A recent Ontario Court of Appeal decision highlights the problem with oral contracts: uncertainty.

In Downey v. Arey, 2022 ONCA 673 (CanLII), a father allegedly agreed to sell a house to his daughter and her partner. There was, however, some uncertainty as to the purchase price. The price was to be $850,000. However, the daughter alleged that there was a “family discount” or gift from the father of $100,000, lowering the price to $750,000. The father testified that the $850,000 was already reduced. The trial judge found that the purchase price was not agreed upon, and therefore the contract was unenforceable. As the trial judge stated, “I accept each of the parties honestly believed their version of the price of the home. Thus, I find that a reasonable bystander would conclude that, in all the circumstances, the parties were not agreed on price, a fundamental term of any contract.”

The trial judge also found that there was uncertainty as to the extension of the closing date.

The trial judge expressed astonishment at the fact that there was no written agreement for the sale. The home was the father’s most significant asset. The parties were sophisticated and knew the significance of a written contract.

The Court of Appeal held that there was no basis to interfere with the trial judge’s finding of fact. 

(The father was 80 years old at the time of the trial. He died before the appeal could be heard. It is not clear who his estate passed to, or if the daughter was a beneficiary of his estate).

Neither the Court of Appeal or the court below referred in their reasons to the Statute of Frauds. Section 4 provides that “No action shall be brought to …charge any person upon any contract or sale of lands, tenements or hereditaments, or any interest in or concerning them, unless the agreement upon which the action is brought or some memorandum or note thereof is in writing and signed by the party to be charged therewith or some person thereunto lawfully authorized by the party.”

At trial, the father was asked why there was no written agreement to sell the home. At first, he said that he trusted his family. Wrong answer. Second, he said “that’s a good question”. Indeed.

Thanks for reading.

Paul Trudelle