July 22, 2024 | Michael Leger and Danny McMullen
To be tendered describes a state of preparation. When closing the sale of a property, the closing date is a term of the agreement, which like any other, can be breached. To make a claim for the breach of the closing date, the claiming party must demonstrate that they would have closed if not for the breach. Tendering is an exercise whereby parties to a closing deal submit all their closing documents and execute all their other responsibilities to demonstrate that they were ready willing and able to close.
Why Must We Tender?
To find a party liable for breach, that party must be the only one in breach. A contract’s stipulated closing date can only be enforced by a party prepared to execute upon that closing date.[1] The law draws a line between a party that could have closed, with one that effectively had. The court supports the contractual rights of those parties who are innocent under the contract, not those who would have obeyed the contract hypothetically. Therefore, the innocent party must tender their closing responsibilities to lay claim to the other party’s breach.
To illustrate this point, imagine you have committed to the sale of your property; if later, the purchaser wants to back out and refuses to pay, then they would be in breach come closing. However, the court will not be sure of who is responsible for the breach legally unless the vendor’s hands are clean of wrongdoing under the contract. The court cannot find the purchaser is to blame if neither party properly closed.
Tendering in Ontario
“Perfect tender” represents a very high standard of tendering, where the tendering party makes no mistakes at all. Once expected in Ontario, the jurisdiction has since lowered its standards. In cases where one party is explicitly unwilling to close, the court will exercise more leniency when evaluating the other party’s tendering. Regardless of Ontario’s flexibility, perfect tender is the safest course of action for a tendering party.[2]
Some Rules of Tendering
The law on tendering is made up of both universal rules and rules that vary depending on the contract’s provisions. For example, courts have addressed that an undertaking to execute a mortgage discharge is insufficient to substitute the execution of said discharge.[3] It is important that your council is mindful of the difference between an executed task and an undertaking to execute. Other requirements depend more heavily upon the character of the sale agreement. For example, whether land must be vacated at closing varies heavily and greatly impacts the responsibilities of a vendor. Understanding how to tender a deal properly will always depend upon the requirements of the contract of sale. Some purchase and sale agreements may even address what is required to tender manually.
Here at Northview Law, our team of lawyers are here to help you through the tending process, and make sure your sale and purchase transactions close smoothly.
[1] Zender v Ball, 1974 5 O.R. (2d) 747 at para 21, (ONHCJ) | [Zender].
[2] Sidney Troister, The Reality of Tendering: How Important is Tendering on Closing in the Decisions You Render?, 2018 24th East Region Solicitors Conference 22A, 2018 CanLIIDocs 10894, <https://canlii.ca/t/sqz1>, retrieved on 2024-06-17 at 1.
[3] Sidney Troister, The Reality of Tendering: How Important is Tendering on Closing in the Decisions You Render?, 2018 24th East Region Solicitors Conference 22A, 2018 CanLIIDocs 10894, <https://canlii.ca/t/sqz1>, retrieved on 2024-06-17 at 4.
For more information we recommend reviewing: “Sidney Troister, The Reality of Tendering: How Important is Tendering on Closing in the Decisions You Render?” as an overview of issues in tendering and the responsibilities of both parties.
