The Fine Print

Signing an Agreement of Sale or Offer to Purchase is a stressful time for both buyer and seller. Both parties are concerned that their interests are protected by the agreement, and also worry about what will happen should anything go wrong. Buyers and sellers can, with reasonable certainty, expect the courts to uphold and enforce every term of an agreement. However, in a recent case that came before the Appellate Division, the court found that an indemnity clause which appeared on the reverse side of an agreement was unenforceable. A client had left his vehicle with a dealer for a service, and signed an agreement with the dealership which contained an indemnity clause on the reverse side of the contract. In terms of this clause, the dealership would be absolved from all responsibility in the event that the vehicle was stolen whilst the vehicle was in their care. The dealership did not take the usual precaution to have all car keys locked in a safe, and when the dealership was broken into, the client’s car was stolen and never recovered. The dealership refused to accept responsibility for the theft, and relied on the indemnity clause in the agreement to protect them. In the past, our courts tended to apply these types of clauses in contracts far more strictly, in favour of the dealership or merchant. In this instance, however, the court made a finding that onerous conditions such as the indemnity clause that appeared in the agreement between the client and the dealership, must be brought to the attention of the consumer in a clear and pertinent manner in order for it to be enforceable. For example, if the client was asked to initial next to the indemnity clause, the court would not have come to his assistance and would in all likelihood have found in favour of the dealership. If your Sale Agreement contains conditions that are unusual or very onerous, it is advisable to properly explain such clauses to the other party and to get the other party to initial such clause or clauses to indicate that they are fully aware of such clause(s) and their implications.