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ARTICLE · 16 SEPTEMBER 2009

A Broker’s Word Is Its Bond: Verbal Contract Held Binding In UBS v. Sands

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What you think is a casual discussion about a potential transaction may very well be a binding verbal contract.

CanadaLitigation, Mediation & Arbitration
Brett Harrison
Brett Harrison
Jeffrey Levine
Jeffrey Levine
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What you think is a casual discussion about a potential transaction may very well be a binding verbal contract. It took two trials and two trips to the Ontario Court of Appeal, but in UBS v. Sands,1 Sands Brothers Canada, Ltd. ("Sands") found that out the hard way. Sands tried to back out of a sale to UBS Securities Canada Inc., ("UBS") of 100,000 shares Sands held in Bourse de Montreal Inc. ("Bourse"). Bourse was a privately held company that operated the Montreal Stock Exchange.

In November of 2006, a UBS representative discussed the purchase of the Bourse shares with Sands' president. Sands said that it was interested in the transaction, but wanted the sale to close in 2007 for tax reasons. UBS agreed to a January 3, 2007 closing date and Sands told UBS to "draw up the papers".

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