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ARTICLE · 25 JANUARY 2016

Ghost Offers In Real Estate Transactions

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Both Section 21 of the Business Corporations Act (Ontario) and Section 14 of the Business Corporations Act (Canada) recognize the notion of a pre-incorporation contract.

CanadaReal Estate and Construction
Simon Crawford
Simon Crawford
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"If a man signs a contract for and on behalf 'of his horses', he is personally liable."

– Lord Denning

Too Clever by Half

Not so long ago I received a draft agreement of purchase and sale from a practitioner in which he named his purchaser client as "John Doe, in trust, and without personal liability, for a corporation to be formed".

The draft agreement was prepared in furtherance of an earlier letter of intent that specified that the definitive purchase agreement would not be assignable by the purchaser.

And as I read the draft agreement, trying to reconcile these two concepts, it occurred to me that purchaser's counsel had been too clever by half, for inasmuch as he had tried to skirt the restriction on assignment clause, his proposed language may have inadvertently made the contract not a contract.

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