Join Lawrence Mak and Brian Madigan as we discuss a very important Supreme Court ruling regarding contracts and fulfillment in good faith.
The myth that failing an inspection or financing clause based on “sole and absolute discretion” is no longer the case as of the year 2000.
Lawrence Mak, Real Estate Broker | EXP Realty.
Brian Madigan (same wording as his FIRST video)
0:35 Myth? Can people get out of a contract
0:40 because of “sole and absolute discretion”?
0:50 “we have an unrelated condition but we want to get out of the contract”
1:00 It certainly used to be true before 2014
1:09 Bhasin v. Hrynew – (November 13, 2014)
1:17 We’re changing the common law
1:45 Now there is an obligation of good faith for contractual performance
1:52 Duty to act honestly
2:01 Eliminates the opportunity to just walk away
2:10 The ruling was made in 2014 but the breach was from 2000
2:32 The breach took place in June, 2000
2:35 This litigation process took 14 years!
3:01 Good faith applies to all contracts
3:32 Used to only have 2 choices with the contract
3:50 1) You can perform the contract
4:00 2) You can breach the contract (and pay damages)
4:14 The Supreme Court has taken away this second choice now
4:35 It’s expected you will conduct an honest inspection in good faith
5:09 To summarize: If you only have a financial condition in your offer
5:20 You need to make your best attempt to fulfil that condition
5:35 For instance, if you bought a home for $500,000
5:45 and your bank says you only qualify for $450,000
6:00 Propose to the seller for a vendor take-back mortgage
6:10 At 1st mortgage rates
6:25 The Supreme Court is now asking you to do this
6:55 The old method of just “breaching and paying damages” is no longer there
7:17 Lastly, this applies to contracts and NOT negotiating!
7:27 But once you have a contract, you have to fulfil in good faith
7:45 For real estate expert witness testimony, talk with Brian