The Ontario Court of Appeal (ONCA) in Ching v. Pier 27 Toronto Inc., 2021 ONCA 551 (CanLII), recently outlined the options an innocent party to an agreement of purchase and sale (APS) has upon the other party breaching (i.e. repudiating) the APS.
Repudiation is the refusal of one party to an APS to abide by the terms of the APS.
Repudiation by one party does not in itself result in the termination of the APS. Rather, repudiation provides the innocent party (i.e. the non-repudiating party) to the APS with the following choices:
- Accept the repudiation (i.e. disaffirm the APS); or
- Treat the APS as subsisting (i.e. affirm the APS).
The innocent party generally has a reasonable period of time to choose whether to disaffirm or affirm the APS. However, waiting too long may result in a court determining that the APS has been affirmed.
During this reasonable waiting period, the innocent party runs the risk that another event can prejudice the innocent party’s rights under the APS. The innocent party also runs the risk that the repudiating party will resume performance under the APS, and thus potentially result in the innocent party losing the right to accept the repudiation.
Disaffirmation (Acceptance of the Repudiation)
Acceptance of the repudiation results in the termination of the APS.
Such acceptance must be clearly and unequivocally communicated to the repudiating party by the innocent party within a reasonable time. Acceptance of the repudiation may be communicated expressly (i.e. orally or in writing) or may be inferred from the conduct of the innocent party.
Affirmation (Treating the APS as Subsisting)
The ONCA advises that if the innocent party does not accept the repudiation, there is no legal effect, and so the APS remains in force.
As with disaffirmation, the affirmation must be clear and unequivocal, and may be expressly communicated or may be inferred from the conduct of the innocent party.
Where the innocent party treats the APS as still being in force and effect, this may amount to affirmation.
At Gilbertson Davis LLP, our lawyers can assist you in your real estate dispute, whether you are a buyer or seller, and whether you require assistance commencing a lawsuit or defending against one. Gilbertson Davis LLP lawyers have experience in proceedings involving Real Estate Litigation, Contract Litigation, Commercial Litigation, and Civil Litigation matters and can assist you in resolving your legal issues in a timely and cost-effective manner. Our mission is to provide creative, sensible, cost-effective, long-term resolutions to clients. Please contact Gilbertson Davis LLP to schedule a consultation.
Comments & Opinions by Gilbertson Davis LLP lawyers and staff on its Blog, or in media interviews, appearances or publications, or in professional publications, are personal to them, and do not necessarily represent the opinions of the Firm or anyone at the Firm other than the individual expressing those comments or opinions.