Although I have written many summaries of cases dealing with judgments against defaulting Purchasers in a declining real estate market, this case included an interesting argument involving “Contracts of Adhesion.” Contracts of Adhesion are generally those that involve a “take it or leave it” approach to negotiations: something like an insurance policy, where one party has no ability to change or modify the contract.
The significance of designating a contract as a contract of adhesion is that the contract will be interpreted strictly against the dominant party.
In this instance, the defendant purchaser argued that the agreement of purchase and sale was a contract of adhesion because the builder seller was very aggressive with its sales approach: offering all prospective purchasers the same deal, on a first come first served basis, offering no customization to their sales contract material. The defaulting purchaser urged the court to read the sales contract very narrowly which if successful would have perhaps significantly limited their damage exposure.
The court didn’t make a determination on whether the sales contract was a contract of adhesion, but rather simply said that even if they construed the contract strictly against the seller, the court couldn’t come to the interpretation that the defaulting purchaser was requesting.
In the end, this is yet another example of the pitfalls of not closing during a declining real estate market: here the defaulting purchaser had judgment entered against them in the sum of just under $332,000.00, plus costs still to be determined.
Rosehaven Homes et al. v. Aluko et al., 2022 ONSC 1227
https://www.canlii.org/en/on/onsc/doc/2022/2022onsc1227/2022onsc1227.html