sellers’ agent that they were not going to proceed with the transaction. As well, they did not pay the $50,000 deposit.
Faced with the buyers’ termination of the negotiations, the sellers re-listed the property and sold it for $25,000 less than the Patels were going to pay.
Litigation followed in 2024 with the sellers suing for the unpaid deposit.
The matter came before Justice Sandra Antoniani in June last year. The issue to be decided was whether there was a binding contract when the sellers accepted the offer but added a schedule B to the document, or whether the change amounted to a counteroffer which was never accepted.
The sellers insisted the house was already sold and demanded payment of the $50,000 deposit. The buyers said there was never a contract in the first place.
The judge sided with the buyers, saying there never was a meeting of the minds. She ruled that there was no binding contract, because when the sellers added Schedule B and asked for the buyers’ initials, they were making a counteroffer — not a conditional acceptance.
If the sellers had accepted the offer without adding a schedule B, it would have been a firm and binding deal. They should have accepted it as-is. But in changing the offer by adding a non-essential schedule, they lost $25,000 in resale value, together with their own legal fees and the buyers’ court costs.
The sellers’ mistake was treating Schedule B as “essential,” then failing to get the buyers’ signatures on it. As a result, the buyers were free to walk away without losing their deposit.
The lesson here is for buyers and sellers to be aware exactly when their agreements become firm and binding. Adding a “standard” schedule, even if it seems to be “just a formality,” can make or break a deal.
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Case citation: Ali et al. v. Patel et al., 2024 ONSC 3505 (CanLII), <https://canlii.ca/t/k5bbc>