April 28, 2026
We have written before in different contexts about the importance of reading the fine print in agreements. Not surprisingly, this is true of real estate agreements of purchase and sale.
THE ISSUES
If the seller prepares the agreement, are they required to bring to the buyer’s attention an unusual and restrictive clause limiting damages if the deal does not close?
Is not reading that clause a reason why a court will not enforce it?
THE CASE
In Shiralian v. Wyldewood Creek Inc. the buyers entered into a contract at the pre-construction stage to purchase a residential condominium unit to be built. The condominium was not built, The builder/seller was found to have breached the deadline for notice of termination.
The issue was how much compensation the buyers would receive for this breach.
An appendix to the agreement contained a provision limiting the rights and remedies on default to a return of the deposit. The buyers felt that they had suffered greater losses.
The application judge at the Superior Court reviewed the rules surrounding the enforcement of limitation of liability clauses generally and found that the clause fit the criteria.
The Court of Appeal agreed with the Superior Court decision.
On appeal, they also considered the argument that the buyers were unaware of this onerous clause, and that the sellers had an obligation to bring it to their attention prior to the agreement being signed. Failure to do so , they argued, helped make the restriction unconscionable, thus unenforceable. But courts seldom find unconscionability, applying a strict three step test:
- Does the clause on its face apply to the dispute?
- Was it unconscionable at the time of signing?
- Whether the court should refuse to enforce the clause for public policy reasons.
The most common “public policy reason” by far is an inequality of bargaining power.
The court said:
The parties’ agreement of purchase and sale was not a standard form contract: through their lawyers, the appellants, who were sophisticated and experienced in real estate transactions, negotiated significant changes to the agreement of purchase and sale. Consequently, the appellants should have been well aware of the limitation of liability clause. In these circumstances, the respondent had no obligation to expressly bring it to their attention.
Although this does not extend the decision to every contract, the general rule in law remains that when you sign a contract, you are assumed to have read and understood it. In most cases, the time to complain about the terms is before you sign it.
There are exceptions for some printed forms, such as tickets. Other cases where exceptions have been applied include car rental forms and releases signed by participants in sporting events. The application of each exception however turns on the facts surrounding the use of the form. So, relying on the exception, rather than reading the form, is still risky.
TAKEAWAYS
- Read the entire agreement before you sign.
- Make sure you understand what you have read.
- If you do not understand, ask questions.
- If you still do not understand, consider legal advice. Though as this case demonstrates, the lawyer may not save you from a bad agreement, they can help you understand it.
- Before you sign is the time to object to any terms you do not agree with.
- For ongoing or high value agreements, having a lawyer look it over before you sign is always a good thing.
WHAT WEILERS LLP CAN DO TO HELP YOU
The real estate and commercial transactions lawyers at Weilers LLP carry on our proud tradition of advising clients about the risks and obligations that they are undertaking before they sign a contract.
If difficulties arise, we work with our clients and their other advisors to attempt to resolve the problems.
If the problems cannot be resolved on a friendly basis, then our litigation lawyers may be able to assist with damage control. They understand the importance of facts, the law of evidence, and how to prove fraud.
Give Weilers LLP a call and see if we are the right lawyers for you.